Sufficient, Say Analysts

China could be sitting on ample copper supplies to get it through the next few months, wiping out the need to buy on the world market whether current high prices fall or not, traders and analysts said yesterday.

Copper stored in Shanghai warehouses could be around 100,000 tonnes if talk is to be believed, a Chinese trader with a Beijing-run firm in Singapore said.

Shanghai Metal Exchange (SME) warehouse figures released last week put copper stocks at 16,772 tonnes, which a SME copper futures trader told Reuters was about two months supply.

Another Chinese trading source said he had confirmed with sources at the Chinese State Reserve Bureau that Shanghai warehouses held 80,000 tonnes of central reserve copper.

The market has been plagued in the past year by talk of 100,000 tonnes of copper being held in Shanghai. Officials have consistently denied any knowledge of such a stockpile.

That copper and another 200,000 tonnes were reported to have been channeled into China after last years revelations by Japans Sumitomo Corp of $2.6 billion in copper trading losses, which led to significant price falls. (Reuter)

Many market and industry sources said at the time that the copper, moved out of bonded warehouses and through customs in October and November 1996, was bought by Beijings metals trading arm China National Non-ferrous Metals Import/Export Corp, possibly in conjunction with Sumitomo.

Neither corporation has made an official comment. Analysts with private think tank Shanghai Colub Consultant Co have said Chinas carryover copper stocks from 1996 imports could be as high as 250,000 tonnes. The official China Daily Business Weekly said last Sunday that China amassed a stockpile in 1996 of 170,000 tonnes of copper which would be used to fill the domestic supply/demand gap in 1997.

It put 1997 imports at more than 130,000 tonnes, for demand of 1.2 million tonnes and production of about 900,000 tonnes. Imports in 1996 of raw and uncast copper were up 32.7 per cent to 714,248 tonnes, according to official figures. Exports were 133,700 tonnes, leaving net imports at 580,600 tonnes, the figures show. Im convinced they have enough (copper), a trader with a major European firm said.

Everyone has been waiting since Chinese New Year for this huge Chinese buying spree... it is possible there are tens of thousands of tonnes of copper there, he said.

Whether or not the red metal is moving into tight supply in China