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China’s State Reserves Administration reported that it would publicly auction a total of 100,000 tons of nonferrous metals early next month in the first round of a rare and much-anticipated release of its inventories.
The National Food and Strategic Reserves Administration announced in three separate notices that it would auction 20,000 tons of copper, 30,000 tons of zinc and 50,000 tons of aluminum on July 5-6.
The amount of zinc for sale is equivalent to 5.7 percent of monthly production in China, the world’s largest metal consumer, based on official May data. For copper, the volume auctioned is 2.3% of May’s refined production and for aluminum it is 1.5%.
The release of state reserves of the metal in China is one of several attempts by Beijing to cool a stellar rally in commodity prices that has squeezed producers’ margins.
Benchmark copper prices hit a record high of nearly $10,750 a ton last month, fueled by a post-pandemic economic recovery, ample global liquidity and pockets of speculative buying, but have since fallen to around $9,260.
More selling from reserves combined with slower underlying demand and seasonal weakness is expected to put an upward tiller on prices in the very short term, but then expect a rally to new highs in the next 3 months.
Copper and zinc sales will take place on an online platform belonging to state-owned miner and metals trader China Minmetals Corp, while the aluminum auction will be on a site run by another state-owned company, Norinco.
Companies wishing to bid must be involved in processing and production and should register on the electronic bidding platforms by 4 p.m. on June 27.
A breakdown of batches of copper, zinc and aluminum for sale showed that all of the metal entered storage after 2008 and is currently in warehouses across China.
