China's State Reserves Bureau has released more copper from its stockpile to the Chinese market, dampening demand for imported metal from the world's biggest copper consumer.
The state body, responsible for managing China's copper stocks, had released about 25,000 tonnes of copper in the eastern port city of Ningbo on Monday, market sources said on Wednesday. The latest release is the bureau's second in the past month. It sold 37,400 tonnes in Shanghai to five Chinese trading and fabricating firms in early June.
The copper sold in Ningbo and Shanghai was stock. Old copper cannot be delivered in settlement of futures contracts or exported. "One firm took more than 10,000 tonnes," a trader for a Chinese producer said of the Ningbo sales.
Sources expect the bureau to sell more copper in the near future. One source said it had 40,000 tonnes in a warehouse in Shanghai.
The bureau has sold 156,561 tonnes of copper since November, including 37,000 tonnes in December to January in the futures market, 51,161 tonnes in November to December through four public auctions and 6,000 tonnes in March to one Chinese trading firm.
Market sources believe the bureau had also bought 23,000 tonnes of copper from the market in March. The bureau said in November when it held its first ever auction that it wanted to sell copper because the price was too high.
Speculation has persisted in linking the sales to the bureau's overseas short position. "The latest sales are more likely to have been swaps for good copper," a manager for one futures house said.
The bureau is believed to have had a short position in the underlying futures market of more than 300,000 tonnes but had reduced this to about 180,000 tonnes in December, market sources have said.
The rumoured short position helped support world copper prices, which reached an all-time high of $8,800 in May. The price was $7,410 a tonne at 0530 GMT on Wednesday. The bureau might have delivered as much as 146,000 tonnes to cover that position between October last year and April this year, according to market sources' separate estimates. It is believed by market sources to have used its old stocks to swap with Chinese merchants' imported copper for part of that delivery.