China sold off the first lot of its base metal reserves in half the stipulated time of the two-day auction in an attempt to cool market prices for its base metals complex.
Media reports noted that Norinco, a state-run auctioneer sold 50,000mt of aluminum, 30,000mt of zinc, and 20,000mt of copper, within the first few hours of the auction.
Aluminum lots were sold at a 5.3pc discount to that day’s closing of the Shanghai Futures Exchange (SHFE). Meanwhile, copper and zinc were sold at a 1.6pc and 4.6pc discount to the terminal price, respectively. In all 100,000mt of state reserve metal were sold in a matter of less than 12 hours.
China has said that its motive was to cool market prices for its base metals market, but participants noted that all SHFE prices rose today in anticipation of the auction. The country will continue to sell off such quantities over the next week, media reports indicated. The full effect of this on the global base metals economy is yet to be seen.