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 March 2015 Digital Edition
FREE Maritime Reporter Subscription
Latest Maritime News    rss feeds

People & Company News

Coast Guard Academy Cadet to Receive Fulbright Scholarship

Stephen Horvath, a first class cadet at the U.S. Coast Guard Academy, was recently granted a two-year Fulbright Scholarship to study renewable energy technologies

Ecochlor Presents BWTS Case Study at CMA

Ballast water treatment technology developer Ecochlor Inc. presented a project case study yesterday at CMA Shipping 2015 in Stamford, Conn. The case study covered

Golden Ocean and Knightsbridge Complete Merger

The merger between Knightsbridge Shipping Limited and Golden Ocean Group Limited was approved today at special meetings of both companies' shareholders.      The new company,

Bulk Carrier Trends

Golden Ocean and Knightsbridge Complete Merger

The merger between Knightsbridge Shipping Limited and Golden Ocean Group Limited was approved today at special meetings of both companies' shareholders.      The new company,

Baltic Sea Freight Index Flat on Muted Vessel Activity

The Baltic Exchange's main sea freight index, which tracks rates for ships carrying dry bulk commodities, remained steady on Thursday due to a muted vessel activity.

Liebherr Opens African Maritime Hub

Liebherr Maritime Cranes celebrated the grand opening of the new sales and service center in Durban, South Africa. The new African maritime hub was opened by a

Ports

Panama Canal Sets Sight on Another Expansion

As it enters the final stretch of a massive expansion, the Panama Canal Authority is setting its sights on an even more ambitious project worth up to $17 billion

Long Beach, LA Collaborate to Improve Cargo Flow

Executives from the ports of Long Beach and Los Angeles held a kickoff meeting earlier this week to begin working together to focus on cargo conveyance strategies

Australian Reef Pilots Under New Ownership

Australian marine pilotage company Australian Reef Pilots (ARP) has been bought by a consortium of its employees.   ARP, which services shipping through the Great Barrier Reef,

Finance

Yachting Malta PPP Sets Sail

Yatching Malta Ltd (YML) - a new public private partnership (PPP) between the government and the Royal Malta Yacht Club (RMYC) was formed with the aim of putting Malta on "the global yachting map".

China Cosco's Profit Up 54%

The Shanghai-and-Hong Kong-listed flagship unit of China Ocean Shipping Group, China Cosco Holdings Co Ltd says that its 2014 net profit went up 54 percent y/y at 362.

Taiwan Boosts Yacht Export

Taiwan's yacht industry saw its first double-digit growth in nearly a decade, indicating an inspiring revival led by development and sales of larger leisure boats,

News

Indonesia Partners with China on Maritime

Indonesian President Joko “Jokowi” Widodo and Chinese President Xi Jinping pledged increased maritime cooperation during the formers visit to China.   The joint

China Strengthens Maritime Ties with Pak

The Vice Chairman of China's Central Military Commission General Fan Changlong has pledged to deepen maritime security and military technology cooperation during

Cruise Giant Carnival to Expand its Fleet

The world's largest cruise ship company Miami-based Carnival Corp. has signed agreements with German and Italian ship builders to build nine new ships over a four-year period, starting in 2019.

 
 
Maritime Careers / Shipboard Positions Maritime Contracts Maritime Security Maritime Standards Navigation Pipelines Pod Propulsion Port Authority Ship Simulators Shipbuilding / Vessel Construction
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: 0.1707 sec (6 req/sec)