China digs into copper reserves to fight rising prices - sources - Metals Place, Nov 03, 2005 22:24
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China digs into copper reserves to fight rising prices – sources
Source: Interfax
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Copper Board
Copper CatalogChina will dump government copper reserves onto the domestic and overseas markets to help hold down rising prices at home, sources told Interfax today.
An anonymous official, who attended a meeting last month in Beijing between government and industrial officials, told Interfax that during the meeting it was announced that the State Reserve Bureau of China (SRB) had decided to sell as much as 80,000 tons of copper to ease a domestic shortage.
"The senior official said the skyrocketing copper prices had damaged the healthy development of the Chinese industry," the source said.
China's power industry has ingested larges amounts of copper in recent years in step with the rapid growth of the industry, which has contributed to rising domestic and overseas prices.
Xinhua news agency, the state-run media, confirmed SRB's proposal Thursday but did not disclose details. SRB stockpiles and trades are considered state secrets in China.
The SRB has already set up the market for the upcoming flood of copper.
"The SRB has cleared the position in copper futures on November and December delivery through its traders on the Shanghai Futures Exchange (SHFE)," a futures trader at Yong'an Futures Co. Ltd., who asked to remain anonymous, told Interfax. "As far as I know, the SRB may sell 30,000 tons of copper in China and 50,000 tons overseas."
The trader said bulls are already clearing their position on the market with hopes that the SRB would possibly sell its stockpile to pull down the continuous rising prices. He also said the SRB has delivered as much as 20,000 tons of copper to warehouses in Shanghai and would transport another batch of around 10,000 tons this week.
According to the figures from the SHFE, copper stockpiles rose by 14,485 tons to 47,350 tons on October 29.
A director at Minmetals, China's largest metals and minerals importer and exporter, who also asked to remain anonymous, told Interfax the SRB delivered 90,000 tons of copper to Minmetals last Friday, which could mean that the company would release part of the government's reserves overseas.
In order to drop the domestic price, China would most likely have to influence the overseas market, such as the London Metals Exchange (LME).
The copper futures for delivery in November ended at RMB 37,440 (USD 4,639) per ton on November 3, up RMB 50 (USD 6.2) from the previous trading day, while the copper for next January delivery, the heaviest contract, increased by RMB 10 (USD 1.2), to RMB 36,660 (USD 4,543) at Thursday's close.
The price of copper for immediate delivery on the Shanghai Changjiang Market rose as much as RMB 25 (USD 3.10) to RMB 38,250 (USD 4,740), while the cash price of copper imported from Chile, the world's largest producer, climbed by RMB 50 (USD 6.2), to 38,250 (USD 4,750) today. |
