Teck Resources Ord Shs Class A T.TECK.A

China's SRB quietly selling 50,000 T imported copp

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https://uk.reuters.com/article/tnBasicIndustries-SP/idUKPEK21319520090526?sp=true

* China seen selling 50,000 T of imported copper locally

* SRB building a warehouse in Shanghai for copper

* Spot premiums to China fall by a third from early May

By Polly Yam

HONG KONG, May 26 (Reuters) - China's State Reserves Bureau

(SRB) has quietly over the past month sold off a small volume of its contracted copper imports and might sell up to 50,000 tonnes, temporarily reversing course after months of buying, industry sources who were offered SRB copper said on Tuesday.

The SRB began delivering imported copper to local firms in Shanghai on Monday after secretly offering to unload some of its stocks since late April, when rumours first circulated but were widely discounted by most traders. The 50,000 tonnes is about a sixth of the SRB's estimated purchases so far.

Shanghai and London copper prices were little moved on the news, but state selling could push down Chinese prices and close the arbitrage window for spot imports, which doubled in the first four months of this year compared to the same months of 2008, helping to drive London Metal Exchange prices MCU3 up by half.

"The SRB is going to sell 50,000 tonnes," an executive at a trading firm said. He added the state body had delivered 2,500 tonnes of newly imported copper to local firms, including his trading firm, in Shanghai on Monday.

But he also said the SRB, Beijing's commodity buying arm and one of the market's biggest X factors, may buy back the copper once it completes construction of a warehouse in Lingang port in Shanghai in July, giving it more space to store its inventories.

"It is unlikely to resell additional copper given the Lingang warehouse will be usable from July."

A source at a copper fabricator said the SRB had made an offer in early May to sell his plant up to 20,000 tonnes of imported refined copper cathode for June delivery, but at a premium of $140 per tonne it was twice what the plant had paid for imports this year, so it had not taken up the offer.

"They wanted to earn profits as premiums were high and may fall in later months," he said.

Premiums paid by Chinese importers for spot refined copper cathode have fallen by a third from early May and 60 percent from last month to $100-$130 per tonne over cash LME prices MCU0 at Shanghai ports, as domestic demand was also weakening, traders and fabricator sources said.

The 50,000-tonne selling plan is believed to include at least 10,000 tonnes of imports in May and 20,000 tonnes in June, trading sources said. A top Chinese smelter had also been assigned a selling agent for the SRB imported copper.

The SRB is believed to have contracted 300,000 tonnes of foreign refined copper of which at least 200,000 tonnes already arrived in the first 4 months of 2009. That was thought to have been the first phase for a state stockpiling plan that may seek a total of 1.2-1.3 million tonnes in coming years.

China's imports of refined copper are likely to stay high in May given continued state buying and merchants' aggressive booking for May delivery last month, a manager at a large trading firm said, adding that a ship carrying more than 7,000 tonnes of Chilean copper would arrive Shanghai this week.

The SRB has expanded storage capacity in past 2 years, according to reports on its website. This provides the infrastructure for Beijing's huge commodity stockpiling programme, which started late last year, targeting everything from oil to soybeans to aluminium. (cbj.ndrc.gov.cn)

But other trading sources said they believed the SRB was trying to cash in on high prices.

(Editing by Jonathan Leff)

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