(Adds analyst comment)
By Polly Yam
HONG KONG Nov 12 China's State Reserves Bureau (SRB) has issued a tender to buy 160,000 tonnes of primary aluminium from local smelters, two sources who received the tender notice said on Monday, the first clear sign Beijing is resuming metals stockpiling.
Sources said the reserves body was set to hold the tender on Wednesday, although it was not announced on its website. (www.ndrc.gov.cn)
Last week, Reuters reported that China is expected to soon resume stockpiling of some base metals, including copper and aluminium, buying them from domestic smelters hurt by weak demand.
But the stockpiling could mean more than support for a desperate industry, Natixis analyst Nic Brown said, arguing it could signal Beijing is ready to push ahead with a programme of more direct stimulus for the economy.
"It's a hint that the stimulus measure that have been talked about so far are likely to start getting implemented," he said.
In September, China gave the green light to 60 infrastructure projects, including plans to build highways, ports and airport runways, worth more than $150 billion, as it looks to energise its economy. Many of the projects will be metals intensive.
Markets have been hoping the once-in-a-decade leadership change underway at a Communist Party congress in Beijing will open the door to more aggressive steps to support growth that is crucial to Western economies' own recoveries.
"I think they have to start on the right foot, and I would be very surprised if they allowed the economy to stagnate," Brown said.
"Yes, the accumulation of strategic stock piles started in aluminium - it's the market that needs support - but are we going to need that metal? It's entirely possible. I think it's a sign that you will see an improvement in demand over the next 12-15 months."
Sources told Reuters last week China's influential state planner could revive the stockpiling plan as soon as this month to buy around 400,000 tonnes of primary aluminium ingots and 165,000 tonnes of refined copper cathode for state reserves.
This volume equates to around 8 days of consumption for refined copper and nearly 7 days for primary aluminium, and compares to China's current stocks of more than one million tonnes of both copper cathode and aluminium ingots.
"We think there will be another tender after the Wednesday one," said one of the sources, who declined to be identified because he is not authorised to speak to the media.
"But how many tonnes the SRB will buy, or smelters will sell, depends on prices," he said, referring to the prices offered by the state reserve body.
"We think the State Reserve Bureau will buy 160,000 tonnes first, then about 200,000 tonnes in the second tender later," said a source at another large smelter.
The move to resume stockpiling followed a proposal by an industry body for the state planner to buy base metals from domestic smelters hit by weak demand and battling conditions harsher than during the financial crisis of 2008/09.
Although China racked up annual GDP growth of 7.4 percent in the third quarter of 2012, that was its slowest pace since the depths of the financial crisis in the first quarter of 2009.
Unlike the launch of the inaugural stockpiling in 2008, the SRB has not officially announced current purchase plans this time round.
In December 2008 it said it planned to buy 1 million tonnes of aluminium, 400,000 tonnes of copper and a total of 400,000 of lead and zinc from domestic smelters over three years.
But it had only bought 235,000 tonnes of copper, 590,000 tonnes of primary aluminium and 159,000 tonnes of refined zinc by the end of that round. (Reporting by Polly Yam; additional reporting by Susan Thomas in London; Editing by Clarence Fernandez and Patrick Graham)
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