No Strong Reason for Copper Stockpiling, China Copper Imports Rose on Arbitrage Opportunities-Shanghai Metals Market

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No Strong Reason for Copper Stockpiling, China Copper Imports Rose on Arbitrage Opportunities

SMM Insight 05:46:19PM Jun 08, 2013 Source:SMM
SHANGHAI, Jun. 8 (SMM) – Here are major events in copper markets in the past week:
 
SRB May Seek to Buy Base Metals at Low Prices
The State Reserve Bureau (SRB) has reportedly purchased base metals in global markets during the price plunges lately. This was the first time the SRB took such action since the global financial crisis. 
 
Sources disclosed that the SRB bought some 30,000 mt of nickel, which equals one sixth of LME nickel inventories. Besides, other sources also reported that the SRB planned to purchase 200,000-300,000 mt of copper. 
 
Goldman Sachs: No Reason for Copper Stockpiling
Goldman Sachs believes the SRB has no strong reason to purchase and stockpile copper as copper prices are bound to fall next year given the excess supply in global market. Analyst of Goldman Sachs said rumors about the copper purchase by the SRB may help bolster prices, but the window for price hike is narrowing. 
 
China Copper Imports Rose on Arbitrage Opportunities
China’s copper imports increased during the past week with banks issuing more loans and more arbitrage opportunities were allowed. 
 
Domestic copper importers reported difficulty in obtaining loans since middle May as banks tightened lending to importers and waited for introduction of detailed rules to control speculation on currencies. But importers were able to get loans from banks after the detailed regulation rules were rolled out. 
 
Banks still preferred L/C in RMB than L/C in USD, but some banks also issued three to nine-month L/C in USD. 
 
A large trader said copper foreign traders were unaffected by the new regulation rules, combined with more arbitrage opportunities for copper imports, China’s demand for imported copper was lifted.  
 
Apparent Demand for Copper Doubted 
International Copper Study Group (ICSG) reported shortage in global copper market last year, which is agreed by most analysts and confirmed by China’s strong copper demand. 
 
However, the ICSG announced last month that some copper inventories in China were not reported last year, raising doubts about the strong copper demand in 2012. ICSG reported that the unreleased inventory growth totaling some 600,000 mt will largely influence the result of supply and demand balance for 2012 calculated by ICSG, turning the supply shortage to surplus.
 

No Strong Reason for Copper Stockpiling, China Copper Imports Rose on Arbitrage Opportunities

SMM Insight 05:46:19PM Jun 08, 2013 Source:SMM
SHANGHAI, Jun. 8 (SMM) – Here are major events in copper markets in the past week:
 
SRB May Seek to Buy Base Metals at Low Prices
The State Reserve Bureau (SRB) has reportedly purchased base metals in global markets during the price plunges lately. This was the first time the SRB took such action since the global financial crisis. 
 
Sources disclosed that the SRB bought some 30,000 mt of nickel, which equals one sixth of LME nickel inventories. Besides, other sources also reported that the SRB planned to purchase 200,000-300,000 mt of copper. 
 
Goldman Sachs: No Reason for Copper Stockpiling
Goldman Sachs believes the SRB has no strong reason to purchase and stockpile copper as copper prices are bound to fall next year given the excess supply in global market. Analyst of Goldman Sachs said rumors about the copper purchase by the SRB may help bolster prices, but the window for price hike is narrowing. 
 
China Copper Imports Rose on Arbitrage Opportunities
China’s copper imports increased during the past week with banks issuing more loans and more arbitrage opportunities were allowed. 
 
Domestic copper importers reported difficulty in obtaining loans since middle May as banks tightened lending to importers and waited for introduction of detailed rules to control speculation on currencies. But importers were able to get loans from banks after the detailed regulation rules were rolled out. 
 
Banks still preferred L/C in RMB than L/C in USD, but some banks also issued three to nine-month L/C in USD. 
 
A large trader said copper foreign traders were unaffected by the new regulation rules, combined with more arbitrage opportunities for copper imports, China’s demand for imported copper was lifted.  
 
Apparent Demand for Copper Doubted 
International Copper Study Group (ICSG) reported shortage in global copper market last year, which is agreed by most analysts and confirmed by China’s strong copper demand. 
 
However, the ICSG announced last month that some copper inventories in China were not reported last year, raising doubts about the strong copper demand in 2012. ICSG reported that the unreleased inventory growth totaling some 600,000 mt will largely influence the result of supply and demand balance for 2012 calculated by ICSG, turning the supply shortage to surplus.