The policy of tax reduction on imports of copper from Chile, the largest copper producer in the world, is predicted to soothe the supply shortage of copper in China, which is predicted for next month.

Last month, Chile and China signed a free trade agreement, according to which, China will cut the tariff of some products including copper, imported from Chile. The current import duty on copper is 2 per cent. When the policy takes effect from October, the cost for importing copper from Chile will fall.

China consumes more than 10,000 tons of copper every day and in July, when the world's copper price approached a record high, China's copper imports plummeted 42 per cent to be 58,318 tons.

The reduction in imports has intensified the tight supply of copper in China, arousing concerns about a possible shortage in October.

From late July, the State Reserve Bureau started to sell the 46,600 tons of copper it had in stock in Shanghai. So far, it has sold around 32,600 tons and it is uncertain whether more will be sold after remaining stocks are sold out. Bankruptcy

From late May to early July, the State Reserve Bureau had sold a total of 62,600 tons of copper.