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To: LoneClone who wrote (31389)	1/19/2009 8:40:41 PM
From: LoneClone	Read Replies (1) \| Respond to of 196200

China to Buy Copper Overseas for Reserves, Wang Says (Update2) bloomberg.com By Helen Yuan Jan. 19 (Bloomberg) -- China, the world's biggest copper consumer, will buy the metal overseas to boost state stockpiles, said an executive at Jiangxi Copper Co., the country's second- largest smelter. ``China will buy copper for its reserves,'' said Wang Chiwei, executive director and vice president, at a conference in Shanghai today. Purchases would ``suit national interests. The question is when and how to buy it.'' Copper has tumbled by more than half from a record $8,940 a metric ton in July as a spreading global recession slashed demand for raw materials. The State Reserve Bureau is buying zinc and aluminum from local smelters to support the industry as the economy probably expands at the slowest pace in seven years. ``Should China buy at this price? The question can be translated into whether prices will extend declines,'' said Sabrina Xie, a Shenzhen-based analyst at Guotai Junan Securities Co. ``Copper prices are stronger than other metals, but if demand gets worse, they may decline,'' she said. Prices are ``attractive,'' said Jiangxi's Wang. The bureau would adopt a ``flexible'' approach and the purchases wouldn't be made all at once, he said. China is ``unlikely'' to buy copper from local smelters, Wang said. The country had discarded a plan to buy the metal to support producers because they were profitable and inventories weren't high, government and company officials said this month. Price Forecast Copper prices may average $4,000 to $4,400 a ton in 2009, down from around $6,500 in 2008, Wang said. State buying by China would not affect global prices, he said. The metal advanced as much as 3.6 percent to $3,475 a ton on the London Metal Exchange today and traded at $3,435 at 2:46 p.m. in Singapore, extending the 2.3 percent increase Jan. 16. China, the world's biggest producer of aluminum and zinc, will buy 59,000 tons of zinc from domestic smelters, two company executives said last week. The country also plans to buy 290,000 tons of aluminum by the end of January. China is spending 4 trillion yuan on a stimulus package, building infrastructure including roads and airports, to help the economy. The bureau may increase stockpiles of copper by as much as 74 percent in the next two years, Scotia Capital Inc. said in October. Analyst Na Liu said then the bureau may hold 1.15 million tons and may re-stock to a level above 2 million tons over the next two years. Purchases in 2007 The agency probably purchased as much as 250,000 tons of copper in 2007 after releasing a net 450,000 tons from the third quarter of 2005 to the end of 2006 to meet sales commitments and cool the market, David Thurtell, analyst at Citigroup Global Markets Ltd., said a year ago when he was with BNP Paribas. The SRB had losing trading positions totaling as much as 130,000 metric tons of copper in 2005 because a government trader bet the wrong way, traders said at the time. The agency settled some bets in cash and metal and rescheduled others for delivery in 2006, they said. The bureau declined to comment when contacted by phone today. To contact the reporter for this story: Helen Yuan in Shanghai at hyuan@bloomberg.net Last Updated: January 19, 2009 02:02 EST