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

People & Company News

Coast Guard Foundation to Honor Longtime Supporter

National Tribute Set for Thursday, October 9, 2014 The Coast Guard Foundation, a nonprofit organization committed to the education and welfare of all Coast Guard members and their families,

Last Call to Register for SHIPPINGInsight

Maritime industry conference and exhibition opens next week in Stamford, Conn. There’s still time to register online for SHIPPINGInsight 2014, the North American

Aage Hempel to Service and Distribution Simrad Products Aage Hempel Netherlands b.v. signed an agreement with Navico Europe b.v. for service and distribution

Bulk Carrier Trends

Charterers Remain Optimistic Despite Small Downturn

Overall confidence levels in the shipping industry fell slightly during the three months to August 2014, according to the latest Shipping Confidence Survey from

Star Bulk Takes Delivery of M/V Leviathan

Star Bulk Carriers Corp., a global shipping company focusing on the transportation of dry bulk cargos, has announced that on September 19, 2014 it has taken delivery of M/V Leviathan,

In Support of Affordable Energy

As its key mission, Waterways Council, Inc. (WCI) advocates for a modern and well-maintained system of inland waterways and ports. WCI’s top issues areas include

Ports

Fire at Los Angeles Port Stops Container Traffic

Thick smoke from a smoldering fire started by a welder's torch at the Port of Los Angeles was preventing the movement of containers at the facility on Tuesday,

Air Pollution Continues Decline at Port of Long Beach

Diesel air pollution from ships, trucks, trains and other big machines at the Port of Long Beach has declined by 82 percent since 2005, a comprehensive air quality analysis has found.

New Rotation of CMA CGM Joint Service Unveiled

CMA CGM S.A. (CMA CGM) announced the rotation of its new service in cooperation with China Shipping Container Lines (CSCL), Orient Overseas Container Lines (OOCL)

Finance

Barge Operator Fined for Releasing Dangerous Gas

The operator of a Portsmouth-based barge has today been made to pay almost £111,000 in fines and costs after pleading guilty to a breach of maritime legislation.

Charterers Remain Optimistic Despite Small Downturn

Overall confidence levels in the shipping industry fell slightly during the three months to August 2014, according to the latest Shipping Confidence Survey from

Insights: New York Canal Director Brian Stratton

Brian U. Stratton was appointed Director of the New York State Canal Corporation in April 2011, to oversee the operation and development of New York’s 524-mile Canal System,

News

Coast Guard Foundation to Honor Longtime Supporter

National Tribute Set for Thursday, October 9, 2014 The Coast Guard Foundation, a nonprofit organization committed to the education and welfare of all Coast Guard members and their families,

Suncor Sends First Tanker of Western Canada Heavy Crude to Europe

Canada's largest oil and gas producer, Suncor Energy Inc, is shipping its first ever tanker of Western Canadian heavy crude from Canada's East Coast to Europe, a company spokeswoman said on Tuesday.

Pivotal to Deliver LNG to Carib for use in Puerto Rico

Pivotal LNG, Inc., a subsidiary of AGL Resources, announced this week a long-term agreement to sell liquefied natural gas (LNG) to Crowley Maritime Corp. subsidiary Carib Energy LLC (Carib).

 
 
Maritime Careers / Shipboard Positions Naval Architecture Pipelines Pod Propulsion Port Authority Salvage Ship Electronics Ship Repair Shipbuilding / Vessel Construction 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: 0.2857 sec (4 req/sec)