Hi DJ, but of course even deflation can be used to advantage by those who can ... to buy cheap, so as to sell dear later, or to balance trade surplus. Zambia (shuck, not Zimbabwe) is mentioned at the end:0)
archive.scmp.com
Sunday July 21 2002
China adds to copper stockpile
Mark O'Neill in Beijing
China has been stockpiling copper as a strategic reserve since January, taking advantage of world prices at nine-year lows, and as a way to reduce its large, trade surplus, according to an official newspaper.
The Business Post said that in the first five months of the year China had imported 450,000 tonnes of copper concentrate, double the amount for the same period last year, including 87,500 tonnes in May, up 135 per cent on May last year. In June and July, it will be 112,500 tonnes.
The stockpiling has been arranged by the State Materials Reserve Bureau which has put a substantial part of the imports into warehouses and kept them off the domestic market, so as not to drive down prices.
A bureau official said that in the present global climate it was not enough to only hold currency, bonds and gold reserves, and other kinds were needed. At the end of June, China's foreign-exchange reserves reached a record US$242.76 billion, an increase of US$30.6 billion over the end of last year.
The official said China was and would remain a long-term importer of copper, because its domestic output could not meet demand, which would continue to rise because of growing industrial output.
'Copper is a strategic material. This does not mean that China is preparing for war. But our economy is growing at a rapid pace and our demand for copper is growing. Domestic producers cannot meet demand and we are reliant on imports,' he said.
Another reason for the high level of imports is to reduce China's trade surplus, which reached US$10.43 billion in the first five months of the year, causing dissatisfaction among many trading partners.
'To calm this kind of discontent, China should import a substantial amount of product, to bring down the surplus,' the official said.
'These must be products that are essential for us and copper falls into this category.'
China is also taking advantage of low world prices as a result of a slowdown in world economic growth accelerated by the terrorist attacks in the United States on September 11 last year.
It has been buying copper this year at about US$1,600 a tonne, the lowest world price since 1993.
As it has done with oil, China has been seeking to buy copper mines abroad, to reduce its dependency on imports, and has taken a stake in a large mine in Zambia. |
