CSI China style The mysterious rise and fall of red metal trader Liu Qibing

Nov 18, 2005 | 04:50 AM |

The last time copper so gripped the interest of the international media, Sumitomo Corp.'s Yasuo Hamanaka controlled more than 5 percent of world supplies and his fraudulent trading had boosted prices by a third.

Some 10 years later, it's another crisis in Asia-and the market and media smell blood.

But Liu Qibing, the missing trader affiliated with China's State Reserve Bureau (SRB), is no Hamanaka, and his actions are unlikely to have as long-lasting an effect on the market, traders said.

When the game was up for Hamanaka, copper prices during the ensuing months dropped by more than $1,000 per tonne. Last week, copper prices were volatile-dropping $100 in half an hour at one point before recovering all that ground and more.

At this stage, the Liu crisis looks like a trader who got it wrong rather than a global conspiracy. "It's the opposite to Hamanaka. It involves a smaller tonnage. And Hamanaka went long while Liu went short," a physical copper trader said. "The repercussions of Hamanaka rippled out for years after. This will disappear once it's resolved."

The story exploded with a vengeance when the Wall Street Journal revealed Nov. 14 that the Chinese government was sitting on a short position of between 100,000 and 200,000 tonnes of copper on the London Metal Exchange and that a trader named Liu had gone missing. In truth, the story-in various iterations-had been circulating for months, and many in the market are sanguine about the latest version.

"There have been stories about copper and losses for months," one senior market observer said. "A guy is losing money because he thought prices would go down and they didn't. (Stuff) happens."....