another a$3 bln on iron ore expansion , page-31

copper price remains strong Shanghai Copper Rises Most in Seven Weeks as Sales Fail to Ease Shortage

Nov. 30 (Bloomberg) -- Copper prices in Shanghai rose as much as 3.7 percent, the biggest gain in seven weeks, on concern government sales may fail to ease a local shortage of the metal.

The State Reserve Bureau sold its first batch of 100 tons of the metal at 38,200 yuan ($4,728) a metric ton in an auction in Beijing today, compared with a floor price of 37,400 yuan, according to Chen Wen, manager at Anshan Johnson Foundry Co., who is participating in the auction.

``The price indicates that supply still lags demand,'' said Wang Zheng, a metal trader with Shanghai Dalu Futures Co., in a telephone interview today. ``Government efforts to damp prices are not sufficiently effective so far.''

Copper for delivery in February 2006 rose as much as 1,350 yuan to 37,430 yuan a metric ton on the Shanghai Futures Exchange. The contract traded at 36,860 yuan at 10:56 a.m. Shanghai time.

The government is selling a total of 20,000 tons of copper today as part of a series of weekly auctions to damp metal prices. Last week, the SRB sold copper at between 37,350 yuan and 37,850 yuan a ton and failed to sell 6,500 tons of the metal it was offering because falling futures prices made it cheaper to buy the metal on the Shanghai Futures Exchange.

The bureau may sell up to 100,000 tons of the metal from its inventories at weekly auctions through the middle of December, according to traders including Wang. It has sold more than 38,500 tons so far including today's sales.

Fourth Auction

``The SRB is very likely to announce a fourth auction later today as copper prices are still high,'' he said. ``The 100,000 tons may only be enough to offset a drop in imports. The government may have to sell more to increase supply.''

China's net imports of copper in October were the lowest since August 2004 because of stronger London prices, Shen Haihua, vice president of Southwest Futures Co., said on Nov. 21.

Copper for delivery in three months was bid at $4,255 a ton and offered at $4,265 on the London Metal Exchange at 11:15 a.m. Shanghai time. It rose 0.2 percent to $4,232 yesterday.