-->China May Default on Copper Contracts
Amid Shortage, Lawyer Says

By Matthew Craze
Bloomberg News Service
Friday, November 18, 2005

http://quote.bloomberg.com/apps/news?
pid=10000006&sid=a06N6xBoYZ.Q&refer=home

LONDON -- China may default on money-losing copper trades because
the country doesn't have enough of the metal to make good on
delivery commitments next month, said Mark Topfer, the former No. 2
lawyer at the London Metal Exchange.

China's obligations for copper deliveries into exchange-approved
warehouses are"infinitely higher than the stock that exists," said
Topfer, a senior associate director at law firm Norton Rose in
London. He was the exchange's deputy general counsel until last year
and advises LME brokers and customers.

As much as 200,000 metric tons of copper must be delivered because
of positions amassed by Liu Qibing, a trader for an affiliate of the
National Development and Reform Commission, the top planning agency,
the state-run China Daily said Nov. 17, citing an unidentified
official. There are only about 140,000 tons of copper in global
warehouses, Topfer said.

Liu hasn't been at work since last month, two people at companies
that traded with him told Bloomberg Nov. 15, declining to be
identified. He didn't answer e-mails or calls to his mobile and
landline phones that day. A foreign media report that Liu is working
for the State Reserve Bureau is fabricated, the China Daily said,
citing the official.

"They are denying that this person exists," said Topfer, who works
in Norton Rose's financial markets division."That seems to send the
message that they're not delivering" on their commitments, he said
in a telephone interview yesterday.