China Said to Buy Aluminum For Reserves, Price Jumps

China, the world¡¯s largest metals consumer, will purchase 290,000 metric tons of aluminum from domestic smelters to boost state reserves, helping lift prices to a three-week high in Shanghai.

Aluminum Corp. of China Ltd. the country¡¯s largest smelter, will supply 150,000 tons to the government for 12,350 yuan ($1,807) a ton by the end of January, said the executive, who declined to be identified as the discussions are private. Qingtongxia Aluminum Group Co., Yunnan Aluminum Co., and five others will each supply 20,000 tons, the executive said.

Prices of aluminum, used in car parts, have plunged 36 percent in China this year, leading to losses at almost all producers. Chalco, as Aluminum Corp. of China Ltd is known, and China¡¯s other major smelters are meeting today and tomorrow with government officials, including those from the State Reserve Bureau, to discuss the purchases.

China¡¯s State Reserve Bureau may buy a total of 1 million tons of aluminum and 300,000 tons of zinc from producers over three months from January, said Chen Yonglin, an analyst at Citic Futures Co. China is the world¡¯s largest producer and consumer of the two metals.

Aluminum for March delivery advanced as much as 1.7 percent to 11,465 yuan ($1,678) a ton on the Shanghai Futures Exchange, the highest intra-day price since Dec. 3. The contract traded at 11,380 yuan at 2:57 p.m. local time.

Price Advances

¡°Shanghai aluminum and zinc are particularly strong due to intensified state buying speculation, and copper is bolstered along with it as well,¡± Chen said today from Shanghai.

Aluminum closed 1.5 percent down at $1,537 on the London Metal Exchange yesterday, bringing this year¡¯s loss to 36 percent. The exchange is closed today for the Christmas holiday.

China will increase reserves of ¡°important¡± raw materials, the Ministry of Industry and Information Technology reiterated last week. Officials from the government-controlled State Reserve Bureau, which holds reserves of commodities to regulate supply, were not immediately available for comment today.

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