China May Halt Metals Stockpiling, Start Sales, Securities Says
China may suspend stockpiling nonferrous metals and may start to sell existing inventories to tame prices, the Chinese-language Securities Times reported without saying where it got the information.
The Ministry of Industry and Information Technology reviewed a plan on the development of the nonferrous metals industry and concluded that stockpiling plans should be suspended on “elevated” prices, the newspaper said on its web site late yesterday. Agencies that stockpile may sell inventories to tame “excessively speculative markets,” according to the newspaper report. It did not detail which metals might be sold.
Ministry spokesman Wang Lijiang did not reply to a faxed interview request sent by Bloomberg News.
The Adjustment and Revitalization Plan of Nonferrous Metals Sector released in May 2009 stated China should set up a national stockpiling program, according to a statement posted on the central government’s website at that time. It did not elaborate on the plan, which was designed after the financial crisis in 2008 and was valid for the 2009-2011 period.
The London Metal Exchange index (LMEX) of six primary base metals declined 22 percent this year, first time since 2008. Three- month copper declined to $2,817.25 a metric ton in December 2008, the lowest level since 2004, after the collapse of Lehman Brothers Holdings Inc. The contract dropped 1.9 percent to $7,345 a ton at 2:37 p.m. Shanghai time.
“It is not a good time for the reserve management agency to sell as lots of producers are already running in the red,” Che Hongyun, chief analyst at Galaxy Futures Co., said by phone from Beijing. “As a country short of minerals with huge demand, stockpiling should continue to be the key tone.”
China usually doesn’t release information about when state reserve managers buy or sell nonferrous metals.
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