China to auction 50,000 tonnes of aluminium from state reserves in the first batch of bidding on July 5-6

On Tuesday, June 22, China’s state reserves administration said it would publicly auction 100,000 tonnes of non-ferrous metals early next month. In three separate notices, the National Food and Strategic Reserves Administration said that it would auction 20,000 tonnes of copper, 30,000 tonnes of zinc, and 50,000 tonnes of aluminium on July 5-6.

Only aluminium processing and manufacturing enterprises will be eligible to bid, and the aluminium they will purchase shall be used for production promptly. It shall not be resold or hoarded, said the administration.

The aluminium auction will take place on a site operated by a state-run firm Norinco, while the copper and zinc sales will take place on an online platform belonging to another state-owned miner and metals trader China Minmetals Corp.

The release of state metal reserves is one of the major attempts by Beijing to ease the stellar rally in commodity prices that have narrowed the profit margins of manufacturers.

The amount of aluminium to be auctioned in the first batch is 1.5 per cent of the toatl output in May.

"We expect more sales from reserves combined with slower underlying demand and seasonal weakness to put a lid on prices in the very near term, but we then expect a rally to new highs over the next 3+ months," Jefferies analyst Christopher LaFemina said in a note.

The bidding hours will be from 8 AM to 12 PM (0000-0400 GMT) and 1 PM to 6 PM (0500-1000 GMT). Companies wishing to bid should register on the e-bidding platforms by 4 PM on June 27.

Bidders can also inspect the quality of the metals warehouses on June 30 and July 1 provided they have paid the deposit and arranged a viewing.