At least one company is facing paper losses of more than $40m as Chinese police investigate potentially improper use of metals as collateral in the northeastern port city of Qingdao, a probe that has already crimped Chinese importers’ access to credit.
Citic Resources, the Hong Kong-listed trading arm of state-owned conglomerate Citic Group, said yesterday that the court in Qingdao had been “unable to sequester” about 123,446 tonnes of alumina to which Citic has title. The value of that metal is more than $40m, at current market prices.
The company is the first to put a number on the amount of metal it claims and how much might be unaccounted for. The case is a sobering reminder to international banks and traders that they may be more exposed than they had thought to China’s opaque shadow banking sector.
