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 Today


The Maritime Industry's original and most viewed E-News Service

Maritime Reporter May 2016 Digital Edition
FREE Maritime Reporter Subscription
Latest Maritime News    rss feeds

People & Company News

“Twiggy” Baker Wins BWT Puerto Escondido Challenge

Grant “Twiggy” Baker (ZAF) claimed victory today at the Puerto Escondido Challenge, besting a field of 24 of the world’s best big wave surfers in towering 20-to-35

Winners of International Seafarers' Welfare Awards

The winners of ISWAN's International Seafarers' Welfare Awards 2016 were announced on 24th June at a high-profile ceremony held in Manila, the Philippines. The

Maritime Needs More Women Power

United Nations  International Maritime Organization (IMO) Secretary- General Ki Tack Lim pushed for the increased involvement of women in the seafaring industry

Bulk Carrier Trends

Berthing Policy for Dry Bulk Cargo for Indian Ports Unveiled

Ministry of Shipping has formulated a new Berthing Policy for Dry Bulk Cargo for all Major Ports which will come into effect from 20th August, 2016. The objective

RS Rules Conform to the IMO Goal-based Standards

The rules of the Russian Maritime Register of Shipping are in conformity to the International Maritime Organization (IMO)goal-based standards (GBS), the IMO’s Maritime

Baltic Index up for Third Straight Session

The Baltic Exchange's main sea freight index, tracking rates for ships carrying dry bulk commodities, rose on Friday, for a third straight session, on rising demand across all vessel segments.

Ports

More PPPs Needed to Enhance Dubai Maritime

The Marine Advisory Council has met to discuss the best ways to continue leading the march to excellence pursued by the Dubai Maritime Authority in upgrading the

210 Ships Pass Through Suez Canal Last Week

Suez Canal traffic data revealed that 210 ships transited the canal, with a total load of 12.8m tonnes, from 19 to 23 June.   An average of 42 ships transited the canal per day during that period,

ABP orders Two Gottwald cranes

Terex Port Solutions (TPS) has received an order from Associated British Ports (ABP) for two electric Terex Gottwald Model 8 portal harbour cranes in the G HSK 8424 B four-rope grab variant.

Finance

VEB Guarantees $3 Bln of Yamal LNG Debt

Russian development bank VEB said on Friday it had provided a guarantee for $3 billion of debt to the Yamal liquefied natural gas (LNG) project, led by Russian gas firm Novatek.

US Oil Drillers Cut Rigs after 3 Weeks of Additions

U.S. oil drillers cut rigs this week for a 20th week this year after three weeks of additions, according to a closely followed report on Friday, as crude prices

World Stocks Tumble as Britain Votes for EU Exit

Global capital markets reeled on Friday after Britain voted to leave the European Union, with $2 trillion in value wiped from equity bourses worldwide, while money

News

“Twiggy” Baker Wins BWT Puerto Escondido Challenge

Grant “Twiggy” Baker (ZAF) claimed victory today at the Puerto Escondido Challenge, besting a field of 24 of the world’s best big wave surfers in towering 20-to-35

Winners of International Seafarers' Welfare Awards

The winners of ISWAN's International Seafarers' Welfare Awards 2016 were announced on 24th June at a high-profile ceremony held in Manila, the Philippines. The

Blue Angels Resume Schedule

The U.S. Navy Blue Angels will return to its 2016 demonstration schedule July 2-4 in Traverse City, Mich., Commander, Naval Air Forces announced. The Blue Angels temporarily stood down,

 
 
Maritime Careers / Shipboard Positions Maritime Contracts Maritime Standards Navigation Offshore Oil Pipelines Salvage Ship Electronics Sonar Winch
rss | archive | history | articles | privacy | 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: 0.1093 sec (9 req/sec)