Tianjin: No Petrochem Fraud
China's Tianjin Port Holdings has found no evidence of an alleged fraud involving petrochemicals reported by media earlier this month, the company said in a statement on Monday.
Citing police and trade sources, Reuters had reported police were investigating a suspected contract fraud at Tianjin Port that involved "mixed aromatics", a refinery product commonly used for blending petrol.
But Tianjin Port said it had made checks with the companies said to be involved and had found no evidence of the alleged fraud.
Mixed aromatics, also known as reformates, have become popular as a financing tool in recent years, as China has tightened credit and companies look to profit from interest rate differentials, trade sources said.
Typically, importers buy a cargo using a letter of credit obtained from a bank at a low rate of interest, then sell it on the domestic market, often at below-market rates, for cash that can be reinvested in higher-return assets.
Reporting by Fayen Wong