(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.
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
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
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,"
"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
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
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)