China's Copper Stocks May be 30% Above Official Figure

BEIJING, July 7 -- China may have stockpiled as much as 400000 tons of copper in the first half as a result of sizable imports and a seasonal slowdown in demand from the domestic market, Macquarie Group said yesterday.

    Refined copper stockpiles of 300000 to 400000 tons had been built in the first half and the build-up "has been particularly sharp over the past month" as demand slowed, Macquarie analysts led by Jim Lennon said .

    That was up to 29% of China's refined imports in the first five months, the report showed. A government official was quoted as saying last month that China has bought 235000 tons of copper for reserves.

    Imports for the next two months might slow after rising shipments to China lifted prices and closed the gap between London and Shanghai rates, making it unprofitable to bring in material, the Macquarie analysts said.

    Trading companies contracted to take delivery of copper on behalf of the state reserves bureau were instructed to sell it back into the market at a profit as prices rose, Lennon said.

    If the London Metal Exchange price fell, China would buy more, he said.

    (Source: Bloomberg)