China’s copper financing deals: what next?
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China’s copper financing deals: what next?
March 09, 2012 - 11:38 GMT Location: Shanghai
China is unlikely to import as much copper for financing purposes this year if the government relaxes its grip on conventional channels of credit, making copper financing deals less attractive. There have also been policy changes that inhibit the practice.
By some estimates, more than half of all reported or unreported inventories in China (estimated at 600,000 tonnes) may be the stocks of imported copper that entered the country in deals designed to give the importer cheap financing.
Metal Bulletin outlines how these trades work in the article below.
But China is unlikely to import as much copper for financing purposes this year if the government relaxes its grip on conventional channels of credit, making copper financing deals less attractive. There have also been policy changes that inhibit the practice.
“From this year on, copper financing deals are expected to shrink in volume because private lending is likely to be eased, bank lending may be eased, and [also because] property developers and investors who carry out the bulk of copper financing trades can't make insane profits from China's housing market as they did before,” a trader said.
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