In recent weeks, three-month LME copper prices have stalled just below the 4,000 dollars/tonne level (1,81 dollars/lb) as the spotlight has moved away from supply disruptions (the four-month Asarco strike and the one-month Falconbridge strike both now resolved) and recovering US demand, to focus instead on China -and specifically the actions of the State Reserve Bureau (SRB), which is releasing metal onto the market from its stockpile. The tonnage to be sold has been reported as anything up to 500,000 tonnes, according to some far-fetched stories that claim to quote SRB officials directly. However, this is simply unrealistic as there is no way the bureau could be holding such a large quantity. The more sensible estimates put the amount to be disposed of at around 80,000-100,000 tonnes. MBR understands from reliable sources that the SRB has built its total holding up to 200,000-250,000 tonnes this year following sales of around 300,0000 tonnes in 2004. Therefore a disposal totalling up to 100,000 tonnes this year is quite feasible. However, it should be remembered that the SRB's motivation is to bring domestic prices down and try to re-establish an orderly market. Therefore, if sales of 100,000 tonnes are comfortably absorbed by the market and fail to dampen prices (which seems to be the case so far), the SRB may yet authorise more sales.
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