[Cu] Market Rumors over SRB Selling Copper

SHANGHAI, Apr. 23 (CBI China) -- According to CBI sources, there has been market talk over China’s State Reserve Bureau (SRB) selling copper in the future. CBI contacted with some market players concerning the rumor, revealing mixed views towards the talk.

    One market player, disclosing that SRB will sell a specific volume of copper in spot markets believed SRB would not purchase copper at low prices as recent copper prices soared. As copper prices of nearby contract are higher than forward contracts, SRB will likely sell nearby contracts or move a given quantity of copper in spot markets, and buy forward contracts, so as to make national reserves smoothly.  
 
    Another insider told CBI that SRB has allowed producers with reserve commitment to contribute the national copper stocks at a later time. The move will postpone the pace of copper inflows to SRB, and in turn increase market supply. 

    CBI believes copper supply surplus will not appear in the short term, as supply in domestic copper markets has been tight since March. Rumors report that SRB will sell about 20-50kt of copper in the near future. If SRB does not sell the rumored quantity of copper at a concentrated time, its impact on domestic markets will be limited. It is too early to predict that copper prices will track lower, but SRB’s possible move will cause copper prices to face downward pressures and fluctuate more widely in the short term, given a wait-and-see attitude emerged in the market from the surging copper prices in April, and relatively weak copper consumption in Mar and June, as well as large influxes of imports. 

    Additionally, CBI believes particular attention should be paid on whether the Central Government will implement new monetary policies concerning the surging capital liquidity, actual consumption in China, as well as global economic trends. All of those factors will affect copper prices in the real sense.

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