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China's stockpiler may buy nickel as sources say


Updated (Reuters): 2016-01-08 13:44  

    The mainland's commodity stockpiler is working on plans to buy about 300,000 tonnes of copper and up to 150,000 tonnes of nickel nest year to take advantage of weak international prices, said three sources with knowledge of the matter.

    The potential purchases by the State Reserves Bureau would be equivalent to two-thirds of copper stocks and half of nickel stocks in the London Metal Exchange's registered warehouses, which would push up prices.

     Details of the plans have not been finalised, after the state body made inquiries about global supply and premiums of the two metals last month to select firms, say two of the sources.

The bureau was likely to import the metals through mostly state owned firms and the plans were unlikely to be announced, the two sources said.

     The third source said the stockpiler preferred to buy metals from domestic producers unless international prices were lower. It did not want to push up domestic prices.

     The sources declined to be named because of the sensitivity of the matter.

      "[The bureau] is going to place orders soon," said one of the sources.

      The mainland usually does not announce imports for strategic stockpiling and the quantity of state stocks. An official at the bureau did not comment on the plans.

      A poll in October showed analysts forecast average cash copper on the LME at US$7,050 a tonne and nickel at US$15,367.50 for next year.

      Benchmark three-month LME copper has fallen about 8 per cent so far this year and was at US$7,270 per tonne on Tuesday, while nickel has lost about 18 per cent to US$14,020.

     The state stockpiler was stepping up to build copper and nickel stocks after the bureau's new leadership, in place since the start of the year, had assessed stocks of the metals to be too low, said one of the sources who has links to the central government.

     The stockpiler had not bought large amounts of copper this year as it expected prices to fall, the source added.

     It still had received at least 100,000 tonnes of contracted copper shipments this year, said the third source, who also has central government links.