China Confirms Probe into Qingdao Port Fraud Allegations

A probe into the alleged fraudulent behaviour involving copper and aluminium inventory financing at China's Qingdao Port has been confirmed by the port authorities.

The recently-listed port says that other business will continue as usual, but until recently some copper cargoes had been shipped out of Qingdao into more regulated London Metals Exchange warehouses.

Investors have been rattled by reports that a company used single cargoes of metal multiple times to obtain financing.

Standard Chartered Bank allegedly suspended new metal financing for some Chinese customers in response to the investigation.

The Wall Street Journal has reported that six banks, including Citibank and Standard Chartered, have launched investigations into loans they provided to trading firms backed by stocks of copper and aluminium stored at Chinese ports.

Banks, traders and investors have been scrambling to gauge their exposure to the port, which is the world's sixth busiest and handles upwards of 370,000 kilotons of cargo each year.

Qingdao Port was floated on the Hong Kong Stock Exchange to a muted response from investors.

However, the port's chairman Zheng Minghui tried to assure reporters that the results of the investigation would be limited. "Everything in Qingdao port is running normally," he said at the listing.

Copper prices plummeted on news of the investigation, compounded by weak demand for metal on the global markets.