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Bloomberg
One of China’s top commodity traders, Tewoo Group, is selling copper at below market rates as it grapples with a liquidity crunch, according to people with knowledge of the matter.
The company, which is owned by the local Tianjin government, is offloading some refined copper stocked in bonded zones as it unwinds financing deals with some banks, said the people, who asked not to be identified as the information isn’t public. The metal is used as collateral in financing agreements or committed assets in so-called repurchase agreements with banks, they said.
The firm sold some copper to other trading houses at a premium of about $10 per ton, the people said. That compares with the copper premium in Yangshan, or the fee payable on Chinese imports in addition to the London Metal Exchange price, of $54 a ton last week.
Tewoo has already sought support from its major creditors to extend debt maturities, asking lenders including Export–Import Bank of China and Agricultural Bank of China Ltd to convert some short-term debt into longer-term liabilities at a meeting. An official from the Tianjin regional government pledged to inject assets and push forward a restructuring of the company.
At least 50,000 tons of refined copper, or 10 percent of the country’s total bonded inventory, were used by the company as collateral or assets for financing deals in the first quarter, according to the people.
Nobody answered calls and an email inquiry to Tewoo’s media office.
Copper futures for May in Shanghai slid 0.5 percent to $7,329 a ton. Prices in London were at $6,457.50 a ton. Tewoo’s $300 million 4.50 percent note due December 2019 fell by 0.9 cent on the dollar to 91.5 cents, according to Bloomberg-compiled prices.
The company is one of the nation’s top commodity traders and ranked 132 in 2018’s Fortune Global 500 list.