An investigation into the alleged fraudulent use of warehouse receipts to obtain finance
has halted some shipments at the port, located in Shandong province. The authorities are investigating the situation, and banks and warehousing companies have sent executives to the seaport to see whether and how much of their own material might have been affected.
While the bonded zone premium has sharply fallen, the impact on the copper spreads has been even more pronounced.
The front end of the copper curve has flattened, with the cash to three months spread in particular dropping from multi-year highs.
The London Metal Exchange copper backwardation has moved from about $100 at the start of the week to about $6 currently.
The June-September backwardation on the Shanghai Futures Exchange narrowed to...