Quote from Arbitrageur:
* * * * Talk the market down so that it actually goes up and you can spank it at the higher price.
Latest press (see bolded paragraphs):
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Chinaâs State Reserves Bureau was again the centre of attention in the copper market on Monday, with traders saying that the Chinese government-owned authority might have extended its copper trading position until the end of 2007. They added that there was talk the SRB had started delivering copper into London Metal Exchange registered warehouses.
The bureau is reported to be obliged to deliver 100,000-200,000 tonnes by December 21 and might have been responsible for a delivery of up to 3,000 tonnes into warehouses in the South Korean port city of Busan. This delivery resulted in a net increase of 2,525 tonnes into copper metal stockpiles on the LME on Monday.
âThere is talk that this delivery into Busan is part of a 20,000 tonne copper consignment to be delivered by the SRB over the next few weeks,â said Robin Bahr, base metals analyst at UBS.
Last week, the SRB sold 20,000 tonnes of copper in an auction and plans another 20,000 tonne auction this week. It has delivered about 50,000 tonnes of copper into warehouses with the Shanghai Futures Exchange in recent months.
Mr Bahr said the price gap between the cash copper price and prices for copper for delivery in December 2006 had widened from a $300 a tonne discount to more than $600 below the prevailing cash price over the past week.
Traders said a deeper discount suggested that prices had been pushed lower because more traders were selling copper for December 2006, buying in the short term so that their position was fully hedged.
They said that the same was repeated for December 2007 when the price discount to the prevailing cash prices doubled to $1,000 a tonne.
âWhen you look at price movements like that, it would indicate that someone is buying copper in the near term and selling it in the future, and the rumour is that SRB is behind this trade,â said Mr Bahr.
The benchmark three-month copper price hit an intraday high of $4,240 a tonne, just $2 below its record peak reached on Friday, before easing to $4,209 in late London trade. Copper cash prices were last trading at $4,381, down $24 from the high touched on Friday.
Barclays Capital said that Chinese copper imports fell sharply in October, with net imports probably not more than 65,000 tonnes. âChinese market participants are hoping for a pick-up in SRB stock releases instead of importing copper from the expensive international market,â Barclays said.
