China has moved to release the first batch of aluminum, zinc and cooper reserves into the market, the National Food and Strategic Reserves Administration announced. The move, experts said, sent a signal about the government’s readiness to crack down on price speculation following steep price surges of bulk commodities.
The government has decided to release 50,000 tons of aluminum, 20,000 tons of copper and 30,000 tons of zinc from its national reserves into the market, according to a report released by the administration on Tuesday.
Potential buyers can purchase the metals through public auction on China’s bidding platforms, the report noted.
This is the first time in more than 10 years that China, the world’s top metal consumer, makes such a move. Experts said this is mainly aimed at stabilizing commodity prices after sharp rises in the price of metals amid the coronavirus epidemic in China.
The price of Shanghai spot aluminum rose by about 32 percent in the past year, while zinc had the highest increase since 2007 in May.
Lin Boqiang, Director of the China Center for Energy Economics Research at Xiamen University, said that the surge in commodity prices is not caused by real shortages of those metals but by disruptions in supply chains during the pandemic as well as speculation on the market as investors hope to increase their stock as demand rebounds in the post-pandemic period.
“I think the government’s release of the metals has sent a signal that it will crack down on speculation to curb price surges,” Lin told the Global Times on Tuesday.
He predicted that the prices of commodities should respond with a fall to the government’s release of metal reserves on Wednesday but in the near term they are still likely to edge up.
In the long run, though, he anticipated that metal prices will adjust and return to pre-pandemic levels.