Trade Resources Economy Chinese Traders Reacted Cautiously After Qingdao Port Had Halted Shipments of Aluminum

Chinese Traders Reacted Cautiously After Qingdao Port Had Halted Shipments of Aluminum

Chinese traders and analysts reacted cautiously Tuesday to news that Qingdao port had halted shipments of aluminum and copper due to a probe into loan irregularities involving stocks in port warehouses.

Local media reported Monday that port had halted copper and aluminum shipments last week after state authorities launched an investigation into some local trading companies for allegedly re-using warehouse receipts multiple times to secure financing from banks.

Up to 80,000 mt of aluminum and 20,000 mt of copper reportedly stored at Qingdao warehouses could not be accounted for, with some trading houses allegedly using a single set of warehouse documents as security for loans from multiple banks.

"We will be affected by the Qingdao shipment halt as we are supposed to get some aluminum ingot offloaded in Qingdao port under contracts signed earlier," a Shanghai-based trader said. "Now we may have to source the metal from other trade sources instead."

However, a Zhejiang-based aluminum and copper analyst said the impact on the aluminum and copper market was likely to be limited.

"The reported missing amount is rather small and it's unlikely to affect both markets much," he said.

An analyst from state-owned nonferrous metals information provider Beijing Antaike echoed this view, saying the halt may have only a small impact on aluminum and copper prices in the short term.

"They are likely to be speculative moves," he said. "Whether this will affect the market in the long run will depend on how long the investigation lasts and the actual amount of aluminum and copper involved," he added.

Some Chinese trading firms have been increasingly using copper and aluminum as a financing tool, stockpiling metal and using it as collateral to get loans from banks as China's tightening monetary policy makes it increasingly difficult to access credit through official channels.

A Qingdao port official declined comment when contacted by Platts Tuesday. The port in China's Shandong province is the country's third-largest foreign trade port.

Source: http://news.chemnet.com/Chemical-News/detail-2327660.html
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Market Cautious After China's Qingdao Port Halts Aluminum, Copper Shipments
Topics: Chemicals