Bloomberg reported that China sold less than half of the metal on offer from state reserves as a high floor price and remote storage locations may have deterred buyers.
The National Development and Reform Commission said that the State Bureau of Material Reserve sold about 16,535 tonnes out of 34,500 tonnes offered at an average price of CNY 17,030 per tonne through public auctions on November 16. The highest price was CNY 17,080 and the lowest CNY 17,020.
The reserves regulator has sold aluminum, zinc, paper pulp, magnesium, sugar, cotton and corn from state inventories this year in an effort to ease shortages and curb price gains. High commodity prices helped push China’s inflation to 4.4% in October the fastest pace in 2 years.
Mr Zhang Shu an analyst at data provider Shanghai Metals Market said that the floor price is a bit high given some faraway storage locations. Some bidders said transportation for example from Gansu to Shanghai is around CNY 500 to CNY 600 adding to the price, so it’s not economical.
Lead prices in Shanghai’s largest nonferrous metals market Changjiang were around CNY 17,700 per tonne compared with CNY 18,000 per tonne on November 16 the day of the tender. The metal, used in car batteries is the second worst performer on the London Metal Exchange this year.
Some provincial governments in China started to limit power supplies to smelters from October in an effort to meet the energy saving goal set by Beijing for the 5 year plan ending 2010.
Mr Hu Yongda an analyst at Beijing Antaike Information Development Company said that still, the impact of power curb on lead is very limited with few smelters affected. Besides, there are ample supplies on the market, so it’s not strange they didn’t sell much.
（Sourced from Bloomberg）
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