Glencore and commodity trader IXM have suspended copper shipments to Chinese metals merchant Huludao Ruisheng, in the wake of the latter’s scandal over missing commodities, reported Financial Times (FT).
Huludao Ruisheng is caught up in a scandal over missing copper inventories, worth nearly $500m, at a storage site in the port of Qinhuangdao in northern Hebei, China, reported the news agency citing people familiar with the matter.
Found to hold 300,000t of copper concentrate representing only one-third of its capacity, the facility is backed by funding from 12 Chinese trading companies, including 12 state-owned firms.
As a result of the missing concentrate, the firms are facing CNY3.3bn ($490m) in potential losses.
The companies have sent a team to the Qinhuangdao site to assess and determine appropriate legal action over the missing concentrate.
FT quoted BMO Capital Markets commodities research managing director Colin Hamilton as saying: “It’s not the first time we’ve had the problem with material going missing in China.
“Onshore financing in China for any foreign bank or trading house will become harder.”
Glencore has transferred some of its existing metal stocks from the Qinhuangdao storage site to alternative sites such as Qingdao to avoid similar issues, FT reported, citing a trader.
According to the source, exposure of Western companies to Huludao Ruisheng was limited.