China releasing copper, zinc and aluminum reserves to quell price pressures
The Wall Street Journal reported that China plans to sell stockpiled industrial metals, including copper, zinc and aluminum, in order to quell factory-gate price increases such as a 67% increase in the price of copper as the world economic activity returns with the COVID-19 pandemic starting to fade. The 13-year metal price highs may increase global inflation.
Copper is the world’s major industrial metal used for many applications, including the burgeoning electric vehicle market.
The metals will be sold at public auctions to domestic metal processors and manufacturers. Copper prices have already been falling since late May and the red metal now trades at US$4.34/lb – a seven-week low. Zinc is selling at US$1.36/lb and aluminum is selling for US$2,465.15.
The move by the State Bureau of Grain and Material Reserves was reported by state TV, which gave no details of when or how much would be released.
It remains to be seen if the metal selling will have any effect on prices and the Chinese government does not disclose the size of its metal stockpiles. It appears that China’s stockpile selling plans for copper is a little late as prices are down and downstream users won’t be seeing their profitability dissipate as much which was China’s objective in the first place.
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