China to buy 400,000 tons of aluminum

The State Reserve Bureau of the National Development and Reform Commission plans to bid for 160,000 tons of aluminum as the first step in a 400,000-ton primary aluminum storage project, China Securities Journal reported on Wednesday.

The purchasing and storage of the 160,000 tons of aluminum will be carried out through competitive bidding among more than 10 shortlisted companies including Yunnan Aluminum Co Ltd, Jiaozuo Wanfang Aluminum Manufacturing Co Ltd and Henan Shenhuo Group.

According to the requirement on the bidding invitation, the delivery time for this purchase and storage will be from Nov 29 to Dec 29. The delivery will be stored in a total of 11 reserve warehouses.

"Since the beginning of this year, the price of primary aluminum has been declining due to weak demand in the downstream market. Aluminum smelting enterprises are suffering serious losses. The purchasing and storage project may boost prices in the short term," said Li Xun, an analyst at Myyouse.com.

Myyouse.com, operated by Shanghai Ganglian E-Commerce Holdings Co Ltd, provides information on nonferrous metals. It says the inventory of electrolytic aluminum in Shanghai, Wuxi and Hangzhou was increasing up to Nov 12.

The long-term trend in the aluminum market is not optimistic. "There is no obvious sign of growing downstream need. And the fourth quarter is the off-season for consumption, so the price of aluminum is unlikely to rise during the quarter," said Li.