China will not purchase nonferrous metals for state reserve any more under the current market condition that domestic prices of nonferrous metals have been raised modestly through state reserve purchase, said an official with the National Development and Reform Commission (NDRC) here last weekend.

At present, China has completed the purchase of 590,000 tons of aluminium, 159,000 tons of zinc , 235,000 tons of copper , 30 tons of indium and 5,000 tons of titanium for state reserve.

Thanks to the purchases for state reserves and commercial reserves launched by the central and local governments in the first quarter of this year, prices of most major metals rose 30 percent. It widened the gap between domestic and international prices, thus attracting a flood of overseas resource for arbitrage.

Statistics show that China's import of copper and copper product approached to 400,000 tons in April, growing 6.6 percent over March; and the import of aluminum and aluminium product was also close to 440,000 tons, soaring 198.9 percent. The growth momentum continued into May.

NDRC is investigating the mass import of nonferrous metals, said the official in charge of NDRC's industrial coordination department, noting that productive enterprises haven't benefited directly from the state purchase for reserve, and middlemen and arbitragers instead become the final beneficiaries.

The higher domestic price led to the great deal of resource import, and it has made the state purchase no sense, so the government will not purchase those products for state reserve any more, said the official. – China Mining

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