pna the business, page-9

EL,

Re your comment "They also can't stop buying completely though, as they have supply agreements set at the LME price."

Can you please explain this comment a little more.

My understanding is that PNA sells the concentrate to BHP who manages the allocation of the concentrate to a smelter. The smelter refines the concentrate, then BHP places it on the LME for sale.

Copper is then bought from the LME is a free and open market. I thought that China could stop buying copper today, watch the LME stock piles rise and prices fall as China consume their reserves. Then China could re-establish the reserves at a low price. This is a potentially interesting strategy that could play out a number of times until US and Europe demand rebound enough to put a ceiling on the fluctuating stock pile.

If there is about to be this volatile copper price scenario, managing cash reserves will be critical to surviving the sharp price fluctuations.

HT1