Chinese Port Probe May Spread to Iron Ore, Soybeans

Posted by Michelle Howard
Wednesday, June 11, 2014

The Chinese probe into financing of copper and aluminium may spread to other commodities such as iron ore and soybeans, an executive of a commodity hedge fund said on Wednesday.

Banks and trading houses have been making urgent checks on the security of metal holdings in China, sparked by a suspected fraud at Qingdao Port, the world's seventh biggest. Police are investigating the duplication of warehouse receipts by a third-party firm on metal cargos used to obtain financing.

"I would say it's going to spill over from copper into iron ore, into soybeans. A huge amount of apparent demand in China is through shadow financing and holding stocks so you can have the cash," said Doug King, chief investment officer of RCMA Capital, which runs the $150 million Merchant Commodity Fund, which is managed from Singapore and London.

Pledging commodities to a bank, often using a warehouse receipt as proof of ownership, has become a popular way of raising finance in China, helping create huge stockpiles of metals at some ports in China.

"If you start to unwind that, then obviously that will cause a front-end pressure of physical supply in the market... It adds another level of nasty uncertainty."

At least two global banks involved in commodity financing in China have asked some clients to shift copper and aluminium, used as collateral for loans, to better regulated warehouses, three sources with direct knowledge of the matter told Reuters.

"I think it isn't just going to go away. You're going to see increased investigations over the next months," King told reporters at the International Derivatives Expo in London.

King also said that as major banks cut back exposure to commodities, other players which take on that business such as trading house Glencore will continue moving upstream and buy production assets to boost profits.

"When you're there as a trader and volatility is low and prices in a lot of commodities are low, that means your margin is low," said King, who is also involved in the RCMA Group, a separate firm which trades physical commodities such as rubber and sugar.

"So you have try to capture your margin somewhere else and that tends to be upstream. So I think the trend is definitely going to be increasingly getting vertically integrated... We'd love to get involved in there."

(Reporting by Eric Onstad, editing by David Evans)

Maritime Reporter June 2014 Digital Edition
FREE Maritime Reporter Subscription
Latest Maritime News    rss feeds

People & Company News

New ICTF Boosts Crowley’s Efficiency

The opening of Florida East Coast Railway’s (FEC) new, state-of-the-art intermodal container transfer facility (ICTF) adjacent to Crowley Maritime Corporation’s Port Everglades, Fla.

Training Builds Support for Sennebogen Customers

When Sennebogen LLC opened its new headquarters in Stanley, N.C., in 2009, the facility was equipped with one of America’s premier OEM Training Centers for heavy equipment.

Ireland Ratifies the MLC

Ireland’s Minister for Transport, Tourism and Sport, Paschal Donohoe TD and the Minister for Jobs, Enterprise and Innovation, Richard Bruton TD, today announced

Ports

New ICTF Boosts Crowley’s Efficiency

The opening of Florida East Coast Railway’s (FEC) new, state-of-the-art intermodal container transfer facility (ICTF) adjacent to Crowley Maritime Corporation’s Port Everglades, Fla.

Maine Port City Bans Oil Loading

City councilors in South Portland, Maine, voted late Monday night to ban the loading of crude oil onto tankers along its waterfront, throwing up yet another roadblock

Pier Damaged at Port Canaveral

Undergoing Repairs While Coast Guard Investigates   The U.S. Coast Guard is investigating a weekend incident that caused pier damage and scattered concrete debris in the harbor on Sunday.

Finance

Pier Damaged at Port Canaveral

Undergoing Repairs While Coast Guard Investigates   The U.S. Coast Guard is investigating a weekend incident that caused pier damage and scattered concrete debris in the harbor on Sunday.

APM Terminals to Sell Container Terminal in Virginia

Port operator APM Terminals, a unit of Denmark's A.P. Moller-Maersk, said it would sell a big U.S. container terminal to infrastructure investor Alinda Capital

Scorpio Bulkers Gets $540m Loan for Newbuilds

Scorpio Bulkers Inc. announced that it has received a commitment for a $540 million loan facility and provides an update on the financing of its fleet. On July 21,

News

New ICTF Boosts Crowley’s Efficiency

The opening of Florida East Coast Railway’s (FEC) new, state-of-the-art intermodal container transfer facility (ICTF) adjacent to Crowley Maritime Corporation’s Port Everglades, Fla.

Training Builds Support for Sennebogen Customers

When Sennebogen LLC opened its new headquarters in Stanley, N.C., in 2009, the facility was equipped with one of America’s premier OEM Training Centers for heavy equipment.

Ireland Ratifies the MLC

Ireland’s Minister for Transport, Tourism and Sport, Paschal Donohoe TD and the Minister for Jobs, Enterprise and Innovation, Richard Bruton TD, today announced

 
 
Maritime Careers / Shipboard Positions Maritime Contracts Navigation Offshore Oil Pipelines Port Authority Ship Electronics Ship Repair Ship Simulators Winch
rss | archive | history | articles | privacy | terms and conditions | contributors | top maritime news | about us | copyright | maritime magazines
maritime security news | shipbuilding news | maritime industry | shipping news | maritime reporting | workboats news | ship design | maritime business

Time taken: 0.1569 sec (6 req/sec)