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Mix-Ansicht- World Copper Stocks To Fall Despite China Deliveries - off-shore-trader, 31.10.2003, 16:13
World Copper Stocks To Fall Despite China Deliveries
-->ODJ FOCUS: World Copper Stocks To Fall Despite China Deliveries
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Fri Oct 31 10:03:14 2003 EST
(Repeating story)
-- China's State Reserves Bureau Believed To Be Behind Shanghai Stock Rises
-- Stocks May Not Reach Consumers; China's Demand Robust
By Chanyaporn Chanjaroen
London, Oct. 31 (OsterDowJones) - Rising copper stocks reported at the
Shanghai Futures Exchange may slow the fall of total metals exchange stocks
at most, but wouldn't reverse the downward trend, analysts said Friday.
First, China's appetite for copper is strong enough to absorb higher
supply, and second, the increased copper stocks in Shanghai may not eventually
reach consumers, they said.
"The stocks may not be released to consumers as the State Reserves Bureau
could have been selling and then buying back," analyst Marc Bonter of CRU
International said.
Strong arbitrage-related buying on the London Metal Exchange from China in
the past two weeks could come from the agency, as it buys LME copper after
selling Shanghai futures, the analyst said.
Bonter also noted strong demand for copper in China, estimated at a rise
of 21% in the first nine months 2003, which is high enough to absorb higher
supplies in the market.
Friday, the Shanghai Futures Exchange reported that total deliverable
copper stocks rose 25,355 tons in the week to 116,240 tons.
This brought total copper stocks at the three copper futures exchanges
including the London Metal Exchange and Comex to 929,985 tons as of Friday
morning.
The increase in Shanghai is said to be only the first chunk of the latest
copper stocks released by China's State Reserves Bureau, or SRB, since last
week.
The bureau, which functions along the same lines as the U.S. Defense
Logistics Agency, or DLA, stockpiles strategic raw materials such as copper
and rubber in case of a shortage within the country.
Unlike the DLA, the Chinese agency hardly makes public its activities.
Analysts estimate the state agency has delivered 80,000 to 100,000 tons to
the Shanghai exchange since last week, which means the amount of stocks
reported at Shanghai warehouses will continue to grow.
The last time the agency sold its stocks was in late September, when about
10,000 tons of copper was believed to arrive in Shanghai.
After the recent releases, the SRB has at least 250,000 tons of copper
stocks left, CRU International's Bonter said. Some market sources mentioned
280,000 tons.
"The chart shows that when there is an upside in the market, the SRB
releases its stocks to stabilize prices," analyst Ingrid Sternby of Barclays
Capital said.
Sternby said the releases by the Chinese agency can slow down the global
stock falls.
This year, total exchange copper stocks have been falling at a monthly
average of 40,000 a metric tons and are likely to hit the key 800,000-ton mark
early next year, if the current trend persists, analysts and industry players
said.
The world's largest copper producer, Corporacion Nacional del Cobre de
Chile, or Codelco, said earlier it would release 200,000 tons of its stockpile
in the world market once the total copper exchange stocks are as low as
800,000 tons.
"Should the global drawdown in exchange stocks of copper begin to slow as
result of the deliveries (by the SRB) then it could have implications for
Codelco's plans," Sternby said.
Even if Codelco releases its stocks, rising demand should be enough to
absorb Codelco's stockpile and also be enough to see exchange stocks fall as
well, though the rate will be slower than this year," CRU's Bonter said.
Major copper producer Phelps Dodge Corp this week expects global copper
consumption to grow by 4.5%-5% in 2004, assuming robust demand from China.
---
Chanyaporn Chanjaroen, OsterDowJones, +44 20 7979 5748
cchanjaroen@osterdowjones.com
Copyright 2003 OsterDowJones Commodity News (ODJ). All rights reserved.
(END) Dow Jones Newswires
10-31-03 1003ET
10:03 103103
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