Log in
Forgot password ?
Become a member for free
Sign up
Sign up
New member
Sign up for FREE
New customer
Discover our services
Dynamic quotes 
News: Latest News
Latest NewsCompaniesMarketsEconomy & ForexCommoditiesInterest RatesBusiness LeadersFinance Pro.CalendarSectors 
All NewsEconomyCurrencies & ForexEconomic EventsCryptocurrenciesCybersecurityPress Releases

China to release copper, aluminium and zinc reserves to stabilise prices

06/16/2021 | 03:50am EDT
Workers are seen next to aluminium rolls at a plant in Binzhou

BEIJING/HANOI (Reuters) - China announced plans on Wednesday to release industrial metals from its national reserves to curb commodity prices in what some analysts said could be the first such move in a decade by the world's top consumer of metals.

The National Food and Strategic Reserves Administration said on its website it would release copper, aluminium and zinc in batches to nonferrous processing and manufacturing firms "in the near future" via public auction.

The notice came as Beijing struggles to cool a surge in metal prices this year fuelled by a post-pandemic economic recovery, ample global liquidity and speculative buying that has dented manufacturers' margins.

China's May factory gate prices rose at their fastest annual pace in over 12 years due to surging commodity prices, cutting into firms' profit margins and highlighting global price pressures.

As speculation swirled about such a move before it was confirmed by the government, Citi said in a note on Monday that it could be part of "efforts to crack down on commodity price hikes by managing market expectations and deterring speculators, more than resolving any material physical shortages."

Citi said the last reported strategic stocks release in China - which did not include copper - was in November 2010. State research house Antaike made parallels between the announcement and the release in 2010.

Most base metals were trading sharply lower in the Asian afternoon session on Wednesday. [MET/L]

Benchmark London copper hit a record high of $10,747.50 a tonne in May, having risen more than 60% since March last year when the coronavirus destroyed demand. Shanghai aluminium touched its highest since 2010 in May, while zinc jumped to its highest since 2007. Graphic: China will release state stockpiles of copper, aluminium & zinc to stabilize key commodity prices,

"The Chinese authorities are trying to help support the margins at (their) manufacturing industry as they have found it hard to transfer these costs to the end-users," said commodities broker Anna Stablum at Marex Spectron. Graphic: China factory gate prices surge at fastest pace in 12 years as commodity costs climb,

The statement by the administration did not provide details on quantities of metal to be sold, the auction process or which manufacturers will be allowed to bid.

Citi estimates China's state reserves currently stand at 2 million tonnes for copper, 800,000 tonnes for aluminium and 350,000 tonnes for zinc, based on past purchase and sales records.

"Our base case is for total volumes of ... aluminium and zinc selling to be around 2% of China's annual demand, i.e. around 770,000 tonnes of aluminium and 140,000 tonnes of zinc, and for copper volumes to be minimal," it added.

Analysts and traders believe metals markets have already priced in some sales from China's reserves.

"However, we still don't have any information about size of these sales and it will definitely continue to weigh on these markets," Stablum added.

($1 = 6.4035 yuan)

(Reporting by Min Zhang and Dominique Patton in Beijing, Mai Nguyen in Hanoi and Tom Daly; Editing by Muralikumar Anantharaman, Kim Coghill and Ana Nicolaci da Costa)

By Min Zhang and Mai Nguyen

ę Reuters 2021
Latest news "Economy & Forex"
03:35pFacebook and tech giants to target attacker manifestos, far-right militias in database
03:28pU.S. SENATE'S SCHUMER : Chamber may stay through weekend to finish infrastructure bill
03:21pDollar edges lower ahead of Fed, cryptocurrencies jump
03:20pTexas power grid sees record-breaking demand during heatwave
03:16pBitcoin crosses $40,000 for first time since june 16, last up 13.22% to $40,112.78; ether up 9.11% to $2,393.84
03:09pDow Jones Industrial Average : U.S. stocks, dollar sluggish, all eyes on Fed meet this week
03:08pECOWAS ECONOMIC COMMUNITY OF WEST AFRICAN STATES : and UNDP hold awareness training on promoting accountability for gender equality and women's empowerment (gewe) in the commis-sion through the gender equality seal for public institutions.
03:04pOil steadies in undersupplied market but coronavirus cases weigh
03:02pTESLA : Wall St mostly edges up as investors eye tech earnings, Fed meeting
03:00pWall St mostly edges up as investors eye tech earnings, Fed meeting
Latest news "Economy & Forex"