QINGDAO, China, June 9 China's Qingdao Port has
sealed its Dagang bonded metal storage area and suspended
delivery of metals from the section, as authorities investigate
an alleged fraud into financing of copper, aluminium and
alumina, two sources with direct knowledge of the matter said.
A Reuters reporter at the port on Saturday saw that the main
gates into the Dagang bonded storage zone, an area roughly the
size of two soccer pitches and which mainly holds aluminium
ingots, were closed with a chain and padlock.
"The bonded zone has been sealed off and no metal deliveries
are allowed," said a person at the port, speaking on condition
of anonymity because the source was not authorized to speak to
A second person, whose firm has copper stocks in another
bonded zone at the port, said authorities had ordered the
sealing of the Dagang metals storage area.
The bonded storage area, located at the front of Qingdao
Port's administrative building, was watched by two security
guards during a visit by a Reuters reporter.
China's Qingdao Port International Co. Ltd. said
on Friday that it was assisting in the investigations on fraud
related to metal financing but neither the company nor its
employees are implicated.
It said its Dagang branch was asked by the Public Security
Authority, China's police and security administration, to help
with an investigation relating to aluminium and copper products
under the name of a third-party cargo shipment agency on behalf
of a cargo owner.
Qingdao Port, the world's seventh-busiest port, is not a
major copper trading centre like Shanghai. A spokesman for the
port said he could not immediately comment on the sealing of the
Dagang bonded zone.
The amount of metal involved in the financing probe was
about 20,000 tonnes of copper, nearly 100,000 tonnes of
aluminium ingots and about 200,000 tonnes of alumina, the raw
material for aluminium production, said the second source.
Qingdao Port also has bonded zones for metals storage in
other areas and deliveries to those sections had not been
affected by the probe, said the source.
News of a investigation into a metal financing fraud at
Qingdao Port, where a third-party company is suspected of using
single cargoes of metal multiple times to obtain financing, has
rattled banks and trading houses and unsettled markets.
Trading houses and banks have sent executives to the port to
physically check on their exposure, while at least one bank has
halted new metal financing to some clients in China.
The probe has not affected iron ore shipments and deliveries
at Qingdao Port, one of China's largest iron ore terminals.
"It is business as usual; the ships are still coming in and
trucks are still sending iron ore out of the ports," said a port
official, who declined to be identified.
(Reporting by Fayen Wong and Polly Yam in Hong Kong; Editing by
Amran Abocar and Ed Davies)