SHANGHAI, Jun 22 (SMM) - China’s National Food and Strategic Reserves Administration announced to release the first batch of national metal reserves, with the total amount of copper at 20,000 mt, zinc at 30,000 mt, and aluminium at 50,000 mt.
Domestic copper consumption is 1.15 million mt per month, and the released 20,000 mt of reserves account for about 2%. Only the companies related to copper processing and manufacturing are qualified to be the bidders, and each bidding section is 100 mt of copper. The copper reserves come from the warehouses in Shanghai, Zhejiang, Anhui, Henan, Shandong, Tianjin, Ningxia, and other regions, which is in accordance with the national policy of ensuring supply and stabilising prices of commodities. The later release amount and frequency will worth attention.
The release of 50,000 mt of aluminium ingots meets the market expectation at a relatively lower level. SHFE aluminium is expected to increase slightly overnight.
The market expected that around 20,000 mt of zinc reserves would be released in the first batch or month, which was lower than the actual amount. The current monthly zinc consumption stands at 530,000-550,000 mt, of which the released reserves will account for around 5.5%. Domestic zinc ingot inventory is around 122,900 mt, and the released reserves takes up 24% of it. Zinc consumption will enter the off-peak season in Q3 2021, and the first batch of reserve release may weigh on the market. Attention could be paid to the changes in domestic zin ingot stocks.