Chinese copper enterprises will convene a meeting in Shanghai on Saturday to discuss possible purchases of copper metals for commercial reserves, according to the Shanghai Metals Market (SMM), a leading metal information provider in China, on Friday.
They are expected to buy about 400,000 metric tons (tonnes) of copper for commercial reserves, higher than earlier rumor about the 200,000 tonnes of state reserves. The benchmark copper futures traded on the Shanghai Futures Exchange (SHFE) closed 1.02 percent higher at 35,810 yuan/tonne on Friday.
Commercial reserves will cause tight supplies on the domestic spot market in the short term, but it has a limited effect on the copper prices as the increasing SHFE/LME copper price ratio will drive up copper imports to fill the gap, said Ji Xianfei, an analyst of Guotai Junan Futures. Commercial reserve is also called hypothecated loan and its effect on the copper prices is much weaker than the state reserve.
Efforts of those copper enterprises will support the price in the short term, said Feng Da, metal analyst of Guosen Futures.
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