According to the report, there were at least 3 Chinese warehouses suspended their regular operations to check on-site mental inventories due to some domestic traders complaining they were tricked into providing loans against artificially inflated aluminum inventories in one facility.

Managed by Foshan Zhongjin Shengyuan Warehouse Management Co, the warehouse in southern Guangdong province, stopped operation after the local police received complaints from creditors. Some traders lent a total of more than RMB 500 million against the inventory stored in the warehouse, now found earlier this week the inventories were worth significantly less than the value.

Also, 2 more warehouses in the Zhejiang provide were also suspended the operations. It told the customer that it was suspended in metal inventories since Wednesday. Those warehoused had begun the internal checkups and they were approved by Shanghai Futures Exchange to hold commodities against the futures contracts.

The Shanghai Futures Exchange did not comment on the request.

Commodities traders faced challenges these months due to banks becoming cautious on high profile loess, especially in the nicked market and volatility from the Russian invasion of Ukraine. Some would look for alternative financings, such as a practice used by China’s smaller, privately-owned companies to promise their goods to bigger or state-run traders to get cash.