China has released details of its first round of auctions of non-ferrous metals from its state reserves, and the market reaction was underwhelming at best.
The National Food and Strategic Reserves Administration said on Tuesday that it will auction 20,000 tonnes of copper, 30,000 tonnes of zinc and 50,000 tonnes of aluminum on July 5-6.
The rare auction of strategic reserves forms part of Beijing’s efforts to take the heat out of red hot commodity markets, which have seen metals such as copper and iron ore reach all time highs amid a surge in demand as the world recovers from the coronavirus pandemic.
However, initial market reaction to the announcement of the auctions would indicate that the volumes being offered are too small to make much of a difference in the world’s largest importer, producer and consumer of industrial metals.
The amount of copper being sold is just 2.3% of China’s output of the refined metal in May, and 4.4% of imports of unwrought copper in the same month.
For zinc, the auction represents about 5.7% of monthly output in China, and for aluminum it’s just 1.5% of May’s production.
It could be that Chinese authorities are just testing the market to see what the appetite is for the sales, and will ramp up volumes in subsequent auctions.