China to stop the storage, reservation of nonferrous metals due to excessive imports

"At present, domestic and international metal markets are closely intertwined, and metal resources are flowing as prices fluctuate. Domestic prices are currently higher than international prices, and a large volume of foreign metal resources are flowing into China. It therefore makes no sense for China to continue the storage and reservation of metals, and the country should stop these measures," said an official from the Industrial Coordination Department at the NDRC.

In the first quarter of 2009, China's central and local governments initiated national and commercial reserves of nonferrous metals, and consequently prices of most key metals increased by 30 percent. This has widened the gap between domestic prices and international prices, and led to an influx of foreign resources to China searching for profit.

According to customs, in April 2009, China's import volume of copper and copper products rose by 6.60 percent month-on-month, and aluminum and aluminum products by 198.90 percent. In May, the import volume continued to increase.

The NDRC is paying close attention to the issue of the high nonferrous metal import volumes. It has found that enterprises did not directly benefit from nonferrous metal storage and reservation. Instead middlemen and arbitragers were the final beneficiaries. Foreign-funded enterprises account for 40 percent of enterprises that import nonferrous metals, private enterprises 20 percent, and state-owned enterprises less than 20 percent.

In particular, the most excessively produced metal is electrolytic aluminum. Because its current price is already high enough for enterprises to make a profit, a number of enterprises are starting to resume their former production capacity. The storage and reservation measures have also resulted in the sufficient recovery of various metal prices.

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