State Reserves Bureau copper scandal

The State Reserves Bureau copper scandal refers to a loss of approximately US$150 million as a result of trading LME Copper futures contracts at the London Metal Exchange (LME) by rogue trader Liu Qibing, who was the chief trader for the Import and Export Department of the State Regulation Centre for Supply Reserves (SRCSR), the trading agency for the State Reserve Bureau (SRB) of China in 2005.

[1] After obtaining a bachelor in economics, Liu Qibing started working for the SRCSR, and was sent to the LME for training in 1995.

Liu became the director of Import and Export Department at SRCSR, in 1999, and was authorized to place orders on LME and the Shanghai Futures Exchange (SHFE).

Between 2002 and 2004, Liu had traded long positions on copper to bet that China's construction boom at the time would lead to price increases.

These central bank policies proved to be temporary, however, and lending for real estate construction resumed, leading to copper price increases.

According to China Daily, Liu's position grew to a short 130,000 tonnes of copper in July and August 2005 for delivery in December 2005.

[8] The SRB eventually acknowledged knowing Liu Qibing, stated that he had been on leave, and later announced that the trader had acted on his own, without authorization.

The SRB denial of knowing Liu Qibing implies that the organization was unaware of activities at the SRCSR and the state of its trading group.