The Wall Street Journal reported today that investigations at China’s Qingdao Port into allegations that some traders illegally pledged copper and iron as collateral to more than one lender could disrupt trade for the base metals. According to the Journal, some analysts say that delays in clearing cargoes will discourage the use of the metals for financing and weaken imports, while others say that industrial demand for iron and copper will mitigate any disruptions.
As quoted in the conversation:
Western banks are looking into allegations that a Chinese trading company illegally pledged metals as collateral to more than one lender. The operator of Qingdao Port, the eastern Chinese port where the metals are stored, has confirmed that Chinese authorities are investigating allegations of fraud relating to stockpiles of metals. China’s government hasn’t commented publicly.
Helen Lau, senior analyst with UOB Kay Hian, told the Journal:
“The market concern about copper prices is real. I am not saying copper prices will keep falling, but there is a downside risk. Prices will fluctuate.”
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