QINGDAO PORT PROBE BRIEFING: The story so far about ban on moving metal

Authorities in Qingdao have blocked the shipment of some material from the Dagang terminal as they investigate the allegedly fraudulent use of warehouse receipts multiple times to raise finance.

Authorities in Qingdao have blocked the shipment of some material from the Dagang terminal at Qingdao as they investigate the allegedly fraudulent use of warehouse receipts multiple times to raise finance.

The stop on shipments began last week at Qingdao, which is a major location for China’s trade in aluminium, alumina, bauxite, iron ore and coal.

The investigation focuses on allegations of double- or triple-pledged metal in bonded warehouses in the Dagang port terminal of Qingdao.

Traders holding alumina in Qingdao warehouses have been scrambling to understand what effect the investigation will have on their capacity to access their material.

The news has hit Chinese copper premiums, which have dropped by as much as $25.

Although Shanghai copper inventories are not under investigation, concerns about the potential widening of the probe prompted sellers to drop their offers and buyers to withdraw bids, causing trading volumes to sink in the normally brisk Shanghai copper market.

There has also been a steep drop in premiums in South Korea, which has taken in-warehouse offers to about $70 per tonne.

Market participants want to know whether this marks the start of a potential further crackdown on financing.

Here, Andrea Hotter considers the potential consequences for futures spreads and banks’ financing of commodities in China.

What to read next
The most recent financial results published by base metals mining companies highlight just how inflation is affecting profit margins, with increasing wages, financing costs and input prices all hitting profits, sources told Fastmarkets in the week to Thursday March 28
Century Aluminum is among those selected to start award negotiations for up to $500 million in Bipartisan Infrastructure Law and Inflation Reduction Act funding to build a new aluminium smelter, the company said on Monday March 25
Participants in the copper concentrates market are struggling to comprehend an “unstoppable” decline in treatment and refinement charges (TC/RCs), with every week bringing spot deals at fresh lows and rumors each “crazier” than the last, sources have told Fastmarkets
The US Department of Energy selected five base metals projects to receive more than $900 million in federal investment from its Industrial Demonstration Program (IDP), leading to a reduction of four million tonnes of carbon dioxide emissions annually, according to a statement by the Department on Monday March 25
Aluminium producer and recycler Constellium announced on Tuesday March 12 that the company is moving to test hydrogen utilization at an industrial scale as a power source in its casthouses
Fastmarkets has corrected its MB-ALU-0002 alumina index, fob Australia and its MB-ALU-0010 alumina inferred index, fob Brazil, which were published incorrectly on Monday March 18.