China copper trading hit by commodity financing crackdown

A Chinese commodity trading house is accused of securing multiple bank loans against a single stockpile of copper and aluminium, causing ructions in copper prices and a dip in trading volumes

Copper tubes

The discovery of a financing practice by a Chinese trading firm using the same metals inventory as collateral to secure multiple bank loans has caused copper prices to plummet, yet futures traders have profited from the price dislocations.

Decheng Mining, a Qingdao-based metals trading firm, was found on June 2 to be using the same batch of copper and aluminium stored at Qingdao port to secure multiple bank loans. The revelations have spooked the market causing a drastic reduction in trading

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