(Recasts with Standard Bank warning of potential losses, adds
LONDON, June 4 Worries over a probe into
commodity stockpile financing at China's Qingdao port appeared
to deepen on Wednesday as Standard Bank Group and a
part-owned unit of Louis Dreyfus Corp warned of
potential losses and copper prices fell further.
The inquiry, first reported by Reuters and other media
earlier this week, has revived concerns about the impact of
China's deepening credit crisis on its metal imports, much of
which piles up in warehouses to be used as collateral. London
copper prices have fallen 2 percent in two days.
Responding to queries about the probe at Qingdao, which has
not been officially confirmed, South Africa-based Standard Bank
said it was "working with local authorities" to investigate
potential irregularities at China's third-largest port, a major
source for metal and iron ore imports.
"Standard Bank Group is not yet in a position to quantify
any potential loss arising from these circumstances," the bank,
whose Standard Bank Plc subsidiary conducts commodities trading,
said in a statement.
Singapore-based logistics provider GKE Corporation Ltd
warned shareholders that it was "assessing the
potential impact" of the investigation on its GKE Metal
Logistics Pte Ltd unit, a joint-venture 51 percent owned by
global commodities merchant Louis Dreyfus.
They are the first companies to publicly discuss the issue
since the inquiry came to light on Monday, when Reuters reported
the port in northeastern China had halted shipments of copper
and aluminum as it launched an investigation into metal
stockpiles used for collateral on loans.
Authorities at the port in northeast China have not
officially confirmed an investigation, and have said exports and
operations are running normally.
But earlier on Wednesday, Xinhua news agency reported that
the port had said it was investigating whether iron ore
warehouse receipts were fraudulently used multiple times to
raise finance by different banks.
According to traders and warehousing sources, port
authorities at Qingdao's Dagang wharfs have been examining
whether there had been multiple issuing of receipts for single
cargoes of metal tied to a trading company and linked companies.
The tumult has revived concerns that first surfaced in
March, when China's first domestic bond default fuelled fears of
further financing woes and triggered one of copper's steepest
drops in years, with prices tumbling 8 percent in three days.
Traders have remained on edge since then, concerned that
tightening credit could unleash stockpiled supplies or at a
minimum diminish demand for additional imports.
"I think it's (copper) got more downside to go," said
analyst Vivienne Lloyd at Macquarie. "That (the probe) will have
the effect of making the banks extremely cautious about to whom
they will issue letters of credit."
(Reporting by Susan Thomas; Editing by Erica Billingham,
Jonathan Leff and Lisa Shumaker)