Missing Qingdao Copper Creates a Mess of Lawsuits

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While the Qindgao copper storage lending scandal may not have created the global metals sell-off that many feared, it has spawned a messy web of lawsuits thanks to the missing copper at the bottom of it.

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The suits, which have been filed in Hong Kong, Singapore and London, show what happens when trade-finance deals that are done every day go sour. Chinese authorities and bankers are investigating whether traders fraudulently used the same stockpiles of metals to secure multiple loans from Chinese and foreign banks.

Some lawyers have had to dust off old legal books to understand the laws in Hong Kong and elsewhere that govern what appear to be hundreds of millions of dollars in disputed claims.

The probe is looking into whether entities linked to Decheng Mining Ltd., based in the eastern port city of Qingdao, illegally pledged the metals as collateral to get the loans, according to court documents and executives at banks that made some of the loans.

With a decline of 1.3 percent on the LME to $6,734 per metric ton on Tuesday, September 23, the copper 3-month price recorded the biggest decline of the day. Also on the LME, the primary copper cash price declined 1.3 percent to $6,781 per metric ton.

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After a couple of days of decreasing prices, the price of US copper producer grade 122 held steady at $3.79. The Japanese copper cash price showed little movement on Tuesday at JPY 781,000 ($7,181) per metric ton. The price of US copper producer grade 102 steadied at $3.98 per pound following two-days of dropping prices. After dropping for two days, the price of US copper producer grade 110 flattened at $3.79.

Chinese copper closed mixed on Tuesday. The price of Chinese copper bar fell 0.3 percent to CNY 49,700 ($8,095) per metric ton. The cash price of Chinese copper weakened by 0.3 percent, settling at CNY 49,900 ($8,127) per metric ton. The price of Chinese copper wire remained essentially flat at CNY 50,395 ($8,208) per metric ton. The price of Chinese bright copper scrap continues hovering around CNY 44,300 ($7,215) per metric ton for the fifth day in a row.

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