China's Tewoo Is Said to Sell Copper at Below-Market Rates

(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 last week. 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 49,260 yuan ($7,329) a ton on Monday. 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 on Monday, 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. It also operates in industries including infrastructure, logistics, mining, autos and ports, according to its official website. It had annual revenue of $66.6 billion, profits of about $122 million, assets of $38.3 billion, and over 17,000 employees as of 2017, according to Fortune’s website.

Tewoo’s Fortune ranking, which measures annual sales revenue, was higher than some other Chinese conglomerates such as weapons maker China North Industries Corp., service carrier China Telecommunications Corp. and financial titan Citic Group Corp.

©2019 Bloomberg L.P.