Copper prices stun even the market's first rogue trader
Yasuo Hamanaka, released from prison in July after serving seven years for hiding US$2.6 billion (HK$20.28 billion) in copper trading losses, is "amazed" at today's record prices for the metal.
Wednesday, December 07, 2005
Yasuo Hamanaka, released from prison in July after serving seven years for hiding US$2.6 billion (HK$20.28 billion) in copper trading losses, is "amazed" at today's record prices for the metal.
Hamanaka, 57, dubbed "Mr Copper" and "Mr Five Percent" because he once bought as much as 5 percent of all the copper traded in the world each year, said he expects to start working again in April.
"I'll decide where to work in a couple of months," he said in an interview outside a two-story house where he lives with his family in Kawasaki, near Tokyo. "I'm looking at various options," he said, declining to comment on whether he would go back to copper trading.
Hamanaka, Sumitomo Corp's former chief copper trader, was sentenced to eight years in prison in 1998 after pleading guilty to hiding the losses, which were the biggest ever blamed on a single trader. Sumitomo said it was unaware of the trades.
Since Hamanaka's release, oil and copper prices have soared to records and metals from aluminum to gold have risen to their highest in more than 10 years, sparking competition for commodities traders and increased bonuses.
Japanese commodity exchange regulations have no rules stopping someone who has been in jail from trading, unless he or she was a company director, according to a spokesman for the Tokyo Commodity Exchange. Hamanaka was not a director of Sumitomo Corp.
Copper prices have risen 39 percent this year as demand for the metal used in power cables and plumbing outpaced supply. Metal for three-month delivery reached a record US$4,435 a tonne on the London Metal Exchange Friday - more than double the US$1,943 at the end of June 1996, when Hamanaka was fired.
The metal was little changed at US$4,390 a tonne in late Asian trading Tuesday from US$4,392 Monday.
Speculation China's stockpiling agency, the State Reserve Bureau, has to buy as much as 130,000 tonnes of copper in the world market to deliver against contracts agreed by trader Liu Qibing also pushed up prices.
Liu made losing bets this year by selling copper he didn't own in the belief prices would fall, the China Daily said last month. Prices rose to records. The government says Liu alone was responsible for the trades.
The agency is now selling copper on the domestic market to damp prices and raise funds to help it settle the wrong- way bets, say traders such as Li Ling from Shenzhen Star Futures in Shanghai. China may lose as much as US$300 million from the trades, according to Wang Zheng of Shanghai Dalu Futures.
Liu has been under house arrest since mid-October, the Economic Observer, a state-owned newspaper based in the eastern province of Shandong, reported last month, without citing anyone. He hasn't responded to e-mails and his mobile phone is off.
Where Liu was short of copper, Hamanaka was long, amassing more than 500,000 tonnes of the metal, according to trade estimates at the time.
"Mr Liu seems to be a mirror image of Mr Hamanaka," wrote Francesca Edwards, a consultant at London's Lombard Street Research. "Same metal, reverse positions."
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