China Reveals Its Copper Stockpile

TBI ^ | 10-13-2011 | Linette Lopez

[blam]

China Reveals Its Copper Stockpile

Linette Lopez
Oct. 13, 2011, 12:54 PM

According to the FT, China's Non-Ferrous Metals Industry Association has announced that the country's copper inventories were at about 1.9 million tons at the end of last year.

That's more that the U.S. consumes in a year.

Estimates by the International Copper Study Group had the number 1.0 to 1.5 million tons higher.

Here's why it matters:

The fact that the amount China is carrying in its reserves means that their demand for copper may be less than we thought. And Chinese demand is so significant, that if can seriously effect price.

For example, in 2009 China started buying up copper like crazy, and now the country accounts for 40% of copper demand. That is what triggered copper's price rally from its low-point during the financial crises, to its new record high prices today ($10,000 a ton).

One more thing to keep in mind: some analysts think that China may be exaggerating the amount of copper it has to push prices down.

[blam]

[Jonty30]

China may be exaggerating a wee bit, but they have been stealing copper everywhere they could, so not necessarily.

If China dumped it’s surplus copper, how much would it drive the price down, because they could be contemplating doing that to pay down its debt.

[blam]

"If China dumped it’s surplus copper, how much would it drive the price down, because they could be contemplating doing that to pay down its debt. "

I don't think they'll sell the copper.

[Jonty30]

They might choose to sell it at the high price and buy it at the low, if they are able to sufficiently affect the price.

They will continue to steal copper, of course.

[rdcbn]

It's a Chinese thing and a hang over from Communist past where supply was unreliable.

They purchase goods and commodities like they are going out of style which provides enormous demand and stockpile several years supply.

They then stop buying for several years and demand collapses.

Drives suppliers crazy because they can't forecast. They add shifts and work overtime only to have cut back at the end of a buying spree.

Lord help if you are in a capitol intensive industry and invest heavily in more capacity to meet the demand and it comes on line right before the bust.