I have first write on China's State Reserve Bureau (SBR) involvement in copper speculation on 18 November 2005.
The Edge have write briefly on the issue on 22 November 2005:
"A trader supposed to be working on behalf of China's State Reserves Bureau is believed to have taken out a 150,000-200,000-tonne bet that copper prices would fall.
He has since vanished."
Liu Qibing, who predicted that the copper price will become bearish, intend to make a huge profit by taking advantage of price difference between the day he short (sell) and the price on settlement date. He never predicted that speculator are eyeing on his short position. Speculator pouring in long (buy) order to push up copper price to conner him.
After the news of Liu missing, international speculator to try to push up the copper price. Copper price was continuously breaking record high. It reach USD4243 record high at one point of time.
According to person in the industry. The long short battle between China's State Reserve Bureau (SBR) and international speculator started much much earlier.
A trader with more than 10 year experience said that he get aware on around 23 September 2005. At that point of time, London Metal Exchange (LME) copper price in the future market drop 3% initially, but later rebound to 7-8%.
Another trader said now at least two force are causing threat to SBR. One is George Soros's Quantum Fund represented hedge fund. Another is from Warren Buffet.
World second richest man after Microsoft's Bill Gates. Warren Buffet's Berkshire Hathaway start buying Gold and Silver since last year. This cause price of Gold and silver increase. This give pressure on copper price indirectly.
SBR has been eyeing by hedge fund this year or much earlier. The price movement of copper was unusual since in the beginning of the year. It has increase 40% in the last few month. This has divert from demand and supply equilibrium. A sign that the price has been manipulated.
SBR eyeing by speculator because of it hugh trading position in the market. The person who represent SBR on London Metal Exchange is Liu Qibing, who described as having "low position, high power"
Liu Qibing
The mess cause by Liu Qibing not only affect international copper market. It affect china copper market as well.
Liu Qibing born on December 1968, age 37. He has a Degree in Economic.
Liu Qibing come to Beijing and work in SBR after graduation. Initially work in a low position in a communist plan economy. Later, when China transform from plan communist plan economy to free market economy. SBR had to change it role in such situation.
It is when such changes that Liu Qibing was send to London Metal Exchange to become trainee for half year.
Liu Qibing take this short opportunity to improve his English. He speak fluent English. Liu Qibing seek advise from experience trader in London Metal Exchange. He learn professional knowledge in future market and gain trading experience. Liu Qibing also help in develop a link IT and communication system between London Metal Exchange and SBR.
However, his knowledge was not used immediately after he come back from London Metal Exchange.
After few years, until 1999, Liu Qibing is still a normal staff in SBR. Nobody predicted he has the influence he has today.
However, he has been promoted in 1999. In 2002, he become the core trader in SBR.
SBR initially has a trading team. Later, reduced to two man team with Liu Qibing and another trader. However, the other trader make a mistake and has been transferred. Thus, Liu Qibing become the sole trader for SBR on London Metal Exchange and Shanghai Future Exchange. A person with low position but high power!
Liu Qibing shine in his position as a trader slowly.
Two years ago. Liu Qibing spot the bull trend in copper price when other trader still do not have clue on where the market is heading. Liu Qibing is correct the copper price is on the bull for two years since 2003. Liu Qibing become a reputable trader in in china commodity market.
However, Liu Qibing prefer low profile. He do not talk much and in deep thought most of the time.Liu Qibing able to used technical analysis or chart skillfully.
Excerpt and translate from Oriental Daily
Related Link : Bloomberg The Economist The Peking Duck Paul Kedrosky's Infectious Greed The stalwart Angry Chinese Blogger
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