According to the FT, China’s Non-Ferrous Metals Industry Association has announced that the country’s copper inventories were at about 1.9 million tons at the end of last year.
That’s more that the U.S. consumes in a year.
Estimates by the International Copper Study Group had the number 1.0 to 1.5 million tons lower.
Here’s why it matters:
The fact that the amount China is carrying in its reserves means that their demand for copper may be less than we thought. And Chinese demand is so significant, that if can seriously effect price.
For example, in 2009 China started buying up copper like crazy, and now the country accounts for 40% of copper demand. That is what triggered copper’s price rally from its low-point during the financial crises, to its new record high prices today ($10,000 a ton).
One more thing to keep in mind: some analysts think that China may be exaggerating the amount of copper it has to push prices down.