Copper premiums fall on worries about financing

Copper premiums in Shanghai fell yesterday after traders cited concerns over disruptions to some shipments at Qingdao, the mainland's third-largest port, related to a probe into the use of the metal as collateral in financing.

According to traders and warehousing sources, the port authorities at Qingdao's Dagang wharfs were examining last week whether there had been multiple issuing of receipts for single cargoes of metal tied to a trading company and linked companies.

The port authorities in Qingdao said exports and operations were running normally.

There were market concerns, however, about a broader crackdown on using copper for financing.

"The market focus is back to the copper financing again in China, because Qingdao port started to investigate the multi-collateralisation of commodities," said Helen Lau, a mining analyst at UOB Kay Hian Securities in Hong Kong.

"I think this continued campaign against financing deals that started back in February has resurfaced. Before it was just talk, now it's action … I think the worry is that certainly [it] will not stop there at Qingdao port."