"We are talking to brokers but is it different from what we normally do? No," LME chief executive Simon Heale told reporters on the sidelines of a copper conference in Shanghai.

Heale denied there had been any contact between the LME and the Chinese government amid mounting speculation that Beijing is desperately trying to stem losses from bad trades that could costs hundreds of millions of dollars.

"We would have no reason to talk to (the Chinese)," said Heale, adding that he did not believe potential trades conducted between China and brokerages on the LME had been illegal.

Heale refused to confirm if China was behind short positions that have helped push copper prices to record highs.

"It is not appropriate for the LME at any time to comment on who is using the market," Heale said.

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

Most traders believe that Liu's short position -- the selling of copper he did not have in the hope of buying it back more cheaply in the future -- ranges between 100,000 to 200,000 tonnes although some Chinese dealers have put the figure at 600,000 tonnes.

With Liu's whereabouts still unknown, how Chinese authorities will handle what increasingly looks like a major trading scandal was the subject of heated discussions between traders and analysts attending China's Second Copper Conference.

"This is probably only the tip of the iceberg, I can smell it all the way in Chile," said Carlos Rodriguez of International Cosultants, a commodities outfit based in Santiago.

A report in the Beijing-based Economic Observer on Monday claimed that Liu had been taken into police custody, but Chinese authorities have remaind mum and even denied knowing Liu.

"Really China should come out and make its position clear," said Michael Overlander, chief executive of commodities trading firm Sucden.

China, the world's largest consumer of copper, has in recent weeks tried to cool the price by drawing down some of its stocks, adding to speculation that the SRB is trying to minimise trading losses.

The SRB, which is charge of China's metals supply, is set to auction another 20,000 tonnes of copper Wednesday, after a similar unprecented sale last week. The usually secretive organisation also recently claimed that it had 1.3 million tonnes of copper in reserve, heightening market suspicions.

Although Chinese dealers said they believe the SRB is stockpiling copper to help offset the impact, doubts remains whether China can make good on its contractual obligations due on December 21.

During the last few weeks, there has been a steady stream of deliveries to the SRB's warehouses in Shanghai, said Zhen Quan, analyst with Shanghai-based Lianhao Futures Brokerage.

Market talk has also centred on whether Liu was authorised to build up such huge trading positions or whether the experienced trader was acting on his own.

"Nobody knows what is going. He definitely was not doing business for himself because who would be able to get such a huge credit line to carry out such trades on an individual basis," said Zhang Tianjiao, an official with state operated firm Minmentals.

The SRB was established in the 1950s to ensure a stable supply of commodities on the mainland for economic development. It is not subject to the usual checks and balance of China's financial regulatory bodies.

All rights reserved. � 2004 Agence France-Presse. Sections of the information displayed on this page (dispatches, photographs, logos) are protected by intellectual property rights owned by Agence France-Presse. As a consequence, you may not copy, reproduce, modify, transmit, publish, display or in any way commercially exploit any of the content of this section without the prior written consent of Agence France-Presse.

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