Standard Bank said its London-based subsidiary uses the port’s warehouses as part of its global commodities trading business.
Global trading houses and banks are scrambling to check on their exposure to the probe into metal financing at China’s Qingdao port, as concern grows that a crackdown on commodity financing could hit trade in the world’s top metal buyer.
The investigation at the world’s seventh-largest port is looking into whether single cargoes of metal were used multiple times to obtain financing, according to industry sources.
This means different banks and trading houses were holding separate titles for the same metal.
The inquiry has revived worries about the effect of China’s deepening credit crunch on its metal imports, many of which pile up in warehouses to be used as collateral.
“Now the banks are all flying down to the port and literally, together with the warehouse people and the traders, are physically counting the stocks,” said a source at a global trading company who visited the port this week.
“When we were there we did hear a couple of traders holding the same title. One was saying that one (cargo) belongs to me. The other trader said it belongs to him. They had the same document.” Concern about the events at Qingdao has unsettled metal markets, but for now the probe is known to centre on a single trading company and firms related to it.
It remains unclear if it signals the start of a wider investigation by Chinese authorities into metal financing, although checks at other major Chinese ports such as Ningbo indicated operations were normal.
Standard Chartered has suspended new metal financing to some customers in China, said sources familiar with the matter.
“Specific to this incident, Standard Chartered is reviewing metals financing to a small number of companies in China,” it said.
At least one other Western bank with operations in China is reviewing its exposure to copper and aluminium financing, a source with direct knowledge said.
Concern has extended to domestic banks. A Chinese state-owned bank sent a team to investigate trade financing problems, said a source.
Copper prices in London fell to their lowest in more than three weeks on Wednesday, partly on worries bankers would restrict access to credit for financing deals after the probe. Prices steadied yesterday.
Most metal financing deals in China are done outside exchanges, with warehouse receipts used as proof of ownership.
This is agreed typically by a bank or a trading house with a warehouse. There is greater oversight in other developed financial centres. The London Metal Exchange licenses warehouses and monitors stocks held in exchange inventories.
A spokesman for trading house Trafigura said it was following the events and gathering information.
Qingdao authorities have not officially confirmed an investigation, and have said exports and operations are running normally. But Xinhua news agency said the port authorities had confirmed they were looking at whether iron ore warehouse receipts were used multiple times to raise finance from different banks.
Trading and warehousing sources said some copper and aluminium shipments were disrupted.
Traders estimated 80,000 tonnes of aluminium and 20,000-45,0000 tonnes of copper with a combined value of $285m-$460m could be affected by the probe.
Traders and warehousing sources said authorities at Qingdao’s Dagang wharfs were examining cargoes of metal tied to a trading company and linked firms.
Qingdao Ports International, the port’s main operator and controlling shareholder raised HK$2.92-billion ($377m ) in an initial public offering last week, according to sources. The stock is due to debut today.