China, the world's biggest copper consumer, is unlikely to buy the metal now to boost state stockpiles because prices may drop further amid a global slump, said Grace Qu, an analyst at CBI China Co.

The State Reserve Bureau has started buying the metal from domestic bonded warehouses and overseas markets, Reuters reported yesterday, citing trade sources. Inventories in a bureau warehouse in Shanghai rose by about 10,000 metric tons last week, the news agency said.

"I wonder why they decided to buy after copper prices gained and as the outlook is still very uncertain," said Qu from Beijing. Shang Fushan, director of the copper department at the China Nonferrous Metals Industry Association, said he was unaware of the buying. Analyst Bonnie Liu from Macquarie Group Ltd said she didn't believe they had bought and declined further comment.

Copper has climbed 11 percent this year on optimism stimulus spending in China and the United States, the second-largest user, will boost global demand, Bloomberg News said. Prices reached a four-year low in December as a recession slashed demand for raw materials.

The metal rose 0.7 percent to US$3,395 a ton yesterday.

China will buy the metal overseas to boost state stockpiles, said Wang Chiwei, Jiangxi Copper Co's executive director and vice president, in Shanghai on January 19. The bureau would adopt a "flexible" approach and the "question is when and how to buy it," he said at the time.

(Shanghai Daily February 5, 2009)