NEWSBREAK - China's SRB to buy 150,000 tns of copper via tender - sources

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Vivian Teovivian.teo@fastmarkets.comJoint News Editor - Asia

Singapore 05/01/2016 - China's State Reserve Bureau (SRB) is looking to buy 150,000 tonnes of copper through a tender that is expected to take place this week, industry sources told FastMarkets.

A tender notice has been issued to smelters, a senior official with a Chinese copper smelter who had received the document told FastMarkets. The tender will close by the end of this week, he added.

Sources believe the tender is partly related to the recent request by Chinese domestic copper smelters to the Chinese government to scoop up metal in the market to support falling prices.

"It would be wrong to say it is completely unrelated [to the smelters' request]. But it is also a good time for the SRB to stock up now due to the current low prices and before the market closes for Chinese New Year holidays," a Beijing-based metals analyst said. 

"150,000 tonnes is substantial… it definitely is good news for copper and could provide domestic copper prices with support in the near term," the analyst added.

The move should tighten the spot market, another copper smelter representative, whose company also received the tender notice, added.

"Don't forget that there will also be 200,000-tonne sale volume cuts from the smelters in the first quarter. I would say the market will feel the tightness especially after Spring Festival," he added.

Copper smelters in China are mulling a cut in sales volumes in the spot market in the first quarter though the effects should be limited in January-February, industry participants said, because demand typically slows before and during Chinese New Year, which starts on February 8.

But from March the market could experience some tightness because demand usually picks up after the Spring Festival holidays.

"The companies that will receive such tender documents are typically large state-owned smelters," said a Shanghai-based trader who had seen a copy of the government notice. "The purchase will have an impact on the market."

Copper on the Shanghai Futures Exchange closed higher on Tuesday, reversing the losses on Monday, after talk of the SRB's impending purchase hit the market. 

The most active March contract started to climb in the last hour of trading on Tuesday before closing at 36,510 yuan per tonne, up 540 yuan from the previous day. This near reversed the 580-yuan loss on Monday. 

A total of 411,016 lots of the contract changed hands at the end of Tuesday, with open interest at 291,660 lots, down from 294,626 at Monday's close.


(Additional reporting by Vicky Chen and Meimei Qin)



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