China’s sales of copper from its strategic reserve this week seems to have had little impact on prices.
The sales were announced in June as part of the Chinese government’s hectoring of commodity markets and traders in the country about soaring prices for some metal (iron ore and copper, for example).
China’s National Food and Strategic Reserves Administration said in three separate notices in mid-June that it would auction 20,000 tonnes of copper, 30,000 tonnes of zinc and 50,000 tonnes of aluminium on July 5 and July 6.
The amount of zinc being sold is equivalent to 5.7% of monthly production in China, based on official data for May. For copper, the auctioned volume was 2.3% of May’s refined output and for aluminium it is 1.5%.
Media reports claimed that some bids for the metal on Monday were around $US10,400 a tonne, while other reports did not mention bid prices.
If that was the case it was around $US1100 a tonne above market prices of $US9300 a tonne and within $US230 a tonne of the all-time high for copper reached in May.
Chinese reports said the sale went off quickly, as did sales of other metals such as lead, zinc and aluminium with the process over inside a day, compared to the two days set aside by the government.
More sales will be arranged in the near term to ensure market stability, the National Food and Strategic Reserves Administration said on Wednesday.
Comex copper for delivery in September rose 2.6% from Tuesday’s settlement price, touching $4.372 a pound (about $US9,600 tonne) on Wednesday before closing sharply in after-hours trading to be around $US4.2990 a pound.
In London LME three-month copper contract ended at $US9,455 per tonne on Wednesday, up 1.5% on the day.
The price of 62% Fe fines delivered to northern China finished all but steady on Tuesday at $US222.37 a tonne (up three cents). That’s below the all-time high of May 12-13 around $US237 a tonne.
Comex gold climbed back over $US1,800 an ounce on Wednesday to around $US1,804 then settled at $US1,802, before sliding back under that level to be trading around $US1,797 in early European dealings last night.
Gold traders are as confused as bond traders by the sudden slide in US Treasury yields this week to a five-month low of 1.288% before settling around 1.31%. Yields were back at 1.28% in early European trading last night, while West Texas Intermediate crude oil was down under $US72 a barrel and a long way from nearly $US77 a barrel last Friday.
