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Analyst Says Copper Price Fall "Short Lived"

Posted on: Saturday, 19 November 2005, 09:00 CST

Analyst says copper price fall "short lived"

BEIJING, Nov. 18 (Xinhua) -- Copper futures in Shanghai fell on Thursday, one day after the State Reserve Bureau completed its first public copper auction and announced another sale next week.

Copper for delivery in January 2006 closed at 37,140 yuan (4,580 US dollars) a ton on Thursday, a fall of 290 yuan (36 dollars) from Wednesday's close, a drop that many analysts say was "insignificant and short-lived," the English-language newspaper China Daily reported on Friday.

The bureau, the country's stockpiling body, on Wednesday sold 20,000 tons of copper and then announced that it would auction the same amount next Wednesday.

"The price drop is temporary, and set to bounce back in the coming days," Lei Hongwei, a trader from Beijing CIFCO, a subsidiary of China International Futures Co Ltd (CIFC), said.

The copper price touched 4,102 dollars on the London Metal Exchange (LME) on Wednesday, down from Tuesday's all-time high of 4,175 dollars a ton. "The copper price in the domestic market will continue to rise unless the government takes effective measures, such as releasing more reserves," said Lei.

But even if the government does that, he said, the copper price is unlikely to fall by a large margin in the long-term if the price in the international market remains high.

The Ministry of Commerce said on Wednesday China is considering abolishing the preferential taxation policy for imported copper sulphide concentrate starting on Jan. 1, 2006.

The move aims to help cool down the overheated investment in the copper industry, check the exports of refined copper and reduce the demand for imported copper.

Source: Xinhua News Agency - CEIS

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