Abstract Will Tongmao follow the footsteps of steel trade? Industry experts do not currently agree with this statement: "Financing copper" and steel trade financing are "very different," and the probability of a copper price decline leading to a collapse is not too high. But banks are not confident about it. The reporter received news from traders that Construction Bank, Industrial Bank...
Copper trade will follow the footsteps of steel trade? Industry experts do not currently agree with this statement: "Financing copper" and steel trade financing are "very different," and the probability of a copper price decline leading to a collapse is not too high. But banks are not confident about it. The reporter received news from traders that Construction Bank and Industrial Bank began to tighten copper trade loans. Banks in Shanghai, Zhejiang, Hebei and Guangdong have stopped issuing letters of credit for copper traders, lying in the bonded area. This is probably not good news for "financing copper."
The relevant person in charge of the Shanghai Branch of the Construction Bank said that CCB is now more cautious about the new copper trade loans. The Industrial Bank Shanghai Branch replied that "the news is not true. There is no such thing in Shanghai, and there is no tightening of the copper trade loan."
Letter of credit "loop open"
From the point of view of financing methods, financing copper is very different from the steel trade financing that has been raging in the past. Steel trade is through mortgages to achieve loans, and repeated mortgages are very common. Financing copper is the purpose of borrowing through letter of credit trade, and there are few repeated mortgages.
According to the reporter's understanding, the letter of credit loan generally operates like this. When a copper trading company or a copper trading company signs a copper import contract with a foreign company, it will apply for a credit loan from the bank. After obtaining the letter of credit, the bank will pay the goods to the foreign businessman. Until the expiration of the letter of credit acceptance date, the trading company will pay the payment to the bank, and the expiration of the letter of credit is generally 180 days. When these imported coppers enter the domestic market, they are sold in the domestic market at market prices or even low prices for cash withdrawal. And often this time the letter of credit loan has not expired, which is equivalent to a short-term loan of the trading company. When the letter of credit is about to expire, the trading company can apply for a new loan. As long as it has a good relationship with the bank, it can circulate continuously. Operation, so loan funds have been in the hands of traders.
A trader made an analogy for reporters. For example, there are two companies, A and B. Company A usually buys a batch of copper and then sells it to B. B also buys a letter of credit at the time of purchase and then transfers it to C. ... reciprocating, the same batch of goods can be opened a few letters of credit, after the Shanghai and other places have begun to tighten the letter of credit business, many companies go to Jiangsu, Zhejiang banks to open letters of credit, but with supervision from Strictly, the establishment of a letter of credit will become increasingly difficult.
Why is the financing of copper?
In fact, regardless of "funding copper", "financing glue" or other financing bulk commodities, it is a kind of borrowing of funds or an arbitrage behavior.
Taking financing copper as an example, when market funds are tightening (such as raising interest rates, raising the deposit reserve ratio) and the relative appreciation of the domestic currency, financing copper is favored by the market. At the end of 2012, the renminbi was once again in the appreciation channel, and the market funds were tightening, which was the main reason for the high financing copper. At that time, the market statistics of bonded warehouse copper stocks reached 1 million tons.
Although the financing of copper will be subject to import losses, the highest loss per ton of imported copper in 2012 reached 4,200 yuan, while the annual average ton loss is also around 2,000 yuan, but in the context of high interest rates, there is still profit margin for financing copper.
The reporter found through a leaflet of the Copper Foreign Trade Financial Salon organized by a non-ferrous metal analysis agency that the cost of financing copper is much lower than the cost of financing the market. The leaflet reads: “Focus on the cost of copper financing, focusing on more than 6 billion US dollars. 6%-7% of the cost of financing for the blue ocean, which is much lower than the loan cost from the formal channels of the bank.
"And because the funds obtained from copper financing are not necessarily used in the formal production and operation areas, but in real estate, trusts, underground money houses and other high-yield projects, when the funds are tight in 2011 and 2012, high Revenue projects can achieve 30% or more of the annual income, such a financing business can be described as lucrative," an industry source said. Such a high spread is the driving force behind the financing of copper.
50 billion bad debts possible
According to estimates by GF Securities, the scale of China's high-risk copper trade may be 50 billion yuan. In the event of a capital chain stagnation risk, the banking industry will face tens of billions of non-performing loans.
Li Youhuan, director of the Guangdong Provincial Social Science Comprehensive Development Research Center, told reporters that trade finance has a long history and is quite mature in the international market. If there is no trade financing in the international trade market, it will be unimaginable. But the problem is that China's trade finance is completely different from the standard trade finance in the international market. The so-called "financing copper" and "financing glue" are just one form of trade financing. In fact, all product financing can be done, just "funding copper." "Financing glue" is very mature, with a group of first-hand dealers, and a mature financing settlement platform outside the country.
"In a short period of time, the possibility of a concentrated outflow of non-performing loans of copper trade is not very high. Although the price of copper is on the downside, it is not very volatile compared with the previous steel trade," said CITIC, an analyst at CITIC Banking.
However, Xu Yili, a well-known financial commentator, believes that “funding copper†has become a hidden crisis in foreign trade. "Considering that the return of the dollar to the strong is a high probability event, then it can be boldly inferred that the future 'funding copper' crisis is only a matter of time."
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