Some Chinese traders, steelmakers stopped dealing with Radiant World

SHANGHAI: Some Chinese iron ore traders and steelmakers stopped dealing with Radiant World this year, even before recent negative headlines around the trading house, four sources familiar with the matter said.

Two of the sources said they had stopped dealing with the firm because they were uncomfortable with how long it was taking to receive final settlement, and two said it was because state iron ore buyer China Mineral Resources Group had urged them to reduce their exposure to the firm.

Scrutiny around Radiant World has intensified after Bloomberg News reported last week that commodity trading houses Cargill and Vitol Group had cut ties with the firm over concerns that invoices or other documents Radiant World had provided to its banks were not valid. Radiant World previously described those claims as “inaccurate and unsubstantiated”. A company spokesperson said on Friday that the trading house “does not comment publicly on individual counterparties, trading activity, or commercial positions”.

CMRG did not immediately respond to a request for comment. “We stopped doing business with Radiant World from June… in part because the final settlement with the company has been taking unusually long, making us feel uncomfortable,” said an iron ore trader at a state-backed trading firm, declining to be named as he was not authorised to speak to the media.

A manager at a Chinese steel mill that previously bought seaborne cargoes from Radiant World said it had stopped doing so in recent months and had held internal discussions to evaluate future cooperation, declining to elaborate.

On Wednesday, miner and trader Glencore’s CEO Gary Nagle said the company had taken some provision in its accounts related to Radiant World and stopped doing new business with the firm, adding that its exposure was not material.

Deutsche Bank and KBC Group NV have frozen some of Radiant World’s Singapore bank accounts, while some other banks have suspended credit lines, Bloomberg News reported on Thursday.