(Recasts, adds Standard Chartered comment, Trafigura, changes
dateline)

By Melanie Burton and Ruby Lian

SYDNEY/SHANGHAI, June 5 (Reuters) – Global trading houses
and banks were scrambling to check on their exposure to a probe
into metal financing at China’s Qingdao port, as concerns grow
that a crackdown into commodity financing could hit trade in the
world’s top metal buyer.

The investigation at the world’s seventh largest port is
looking into whether single cargoes of metal were used multiple
times to obtain financing, according to industry sources.

This means different banks and trading houses were holding
separate titles for the same metal. The inquiry has revived
concerns about the impact of China’s deepening credit crisis on
its metal imports, much of which piles up in warehouses to be
used as collateral.

“Now the banks are all flying down to the port and literally,
together with the warehouse people and the traders, are
physically counting the stocks,” said a source at a global
trading company who visited the port this week.

“When we were there we did hear a couple of traders holding
the same title. One was saying that one (cargo) belongs to me
the other trader said it belongs to him. They had the same
document.”

Standard Chartered on Thursday became the latest
to say it was monitoring the situation at Qingdao.

Standard Bank Group and a part-owned unit of Louis
Dreyfus Corp, Singapore-listed GKE Corp.,
also warned on Wednesday of potential losses.

A spokesman for Trafigura said this week that
the trading house was following events at the port and gathering
information.

Another major player Glencore, which also uses the
port, declined to comment earlier this week.

Copper prices in London fell to their lowest in more
than three weeks on Wednesday, partly due to worries over the
probe, though prices steadied on Thursday.

On Wednesday, Standard Bank said it had started an
investigation into potential irregularities at Qingdao port.

The bank, whose Standard Bank Plc subsidiary conducts
commodities trading, was responding to media enquiries relating
to concerns over stocks of metal held in bonded warehouses at
the port.

“Standard Bank Group is not yet in a position to quantify
any potential loss arising from these circumstances,” it said.

The bank said it will work with the local authorities as
part of its investigations.

IRON ORE RECEIPTS

Authorities at the port in north east China have not
officially confirmed an investigation, and have said exports and
operations are running normally.

But Xinhua news agency reported that the port had said it
was investigating whether iron ore warehouse receipts were
fraudulently used multiple times to raise finance from different
banks.

Trading and warehousing sources also told Reuters some
shipments of copper and aluminium into the port had been
disrupted, relating to an investigation into the use of metal as
collateral in financing.

Traders estimated 80,000 tonnes of aluminium and
20,000-45,0000 tonnes of copper with a combined value of
$285-$460 million could be affected by the investigation.

According to traders and warehousing sources, port
authorities at Qingdao’s Dagang wharfs have been examining
whether there had been multiple issuing of receipts for single
cargoes of metal tied to a trading company and linked companies.

Logistics provider GKE Corp warned shareholders on Wednesday
that the investigation by port authorities might affect the
business of a metals logistics unit in China.

“The company is currently assessing the potential impact of
the investigation to the business,” GKE said.

(Additonal reporting by Manolo Serapio in Singapore, Polly Yam
in Hong Kong and Susan Thomas in London; Editing by Erica
Billingham and Ed Davies)