canada goose clearance sale Petrochemicals latest China commodity to be hit
buy canada goose jacket cheap BEIJING, July 3 (Reuters) Chinese petrochemical imports have become the latest commodity financing tool to come under investigation for possible fraud, highlighting the risks from the widespread use of raw materials as collateral to raise canada goose uk shop loans and skirt credit restrictions.
Commodity financing deals in China, which Goldman Sachs has estimated to be worth as much as $160 billion, have come under close scrutiny after an alleged metal financing fraud at canada goose factory sale Qingdao Port, a huge trading hub in eastern China.
Now police in northern China are investigating another suspected fraud at Tianjin Port near Beijing, police and trade sources said, involving aromatics a refinery product commonly used for blending petrol.
The use of commodities, from traditional copper sheets to perishables such as soybeans and rubber, to raise finance has canada goose coats been increasingly popular in recent years as Chinese policymakers have sought to tamp down rapid credit growth.
That has added to the build up of credit in the so called shadow banking system trillions of dollars in non bank lending that is seen by analysts as one of Canada Goose sale the key risks to China economy and also increased the potential for fraud.
Canada Goose sale In Qingdao, China third largest port, police are investigating whether a private metals trader, Decheng Mining, had duplicated warehouse receipts so that a cargo of metal could be used multiple times to obtain financing.
canada goose coats on sale The concerns raised by that investigation have forced banks and trading houses to consider new controls in the country canada goose clearance sale massive commodity financing business, which traders say could lead to the drying up of credit for canada goose uk outlet all but large firms and state owned companies.
cheap Canada Goose MIXED AROMATICS The Tianjin case appears much smaller, but illustrates the breadth canada goose of the use of industrial materials in financing.
canada goose A local unit of state run PetroChina trading arm Chinaoil, paid more than 40 million yuan ($6.45 million) for about 4,000 tonnes of mixed aromatics stored at a tank in the city, according to a Chinaoil source and another trader who Canada Goose Outlet frequently does business with the Canada Goose Coats On Sale firm.
The case, involving canada goose clearance a private Chinese fuel company and a trader suspected of contract fraud, is now under police investigation, according to two police sources cheap canada goose uk and Canada Goose Parka traders.
Canada Goose online went to the police after realizing that the 4,000 Canada Goose Jackets tonnes bought could not be delivered, said the Chinaoil source, who has direct knowledge of the case. Chinaoil officials and a PetroChina spokesman did not respond to calls or text messages seeking comment.
Details of the alleged fraud remain unclear, but the two trading sources said it involved at least one 30,000 tonne cargo worth around 300 million yuan ($48.3 million) stored at a tank in Tianjin. Chinaoil purchase was part of that cargo, they said.
Canada Goose Jackets The sources said the certificate of ownership Chinaoil received on payment may have been duplicated. The investigation was looking at whether the same lot was sold to multiple buyers, and whether it was used to raise loans, they said.
Chinaoil has since banned its regional offices from trading mixed aromatics, allowing only traders at its Beijing headquarters to deal with the fuel, said the Chinaoil source.
Canada Goose Outlet At least two other, private companies were also potential victims of the suspected fraud, the sources said.
canada goose clearance FINANCING TOOL Mixed aromatics, also known as reformates, have become increasingly popular as a financing tool in recent years, as China has tightened credit and canada goose coats on sale companies look canada goose black friday sale to profit from interest rate differentials.
canada goose store Typically, importers buy a cargo using a letter of credit obtained from a canada goose online bank at a low rate of interest.
canada goose coats They then sell it on the domestic market, often at below market rates, for quick cash to be reinvested in high return buy canada goose jacket areas such as real estate or shadow banking, where the gap between returns and funding costs could be as much as 10 percentage points.
a play on interest rates arbitrage. so long as the profits made in loans or currencies can cover losses in selling the Canada Goose online oil in the physical market, said an oil trader.
Reformates also used as a feedstock, or raw material, to produce petrochemicals are popular because of their high value per shipment and the ease with which they can be traded.
canada goose deals product needs to have enough liquidity so it can be sold in the market quickly, said the trader.
canada goose black friday sale Unlike the controlled crude oil market, companies do not need import licences to bring mixed aromatics shipments into China, while trading of other petroleum products, such Canada Goose Online as diesel and kerosene, is dominated by only a handful of state companies.
Imports of mixed aromatics soared after the 2008/2009 financial crisis to peak at 3.6 million tonnes in 2011, as dealers cashed in on tax incentives. canadian goose jacket China did not levy consumption tax on the product until canada goose store early 2014.
Imports have fallen since uk canada goose as uk canada goose outlet the consumption canada goose uk black friday levy wipes out the earlier profit margins, but the lure as a buy canada goose jacket cheap financing tool has helped hold levels up at close to 3 million tonnes a year for 2014, traders estimated.
Several main players little known private firms were believed to be holding around 400,000 tonnes of stocks, said a second Beijing based trader.
Canada Goose Parka commodity that sits in storage for long, you could reasonably suspect it as being used for financing, said a second senior https://www.cheapcanadagoose.net trader. aromatics is one of those.
buy canada goose jacket Fuel oil, of which China is Asia top cheap Canada Goose importer, is harder to use for financing as it incurs higher storage fees, traders said. ($1 = 6.2119 Chinese Yuan Renminbi) (Additional reporting by Florence Tan in Singapore; Editing by Alex Richardson).