UPDATE 2-China Yunnan province to buy $3 bln of metals
reuters.com
Mon Dec 1, 2008 1:33am EST
HONG KONG, Dec 1 (Reuters) - China's Yunnan province will buy 1 million tonnes of base metals to help smelters in the region that are struggling with weak domestic demand and low prices, a report on the Ministry of Land and Resources' website said on Monday. (www.mir.gov.cn)
Yunnan will buy 150,000 tonnes of copper, 300,000 tonnes of aluminium, 150,000 tonnes of lead, 300,000 tonnes of zinc and 100,000 tonnes of tin, the report said. The reserves will be kept for one year.
Analysts estimated that at current prices, the plan could cost nearly $3 billion.
"Copper I can see, and maybe lead and zinc. But the tin number doesn't make sense -- that's over a quarter of world production," a metals trader in Simgapore said.
"There should have been a huge reaction in prices on this news, but it looks to me like the market doubts it will happen." Tin was trading at $12,450 a tonne on the London Metal Exchange at 0620 GMT, up 1.2 percent from Friday. Before the news, tin stood at $12,275.
A report posted on the Yunnan e-government website (www.yn.gov.cn) dated Nov 26, said the global financial crisis had caused base metal prices to fall sharply, adding pressure to smelters in Yunnan and forcing them to cut production.
Yunnan, a major base metals producing province in China, houses Yunnan Copper 000878.SZ, Yunnan Aluminium 000807.SZ, Yunnan Tin 000960.SZ, Luoping Zinc and Chihong Zinc (600497.SS: Quote, Profile, Research, Stock Buzz).
The Yunnan report said the provincial government also encouraged firms to buy reserves of iron ore and copper concentrates at low prices.
Beijing is also looking at buying base metals as state or commercial reserves to take advantage of the lowest prices for years and bolster weak demand, industry sources have said. [ID:nHKG166943] (Reporting by Polly Yam; editing by Nick Trevethan and Ben Tan) |
