Singapore 27/06/2016 - Talk that China’s State Reserve Bureau (SRB) is buying another 50,000 tonnes of copper this year has been met with scepticism, with market participants downplaying its effect even if the rumour proves true.
There is speculation that the SRB is looking to buy another 50,000 tonnes of copper later this year but no further details have come to light.
Sources from major Chinese smelter sources told FastMarkets they have not had any such information from the SRB and believe the rumour to be untrue.
A 50,000-tonne purchase is also seen as a small amount and one that is unlikely to have a significant impact on market supply, most industry watchers agreed.
"We are expecting Chinese smelters' copper production to increase over the next few months. We see output in July-September exceeding production in April-June by at least 50,000 tonnes," a Shandong-based metals analyst said. "Overall, Chinese copper supply will exceed demand in the second half of the year so 50,000 tonnes is not going to have any effect."
Some sources do not envisage the SRB buying more copper after accumulating substantial volumes of the metal in recent years - up to two million tonnes so far, according to some estimates.
But if the rumour were true, the impact of the buying will depend on how the SRB spreads out its purchase, a Shanghai-based futures trader said.
"Will it be 50,000 tonnes over six months, which will not have much effect, or will it be 50,000 tonnes in a month? The latter will have some impact," he said.
The SRB bought 150,000 tonnes of copper in the first quarter of this year via tenders. This, along with improved demand during April-May, tightened Chinese market supply earlier this year.
The Chinese copper market has shown signs of supply tightness recently - the extended closure of the import arbitrage window is discouraging imports and encouraging exports.
Beijing has recently announced plans to raise its stockpiles of some non-ferrous metals but most market participants believe this is unlikely to be carried out soon given the rebound in base metal prices this year.
The country plans to lifts its reserves of some non-ferrous metals "appropriately" and overhaul the system of stockpiling as carried out commercially and officially, the State Council said earlier in June.
(Additional reporting by Vicky Chen, editing by Mark Shaw)