Cyanide Thunderstorms Feared As Mystery Deepens Around $1.5 Billion Tianjin Explosion

Tyler Durden's picture

The story behind the chemical explosion that rocked China’s Tianjin port last Wednesday continues to evolve amid fears that the public could be at risk from the hundreds of tonnes of sodium cyanide stored at the facility.

More specifically, Monday’s heightened concerns were related to the possibility that rain could interact with the water soluble chemical, releasing deadly hydrogen cyanide gas into the air. "First rain expected today or tonight. Avoid ALL contact with skin," a text message purported to have originated at the US Embassy in Beijing read. The Embassy would later deny the message’s authenticity, perhaps at the behest of the Politburo which has kicked off the censorship campaign by shutting down hundreds of social media accounts for "spreading blast rumors."

Despite efforts to preserve order and clamp down on discussion, the anger in China is palpable as citizens demand answers as to how a catastrophe of this magnitude could have happened and as it turns out, not only was Tianjin International Ruihai Logistics storing sodium cyanide in amounts that were orders of magnitude larger than what they were supposed to be storing, but they were apparently doing so without a license. "The company has handled hazardous chemicals during a period without a licence," an unnamed company official said on Tuesday. Apparently, Ruihai received the licenses it needed to handle the chemicals just two months ago, BBC reports, citing Xinhua. 

Meanwhile, it looks as though determining who actually owns Ruihai will be complicated by the fact that in China, it’s not uncommon for front men to hold shares on behalf of a company’s real owners. This is of course an effort to obscure Communist party involvement in some enterprises and as FT reports, "that seems to be the case for Shu Jing and Li Liang, who appear in State Administration of Industry and Commerce records as holding 45 and 55 per cent of Ruihai International Logistics." "Both Mr Shu and Mr Li told Chinese media they were holding their shares on behalf of someone else," FT adds, "but would not say who."

Here’s more from FT:

Licensing to operate a hazardous goods warehouse is not easy to come by, and Ruihai Logistics’ operation seems to have been approved after neighbouring lots had already been auctioned to residential developers.

 

Adding to the speculation, Tianjin’s online corporate registry database was inaccessible for four days after the blasts. When access resumed on Monday, a search for Ruihai Logistics yielded a curious gap.

The company was registered in 2012 but its current legal owners only bought their shares in 2013. The historic list of changes that should have reflected the previous owners did not appear.

 

The records reveal that many Ruihai executives are former employees of Sinochem, the giant state-owned chemicals, fertiliser and iron ore trader that owns the largest hazardous warehouse operation in Tianjin.

You get the idea. And although we’ll likely never know the true extent of the Party’s involvement with the company, local residents are furious, as evidenced by protests near the blast zone on Tuesday morning, which means Beijing must at least pretend to be serious about investigating the incident. In an effort to pacify the country’s censored masses, party mouthpiece The People’s Daily said 10 people, including the head and deputy head of Ruihai had been detained since Thursday. As Reuters reports, Yang Dongliang, head of the State Administration of Work Safety, is also under investigation:

China said on Tuesday it is investigating the head of its work safety regulator who for years allowed companies to operate without a license for dangerous chemicals, days after blasts in a port warehouse storing such material killed 114 people.

 

Yang Dongliang, head of the State Administration of Work Safety, is "currently undergoing investigation" for suspected violations of party discipline and the law, China's anti-graft watchdog said in a statement on its website.

 

The agency, the Central Commission for Discipline Inspection, did not say that Yang's behavior was connected to the explosions in the port of Tianjin but the company that operated the chemical warehouse that blew up did not have a license to work with such dangerous materials for more than a year.

While Beijing is busy engineering a smoke screen to appease the locals, thunderstorms are rolling into the area, which, as noted above, is bad news as the hundreds of tons of water soluble sodium cyanide are now exposed to the elements. Here's Xinhua:

Rains are expected to complicate rescue efforts and may spread pollution at the Tianjin port, which was rocked by warehouse blasts last week. China's central meteorological authority has predicted a thunder storm over the blast site, where hundreds of tonnes of toxic cyanide still reside. A chemical weapon specialist at the site told Xinhua that rain water may merge with the scattered chemicals, adding to probability for new explosions and spreading toxins.

On Tuesday, the Tianjin Environment Protection Bureau said it had collected 76 samples from around the blast site. "With regards to the safety levels, in total there are 29 cyanide inspection sites [and] of them, eight exceeded safety levels [with] the largest reading was 28 times over the safety standard," said Bao Jingling, the agency's chief engineer.

Indeed, some have observed what's been described as a "white foam" on the ground. 

And as for the forecast, well, things don't look promising:

Finally, the first estimates of the damage are beginning to trickle in and while we won't know the full extent of the human toll for quite sometime (if ever), Fitch puts the financial impact of the blasts for Chinese insurance companies at between $1-$1.5 billion. For anyone out there who's long (or looking to get short) the Chinese P&C space, here's Deutsche Bank's take:

Based on reported data, PICC was the largest P&C player in Tianjin with 28% market share in 2014, followed by Ping An at 23%, CPIC at 12% and Taiping at 5%. Tianjin is a relatively small market for listed insurers, accounted for 1.2% of 2014 premiums for PICC, 1.8% for Ping An, 1.4% for CPIC and 4.1% for Taiping.

 

We note that it may be too early to assess ultimate losses from this event as it generally takes time for all claims to be filed. However, assuming losses are shared based on their respective market share in Tianjin, we estimate that every Rmb1bn ultimate loss, PICC’s 2015E combined ratio could increase by 12bps, Ping An by 18bps, CPIC by 14bps, and Taiping by 32bps and PICC’s 2015E net profit would decline by 1.6%, Ping An by 0.5%, CPIC by 0.8% and Taiping by 1.2%.

 

We maintain our relatively cautious stance on Chinese P&C insurers as we expect underwriting profitability to be under pressure in the next 6-12 months amidst auto premium deregulation, potential increase in competition from online players and a tougher comp in 2H15E. 

It also looks as though the government could be on the hook for tens of millions of yuan in insurance claims for injuries and deaths. The full Fitch statement is below.

And meanwhile:

Tianjin city sells 376m yuan of 3-yr bonds at 3.38%.

 

China’s Tianjin Sells 1.46b Yuan Special Bonds in Placement.

*  *  *

Full statement from Fitch

The insured losses from a series of explosions at a chemical warehouse in Tianjin on 12 August are likely to be material for Chinese insurance companies, potentially exceeding USD1bn-1.5bn, says Fitch Ratings. The high insurance penetration rate in this area could make the blasts one of the most costly catastrophe claims for the Chinese insurance sector in the last few years. While the incident is still developing, Fitch expects the number of reported insurance claims cases to surge further in the coming few weeks. 

Fitch believes that claims from the blasts are likely to undermine the financial performance of some regional players and those property and casualty insurers with high risk accumulation in the affected areas. That said, it is too early to determine the exact impact that this incident will have on the credit strength of the Chinese insurance sector as a whole. 

According to the China Insurance Regulatory Commission, non-life insurance premiums from Tianjin city amounted to CNY11bn (USD1.7bn) in 2014. As such, should insured losses come in at the high end of the initial USD1-1.5bn estimate, they would represent about 88% of total direct premiums written in Tianjin or roughly 5.4% of aggregated shareholder capital for the six most active issuers at end-2014. PICC Property and Casualty Company, Ping An Property & Casualty Insurance Company of China, China Pacific Property Insurance, China Continent Property & Casualty Insurance, Sunshine Property & Casualty Insurance and Taiping General Insurance are the most active insurers in the region, accounting for more than 77% of the non-life segment as measured by direct premiums written. 

Claims from the blasts could be shared with both local and international reinsurers, which could mitigate the direct impact on the Chinese insurance sector. While insurers could recover a portion of their property claims from their reinsurers, their exposure, the amount of retention and the number of reinstatements under the catastrophe reinsurance program are likely to determine the degree of severity to which they are affected. Fitch estimates that the overall risk cession ratios of major non-life players active in the Tianjin region range from 10% to 15%. 

Chinese media have reported that more than 8,000 vehicles were destroyed by the explosions. Claims from motor insurance could impair insurers' margins and capital if their reinsurance protection is marginal and the degree of risk accumulation within the affected region is significant. Aside from motor excess of loss treaties, in which the reinsurers indemnify the ceding companies for losses that exceed a specified limit, it is common for Chinese insurers to use quota share reinsurance treaties to mitigate their solvency strain due to the strong growth in recent years from the motor insurance book of business. 

The majority of claims will come from motor, cargo, liability and property insurance. However, medical and life insurance claims are also likely to be substantial. Victims of death and injuries are covered by a government-supported accident insurance plan for the Tianjin region, in addition to their own medical and life insurance policies. Each injured person who is insured by the government plan can claim compensation of between CNY20,000 and CNY35,000, depending on the extent of injuries while compensation of CNY50,000 will be paid in the event of death. 

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Secret Treaties's picture

Not to sound like a conspiracy theorist (hey, this is ZH), but here’s thought on the cause . . .

http://www.socom.mil/default.aspx , or

https://www.cia.gov/index.html 

booboo's picture

Head of Information Yank Mi Yang said there are no health issues.

Manthong's picture

Gimme  a break..  try 5 billion or more.

pods's picture

This is about clipping corners and general shoddy company behavior.  Why do things like this always have to bring about the nutjobs?

We are talking about China here. From melamine in baby formula, to lead paint in toys, they are the poster boy for anything goes.

So please, all you rod of Godders, did the rod of God start the first fire, or was it activated after the fire was going?  Did it fire once, twice, or three times?

pods

Save_America1st's picture

They better send in Jack Burton to find out what's up.  I hear that company is secretly owned by David Lo Pan and The Three Storms...

https://www.youtube.com/watch?v=JM6Z3wgMNlY

https://www.youtube.com/watch?v=ENqEfNhoo8I

 

knukles's picture

Hey, all due credit and Kudos to the Chinese, for at least "China said on Tuesday it is investigating the head of its work safety regulator who for years allowed companies to operate without a license for dangerous chemicals, days after blasts in a port warehouse storing such material killed 114 people."

If it had been toxic chemicals from a government agency fucking around in an abandoned mine, spilling death and destruction into a beautiful river in the US, or something like that, Washington would blame it on a white conservative Republican Oath Keeper member of the Tea Party, gun loving, Bible owning, hate filled racist, misogynistic decorated military veteran male.

In the meantime, Paul Krugman is having an orgasm, raising his forecast for China's GDP 10 fold to 70%

And now, back to "Who the hell am I called Cait"

lordylord2's picture

The last scene of Animal House comes to mind. ALL IS WELL!!!

Son of Loki's picture

I just ordered my Hazmat Cyanide protection gear off Ebay for $9.99 to shipped out of Guangzhou. They even have a life-time guarantee that if the suit doesn't work, full money back guarantee!

 

I'll put it in the closet next to my lead-lined Fuki Radiation protection gear and my Anti-Ebola suit.

BaBaBouy's picture

"" Adding to the speculation, Tianjin’s online corporate registry database was inaccessible for four days after the blasts. When access resumed on Monday, a search for Ruihai Logistics yielded a curious gap.

The company was registered in 2012 but its current legal owners only bought their shares in 2013. The historic list of changes that should have reflected the previous owners did not appear. ""

Well... The Chinee have learnes Well From The USA Gatekeepers...

""Classified Info And State Secret"" ...

Just like Hiliries personal Servers...

BaBaBouy's picture

"" The company was registered in 2012 but its current legal owners only bought their shares in 2013. The historic list of changes that should have reflected the previous owners did not appear. ""

LOL ... Does ANYBODY? Still beleive that the Chinee (Only) Have @1700 Tonnes Of GOLD ??? Hahahahaha

jbvtme's picture

"this is the end of living and the beginning of survival".  chief seattle

dontgoforit's picture

You would think that the fire and explosion would have 'converted' all the bad stuff into ash.  And let's face it, it's gonna' rain sooner or later.

0b1knob's picture

"Cyanide Thunderstorm" would be a great name for a death metal band....

Theosebes Goodfellow's picture

~"the largest reading was 28 times over the safety standard," said Bao Jingling, the agency's chief engineer."~

How do you say "YIKES!!!!" in Madarin?

The Blank Stare's picture

No worries, this plague will only take the first born child. Long Lambs blood.

WordSmith2013's picture

Seems like something much bigger happened in Tianjin.

Chinese Rumor: Pentagon Space-based Weapon Caused The Tianjin Explosion To Short-circuit Yuan Devaluation?

http://cosmicconvergence.org/?p=10960

Was The Tianjin Explosion Caused By A U.S. Space Weapon To Stop Yuan Devaluation?

The explosion was too HUGE!!!

 

hxc's picture

Not a fan of gubmint standards (or anything at all) but i'll bet you they were fucking low already. 28x mild toxicity is a lot worse than 28x next to zero toxicity.

Paveway IV's picture

Uh-oh...

NHK: The flash or in Tianjin explosion fire occurred ammonium nitrate

The amount of ammonium nitrate was near the fire place is that was container dozen pieces, more than 200 tons in total. 

In addition, China Central Television of the state-owned, as a story of executives of fire authorities, told from a sample of air taken in the field is entered in this week, with sodium cyanide and nerve gas poison has been detected. Kind of nerve gas is not identified, but the voice that concern the safety of the surrounding scene has risen.

Whut??

Implied Violins's picture

Why can't this shit ever happen to crates of, like, LSD? That's an acid rain where I'd gladly walk around naked.

El Oregonian's picture

1st of 5 incoming Energy waves. 1st one just past, 2nd one will be 1,000,000 times more intense than the 1st. Prepare accordingly.

Miffed Microbiologist's picture

I hope you haven't forgotten to stock up on duct tape. One absolute essential in all disasters.

Miffed;-)

pods's picture

OMG Miffed that reminded me of one day stopping by an Ace Hardware for some things, and one of them was duct tape.

I was standing in line and a lady behind me was smiling looking at me. She looked at my couple rolls of duct tape and said "you too."

(She had several rolls and some plastic.) 

I got home and laughed when I read the proclamation about how we need to build our own biosafety rooms to protect us.

Modern version of duck and cover. lol.

pods

Miffed Microbiologist's picture

During the anthrax scare I had dozens of email from friends all over the country asking me how I was handling my mail. Individually responding was too labor intensive so I wrote up a procedure for a group mailing. One, drop by mailbox on the way home from work. Two, take out mail and toss on passenger seat. Three, when home, take out mail and dump on kitchen counter. Get dinner started. Four, while meal is cooking, go through mail, toss junk mail in trash and place Mr's mail on his office computer's keyboard. Five, throw bills in the "to be paid" bin. Task accomplish.

Two people emailed back asking if I forgot to asterisk each number as a bagging/gloving step.

I stand by my procedure as written. I survived!

Miffed;-)

centerline's picture

Ever try that Gorilla duct tape stuff?  Wow.  A little pricey - but that stuff is incredible. 

Debt-Is-Not-Money's picture

It's great when it is not exposed to the hot sun. The black color gets hot, the glue softens and whatever it is holding together comes apart.

FireBrander's picture

Educate yourself dumbass...the EPA was cleaning up the mess caused by the "free market"...more specifically, Kinross Gold, a Canada-based multinational mining giant...

The EPA HIRED a PRIVATE company to do the work...that PRIVATE company fucked up!...Not the EPA! Sure, maybe there is some oversight blame to fall on the EPA, but when I hire a contractor to dig a hole, and he hits a gas line...IT'S HIS FUCKEN PROBLEM..NOT MINE.

http://www.cnn.com/2015/08/13/us/colorado-epa-animas-river-spill-owner/i...

Paveway IV's picture

I can't say I agree with you analogy, FireBrander. The EPA does not hire their brother-in-law's remediation firm and tell them to 'go remediate the mine'. It doesn't work like that. The EPA has one of their 'experts' direct said brother-in-law's remediation outfit backhoe operator to dig out the plug.

I would bet dollars to donuts that the backhoe operator (who is probably a contractor and has no ownership interest) facepalmed when he was told to dig out the plug, looked incredulously at the EPA engineer-bureaucrat for a while and said in his best Sam Kinison voice, "OK... are you absolutely SURE you want me do to that, boss? Remember that inspection pipe you didn't want to put in the plug last year because you didn't think it was necessary? See, that would have been REALLY FUCKING HELPFUL right about now to know what's going on inside the mine before we start randomly digging out the FUCKING PLUG." Smarmy EPA engineer-bureaucrat: "Who's the expert here anyway, asshole? Do what I tell you or you'll be slinging tacos and using EBT cards to feed your family before your God damn shift ends. Dig out that f'king plug - NOW!"

On a side note, I have to point out this quote from the Gold King owner:

Hennis' company took ownership of the Gold King Mine when the previous owners were foreclosed on, and Hennis himself has not done any work on the mine outside of what the EPA has requested.

His goal with owning the mine, he said, is to find a buyer.

That seems to be the primary activity of most gold mine owners: finding a buyer for your mine. Tells you everything you need to know about hard-rock gold mining. My uncle told me this decades ago and I couldn't figure out what he was blabbering on about. Why make it so complicated? You just dig the gold nuggets out of the walls and pile them up in your little mine cart until it's full. Stupid easy and it's like free money!

PTR's picture

Oh, CNN.  Then it HAS to be accurate.

Bunghole's picture

Had never heard of the Rod of God until the teevee and Hollyweird worshipers here at ZH pointed it out.

 

 

pods's picture

That crater was only visible in 1 pic that I saw.  The one displayed on the Rod of God article.  Funny all the other ones missed it.

I am not saying they don't have some type of space weapon.

I am only wondering why it is that everyone jumps through hoops to see things that clearly aren't there.

pods

Dsyno's picture

pods says: "That crater was only visible in 1 pic that I saw. The one displayed on the Rod of God article. Funny all the other ones missed it."

pods, you just lost credibility. That crater is visible practically everywhere:
http://qz.com/481174/photos-high-res-aerial-images-of-the-tianjin-blast-...

pods's picture

Every pic is the same damn one. That is the pic from the Rod of God article I quickly had to wash from my mind.

It wasn't darkened, it was water filled.  Forgive me for losing my credibility.

Now go ahead and prove it was made by some space launched scalar weapon.  I will look around for my credibility while you do so.

pods

jefferson32's picture

It is the mark of an educated mind to be able to entertain a thought without accepting it. Aristotle

I enjoy the "Rod of God" hypothesis. 

But shouldn't we have seen a meteor falling from the sky prior to the explosion if it was a kinetic weapon launched from orbit?

 

HowdyDoody's picture

Lets go the whole hog - rods of god's nanothermite.

Paveway IV's picture

That's only half-hog.

Israeli-manufactured, solar-powered, low-carbon footprint depleted uranium and nanothermite-doped cobalt-tungsten-nickel Illuminati Rod of God© based on Nibiru technology with a buckey-ball encased ebola payload and a vegan, revenue bond-funded high-energy strained ring and cage nitramine boosted charge rolled on the thigh of a virgin. And (of course) Raytheon's dual-mode GPS/INS laser-guided Paveway IV tail kit featuring gender-neutral high bore offsight capability and a congressional-earmarked ZIRP-powered selective availability anti-spoofing module and nice chrome spinny-rims.

Where's my f'king grant? I can deliver these next Tuesday.

813kml's picture

I'm leaning toward the theory of a blue ice meteor formed by a sewage flush on one of Virgin Galactic's cruise ships.

Implied Violins's picture

That, or the Hale-Bopp death cult rode in on a comet to top off their cyanide tanks.

clade7's picture

They shoulda called them "Space Jarts" though...sounds more dangerous...

pods's picture

When I first read it, I thougth Rod of God = Chosen Lightning.

pods

cro_maat's picture

Rod of God = Diefic Viagra  (comes in a 10 pack and only priced in USSA Fiat)

Boondocker's picture

I am a nut job and proud of it.....I keep getting proved right too....but I don't see a rod of god on this....maybe in Iran....

KnuckleDragger-X's picture

This is a major port and is very heavy in the chemical export business. Sodium cyanide is nasty stuff, but there are much nastier compounds used in modern industry and we don't know and they aren't saying what other chemicals might be stored in the area.....

pods's picture

Yep, the NaCN is a lasting problem but not what went boom.

If this was a sneaky subsidiary of a big chem manufacturer, there was probably bulk chems stored there as well.  

And if they had 700T of NaCN, there was probably ungodly amounts of actual explosive materials.  The fact this blew like it did, several times leads me to think it was some type of sealed, bulk container that went up.  

An unbelievable blast though.  Leaves you speechless.

pods

tenpanhandle's picture

Heads are gonna roll.  That container wasn't suppose to blow until it reached Long Beach.

Montani Semper Liberi's picture

For a fascinating inside look at the nearly non-existent Chinese environmental regulations and the corrupt bureaucracy behind them, take a look at the excellent, award winning documentary 'Chai Jing's review: Under the Dome'.

 The film was banned by the Chicoms, but not before getting millions of hits on the mainland. I hope Chai Jing has managed to stay out of prison.

 https://www.youtube.com/watch?v=T6X2uwlQGQM

The Blank Stare's picture

I second that! Thanks. Banned in China, no surprise there. This is even more maddening since I was up in the hills camping last weekend away from the city lights checking out our wonderful universe. Saw 5 shooting stars, and the little girl says she's never even SEEN a star before. Reminds me of 2112.