Small Chinese importers delay term copper shipments amid lending cuts

Small importers of refined copper in China are likely to delay term shipments, at least in the coming two months, as local banks cut lending following a probe into an alleged metal financing scam in Qingdao, trading sources said.

Fewer term copper shipments going to the world’s top copper consumer could create extra supply in the international market, putting further pressure on copper prices, which were at a two-week low on Wednesday.

The probe at Qingdao Port in Shandong has led Chinese banks to freeze or cut credit to metal trading firms in the province after the alleged fraud came to light in early June, the sources said.

Banks have also tightened lending for metal importers in Shanghai, preventing smaller trading firms with weaker financing power than larger rivals from taking term refined copper imports, they said.

“Importers who have delayed term shipments are mostly from Shandong and got credit axed by banks. They said they would not be able to take term shipments in the coming two months,” said a China-based trader who works at an international trading house.

Some delayed term copper has been stored in bonded warehouses in Shanghai by suppliers, the trader said.