Rio Puts China Copper Short At 380,000 Trillion - Macquarie
12-06-05 07:04 PM EST
SYDNEY -(Dow Jones)- China has delivered an estimated 140,000 metric tons of copper into short positions, with a further 240,000 tons yet to be unwound, analysts reported Rio Tinto PLC (RTP) as saying in a closed briefing in Sydney Tuesday.
The Anglo Australian resources group was immediately unavailable to confirm the estimates when contacted by Dow Jones Newswires.
The estimated total of 380,000 tons far exceeds trader estimates of between 100,000 tons and 200,000 tons apparently built up by China's State Reserve Bureau on the London Metal Exchange, much of which for Dec. 21 delivery.
Macquarie Research analysts quoted Rio Tinto copper chief Tom Albanese as saying developments from China over the next two weeks will be pivotal to the eventual spike in the copper price.
Macquarie and other analysts report the extent of Chinese strategic copper reserves has so far surprised Rio Tinto, much of which is apparently of Soviet and Kazakh origin and has been stockpiled since the early 1990s.
"The next two weeks are critical, however, we would advise caution regarding any data coming out of China due to the sensitivity of the matter," said Credit Suisse first Boston analysts in a report Wednesday.
Many market participants are skeptical of China's near-term copper statistics on the belief officials are talking down prices to reduce losses on the short position prior to the reported Dec. 21 settlement date.
According to Merrill Lynch, Rio Tinto believes China's copper stockpile is larger than the mooted 200,000 tons to 300,000 tons level although probably below the 1.3 million tons reported elsewhere.
Copper stocks at the LME's warehouse in Busan, South Korea, have risen 114% over the last month amid speculation China is delivering on at least some of the LME short positions reportedly incurred by trader Liu Qibing, who has since disappeared.
Macquarie analyst Sam Catalano said Rio's 380,000-ton China short estimate isn't surprising: "There are a lot of positions to cover at the moment (and) everyone's taking a guess; certainly it's a large position that needs to be covered."
Meanwhile, cautious global copper markets will be keeping a close watch on another auction of 20,000 tons of copper Wednesday by Chinese authorities.
Wednesday's auction is the fourth in as many weeks, part of a bid by the Chinese government to alleviate a domestic shortage of copper.
The latest auction will put both imported metal from Australia and Poland and some domestically produced metal under the hammer.
-By James Attwood, Dow Jones Newswires; 612-8235-2957; james.attwood@ dowjones.com
(END) Dow Jones Newswires
12-06-051904ET
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