China To Auction Another 20,000 Tonnes Of Copper Next Week

ECONOPLEX

A copper smelter in Shenyang.

Beijing (AFP) Nov 23, 2005
China will auction another 20,000 tonnes of its copper reserves next week, the government said Wednesday, amid market speculation that the sell-off is aimed at limiting the damage from speculative trade deals.

The November 30 auction, announced by the National Development and Reform Commission in a statement on its website, will be China's third in as many weeks and follows one earlier Wednesday.

China, which says it has 1.3 million tonnes of copper stockpiled, has reportedly been attempting to cool the price of copper after speculative deals by a government-linked trader went wrong.

The short positions, reported to total about 200,000 tonnes, were piled up amid expectations that the copper price would fall, but instead they rose steeply and left China with a major problem.

The trader, Liu Qibing, has disappeared from public view, with local media reporting he has been taken into police custody.

Copper prices, which have soared this year, hit a record high last week after markets seized on reports that Liu, a trader working on behalf of China's State Reserve Bureau (SRB), went missing after his bets on copper trades went sour.

The SRB managed to sell only part of a 20,000-tonne batch of copper in Wednesday's auction because the floor price was set too high and the quality of the copper was poor, a trader said.

"The SRB only sold about 11,000 to 13,000 tonnes of copper," said the Beijing-based trader, who did not wish to be named.

"We had expected the SRB to set the floor price 500 yuan (61 dollars) lower than the 37,500 yuan-per-tonne floor price they actually set," the trader said.

The trader said most of the copper was sold at 37,500-37,600 yuan per tonne, near the lower end of the auction price range. Copper imported from Chile was sold at 38,500 yuan per tonne.

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ECONOPLEX

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