BEIJING: China’s state reserves administration on Tuesday said it would publicly auction a total of 100,000 tonnes of non-ferrous metals early next month in the first round of a rare and highly anticipated release of its stockpiles.
The National Food and Strategic Reserves Administration said in three separate notices it would auction 20,000 tonnes of copper, 30,000 tonnes of zinc and 50,000 tonnes of aluminium on July 5-6.
The amount of zinc being sold is equivalent to 5.7% of monthly production in China, the world’s biggest metals consumer, based on official data for May. For copper, the auctioned volume is 2.3% of May’s refined output and for aluminium it is 1.5%.
The release of state metal reserves in China is one of a number of attempts by Beijing to cool a stellar rally in commodity prices that has squeezed manufacturers’ margins. Benchmark copper prices hit a record of almost $10,750 a tonne last month, fuelled by a post-pandemic economic recovery, ample global liquidity and pockets of speculative buying, but have since eased to around $9,260.
“We expect more sales from reserves combined with slower underlying demand and seasonal weakness to put a lid on prices in the very near term, but we then expect a rally to new highs over the next 3+ months,” Jefferies analyst Christopher LaFemina said in a note.
“We would be surprised if the (administration) were to sell more than 10% ... of its copper reserves,” he added, estimating these to total 1.5 million to 2 million tonnes.
The copper and zinc sales will take place on an online platform belonging to state-owned miner and metals trader China Minmetals Corp, while the aluminium auction will be on a site operated by another state-run firm, Norinco, the notices show.
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