Copper purchase may be delayed

CHINA'S State Reserve Bureau may postpone plans to buy copper from overseas on speculation a global recession may push prices even lower, according to two traders, who requested anonymity.

The bureau won't buy copper before next year, said the traders, who had spoken to officials from the agency. The bureau discussed its intention to boost stockpiles with the country's biggest smelters and traders before the national holiday in the first week of October, they said.

Copper has plunged 55 percent from a record of US$8,940 a ton in July, increasing speculation China, the world's largest copper consumer, may buy the metal to replenish inventories. The price has slumped 37 percent last month alone and is poised for its worst decline since at least 1986.

The situation now and over the next few years presents "a fantastic opportunity" for China to buy distressed assets and raw materials, Jeremy Goldwyn, who oversees business development in Asia-Pacific for London-based Sucden (UK) Ltd, said in an interview at a conference in Shanghai, according to Bloomberg News yesterday.

Firms submit bids

Some companies approached by the bureau submitted bids to act as agents for the buying, said one of the traders who participated in the process. The agency considered buying around 300,000 metric tons at that time as it bought at similar price levels in 2007, the trader said.

An official from the state-controlled SRB, which holds stockpiles of commodities such as grains and metals to regulate supply, declined to comment when reached by phone.

The agency probably purchased as much as 250,000 tons of copper in 2007 after releasing a net 450,000 tons from the third quarter of 2005 to the end of 2006 to meet sales commitments and cool the market, David Thurtell, analyst at Citigroup Global Markets Ltd, said in January when he was with BNP Paribas.

The bureau may increase stockpiles of copper by as much as 74 percent in the next two years after prices plunged, Scotia Capital Inc said on October 15.

Na Liu, an analyst with Scotia Capital, said then the bureau may hold 1.15 million tons and may re-stock to a level above 2 million tons over the next two years.