China to boost metals stockpiles as part of reform

[BEIJING] China plans to increase its stockpiles of base metals, via both state and commercial reserves, as it seeks to balance supply and demand amid a commodities glut, according to two people with knowledge of the matter.

The plan includes studying a trial programme for companies to build reserves separate to their inventories, the people said, declining to be named because the information is confidential.

China already holds stockpiles of metals though the State Reserve Bureau. The people didn't give a timeline on when any new initiatives might be implemented or how they would be financed.

Commodity prices have collapsed since 2011 as mounting supply meets lacklustre demand in China, the world's top consumer, which is facing its slowest growth in decades.

Other measures under consideration include accelerating reforms that would cut taxes for domestic miners, and adjusting trade policies to support exports of refined metals derived from imported ore, like copper and tin, the people said.

Calls to Li Pumin, Beijing-based spokesman at the National Development and Reform Commission, the country's top economic planner, seeking comment on the measures went unanswered.

The plan reiterates the broader goals of China's so-called supply-side reforms, including limits on new industrial capacity and stepping up the closure of excess capacity.

China's fading infrastructure boom has left it saddled with too much capacity after decades of rapid growth. The nation's steel industry, in particular, has drawn fire from competitors for exporting its surplus too cheaply, stoking trade tensions and hammering profits globally.

BLOOMBERG