| SYDNEY, June 2
SYDNEY, June 2 China's northeastern port of
Qingdao has halted shipments of aluminium and copper due to an
investigation by authorities, causing concern among bankers and
trade houses financing the metals, trading and warehousing
sources said on Monday.
Port authorities could not immediately be reached for
comment. China has a public holiday on Monday.
"We were told we can't ship any material out while they do
this investigation," a source at a trading house said.
The port of Qingdao is China's third-largest foreign trade
port and the world's seventh-largest port, trading with 700
ports in more than 180 countries, according to its website (www.qdport.com/).
"Banks are worried about their exposure," one warehousing
source in Singapore said.
"There is a scramble for people to head down there at the
minute and make sure that their metal that they think is covered
by a warehouse receipt actually exists," he said.
Metal imports have been partly driven in China as a means to
raise finance, where traders can pledge metal as collateral to
obtain better terms. In some cases the same shipment can be
pledged to more than one bank, fuelling hot money inflows and
spurring a clampdown by Chinese authorities.
"It appears there is a discrepancy in metal that should be
there and metal that is actually there," said another source at
a warehouse company with operations at the port.
"We hear the discrepancy is 80,000 tonnes of aluminium and
20,000 tonnes of copper, but we hear that the volumes will
actually be higher. It's either missing or it was never there -
there have been triple issuing of documentation," he said.
Beijing last year set new rules to curb currency speculation
amid signs that hot money inflows helped push the yuan to a
series of record highs. The rules required banks to tighten the
management of their foreign exchange lending and types of
clients that are able to access those loans.
"It's such a massive port I would think virtually everybody
has exposure," the trading source said.
"Once the investigation is over, it could be bearish for
metals. I think that a lot of Western banks will try to offload
material and try not to deal with Chinese merchants," the
trading source added.
(Additional reporting by Ben Blanchard in BEIJING and Susan
Thomas in LONDON; Editing by Muralikumar Anantharaman)