Tags: china | metal | stockpiling

China Metals Stockpiling Almost Over

By    |   Tuesday, 10 Nov 2009 09:46 AM

Report: China Stockpiling Almost Over

Julie Crawshaw

A new report from RBS bank says that China's metal stockpiling days are almost over, signaling a coming drop in metals commodity prices, especially copper, aluminum, zinc, and nickel.

“The huge rise in Chinese imports has been a central pillar of the recovery in base metal prices this year,” the report states.

“But a hefty portion of the imports has without doubt been for stockpiling purposes.”

“Even if material is not released onto the market. . . (it is) likely that Chinese base metal imports will decline further from their Q2 ‘09 peak.”

While acknowledging the difficulty of pinning down tonnages and identifying the type of stockpiling involved, the report’s authors say they are convinced that much of it has been speculative.

“The stockpiles are a potential burden and constitute one of the headwinds (foreseen) for 2010,” the authors write.

“Specifically, China is specifically big on copper, aluminum, zinc, and nickel. But as we move into 2010, analysts are debating whether or not China's stockpiling bonanza will continue.”

Sliding copper prices, which are about 20 percent lower than they were a year ago, are hindering profits for some companies.

Houston Wire & Cable cited a drop in copper price as one reason its third-quarter profit fell 66 percent, Dow Jones reports.

"We continue to be faced with weakened industrial demand due to depressed economic conditions but are pleased to have experienced a slight increase in sequential sales during the quarter," said President and Chief Executive Chuck Sorrentino.

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Report: China Stockpiling Almost OverJulie CrawshawA new report from RBS bank says that China's metal stockpiling days are almost over, signaling a coming drop in metals commodity prices, especially copper, aluminum, zinc, and nickel.“The huge rise in Chinese imports has...
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Tuesday, 10 Nov 2009 09:46 AM
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