China Won't Sell Copper Stockpile Even as Price Gains, Morgan Stanley Says

China, which has sold aluminum and zinc from government reserves this year, isn’t likely to sell copper even as prices gain, according to Peter Richardson, chief metals economist at Morgan Stanley Australia Ltd.

Richardson made the comments in an interview with Bloomberg News yesterday in Singapore. Copper futures in New York have gained 19 percent this year, peaking at $4.0475 a pound yesterday.

“The higher we go above $4, the greater the temptation will be to do it but if you’re under siege and you’ve got a limited amount of ammunition, you could make a serious mistake firing off too soon.

“Their stockpiles reflect exactly the metals in surplus. It’s what they’re not selling that’s most illuminating. They don’t have enough to materially influence the market. They’d be better off to hold their fire and wait for a push back on the demand side to soften the price and gradually pick up more, than fire it off and find they’ve got absolutely nothing because that’s not how strategic stockpiles are managed.

“In 2006, 2007, they sold aggressively into a very strong and rising market and virtually denuded themselves of significant stocks of refined copper. If there’s 1 million tons, why is it not coming back into the market? There was an excess imported last year, but it wasn’t 1 million tons.”