Report: China starts stockpiling metals again

Frik Els | June 2, 2013

http://www.mining.com/report-china-starts-stockpiling-metals-again-90612/

The nickel bought by the government's powerful stockpiling agency represents more than 15% of the inventories held in London Metal Exchange warehouses worldwide and is likely to move markets.

The last time the SRB intervened in base metals markets was during the 2008 financial crisis when it made the most of lower prices picking up vast stocks of import commodities and effectively setting a floor for metal prices.

<img src="http://www.mining.com/wp-content/uploads/2013/06/600x482xcopper-price-chart-china-stockpiling.jpg.pagespeed.ic.zWe4t1Btsm.jpg" alt="Will China&#039;s stockpiling agency set a price floor again?" title="Will China&#039;s stockpiling agency set a price floor again?" width="600" height="482" class="aligncenter size-full wp-image-733060"/>

FT.com reports (sub required) the SRB’s purchases "may be interpreted as a bullish sign that China has confidence in its future consumption":

If you had bought copper every time the SRB bought copper you would have made a fortune

“China has destocked to quite a large degree and prices are at a level where the SRB is buying commodities,” said one senior metals trader. “If you had bought copper every time the SRB bought copper you would have made a fortune”.

China dominates the global trade in just about every commodity including iron ore (representing 60% of world trade), copper (42%), coal (47%), nickel (36%), lead (44%) and zinc (41%).

<img src="http://www.mining.com/wp-content/uploads/2013/06/600x438xnickel-price-chart-china-stockpiling.jpg.pagespeed.ic.l5olnPHWMd.jpg" alt="China&#039;s stockpiling agency recently bought 15% of global warehouse stocks" title="China&#039;s stockpiling agency recently bought 15% of global nickel warehouse stocks" width="600" height="438" class="aligncenter size-full wp-image-733069"/>

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