Friday, December 12, 2008
China's metal prices keep going down despite purchase for reserve
Friday, 12 December 2008
China's metal futures market didn't get off the downward trend although the provincial government of Yunnan, the major nonferrous metal producer in southwest China, kicked off its plan on December 1 to buy one million tons of nonferrous metals for reserve within one year. Yunnan provincial government announced earlier a plan to put in huge amounts of money to stock one million tons of nonferrous metals, including 150,000 tons of copper, 300,000 tons of aluminium, 150,000 tons of lead, 300,000 tons of zinc and 100,000 tons of tin.
However, copper contract 902 at Shanghai Futures Exchange (SHFE) ended at 24,130 yuan on December 9, down 13.9 from the 28,040 yuan of December 1, and SHFE aluminium contract 902 ended at 10,170 yuan on December 9, down 19.2 percent from the 12,590 yuan of December 1.
According to market analysts, the reserve policy by the government won't change the current oversupply and weak demand on the domestic metal market. Prices will fall further as inventories keep growing since the domestic production capacity has been greatly expanded during the bull market term.
Currently, prices of some metals have dropped below their cost prices.
Source: China Mining
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