Qingdao port still operating amid ongoing commodity fraud probe

The port of Qingdao, located in East China's Shandong Province, is still operating and did not halt shipments due to a probe of fraudulent commodity financing, the 21st Century Business Herald newspaper reported Thursday.

The report confirmed that Qingdao port authorities are investigating fraudulent commodity financing, mainly on financing using cooper and aluminum as collateral and the quantity of metal involved is not big.

A Qingdao-based private company, which is partly owned by Qingdao-based Dezheng Resources Holding Co, is involved in the investigation, which was begun before the Dragon Boat Festival holiday (Monday June 2) but with no specific date given, and its boss has already been detained by the police, the 21st Century Business Herald report said, citing several sources.

On Monday, Reuters said that the port had halted shipments due to the investigation.

The alleged fraud involved metal traders collaborating with employees from warehouses and even banks to issue multiple warehouse receipts for a single shipment of metal, which were then used to obtain loans from different banks.

Global trading houses and banks, such as commodities trading and logistics company Trafigura and Africa's Standard Bank Group, have started to check their exposure to the matter, Reuters reported Thursday.

Standard Chartered also said on Thursday it was monitoring events at Qingdao port.

Copper prices in London fell to their lowest in more than three weeks on Wednesday, partly due to worries that the probe would hit trade in the world's top metal buyer, but prices steadied on Thursday.

Traders estimated that aluminum and copper with a combined value of $285-$460 million could be affected by the investigation, Reuters said.