By Li Xiaowei
Oct. 15 (Bloomberg) -- The State Reserve Bureau in China,
the world's largest consumer of metals, may increase stockpiles
of copper by as much as 74 percent in the next two years after
prices plunged to a 33-month low, Scotia Capital Inc. said.
``The SRB might now hold some 1.15 million tons of copper
and might want to re-stock to a level above 2 million tons over
the next two years when the opportunity arises, like now,'' Na
Liu, an analyst with Scotia Capital, a unit of Toronto-based
Bank of Nova Scotia, wrote in an e-mailed report today.
Chinese state purchases may bolster copper prices which
have slumped 42 percent from a July record of $8,940 a ton on
the London Metal Exchange, touching the lowest since January
2006. A deepening U.S. housing slump and the widening credit
crunch has spurred concerns of slowing global economic growth,
which could curb demand for raw materials.
``It definitely makes economic and strategic sense for the
SRB to buy copper now,'' Yang Gang, a copper trader at LG
International Corp., said today by phone from Shanghai. ``Raw
materials like copper and oil could be the best thing for China
to park some of their trillions of foreign reserves.''
China, which has primarily held its $1.9 trillion in
currency reserves in low-yielding U.S. government debt, set up
China Investment Corp. last year to put about $200 billion into
assets with higher rates of return.
Investment Losses
The CIC invested $5 billion in Morgan Stanley, the second-
biggest U.S. investment bank, and $3 billion in buyout firm
Blackstone, manager of the largest leveraged buyout fund. Both
New York-based companies have lost more than 70 percent of their
market value since the purchases.
China's imports of copper and copper products rebounded in
September, climbing 20 percent from August to 213,782 metric
tons, preliminary data from the customs office showed yesterday.
``China's copper imports will remain strong for the rest of
the year,'' Scotia's Liu said in the report.
This represents a bounce back to the normal level of
100,000 tons of refined imports a month, according to Cai
Jinrong, an analyst of Wanxiang Resources Co. The refined data
will be released later this month.
``We haven't seen any noticeable sign of state buying so
far but are closely watching for it like all the others,'' Cai
said by phone from Shanghai.
