Copper prices hit record after China trader’s loss

Wondering why copper has gotten so expensive?

Well, keep wondering …. a spate of articles today yield more questions than answers …

International Herald Tribune

Speculation that China will refuse to deliver up to 200,000 metric tons of copper from its reserves to cover a massive gamble on futures contracts is driving prices to record highs and unsettling the global market for the vital industrial metal.

Copper hit a record $4,160 a metric ton on Thursday before falling back slightly on Friday after Chinese state media reported that Liu Qibing, a futures trader based in Shanghai, had amassed futures contracts on the London Metal Exchange betting that prices would go down. Instead, prices have continued to climb sharply this year on strong demand from China’s booming economy and some unexpected supply shortfalls from major producers in Chile and the United States.

If prices remain at their current levels or continue to rise, Liu’s trades could lead to losses of $200 million or more, according to some analysts.

‘The next step is to see whether they really want to deliver this copper,’ said a Shanghai-based market analyst who spoke on condition of anonymity.

Some traders and market analysts have suggested that China may refuse to honor the contracts, which come due on Dec. 21, after Beijing denied that Liu had been working for the government’s secretive State Reserves Bureau when he made the trades.

‘As far as I know, the loss was a result of his personal actions instead of the government,’ the official China Daily newspaper reported Thursday, quoting an unidentified official at the bureau.”

These other articles contain similar information, much of it speculative …

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