Thursday, January 01, 2009

Aluminum purchase to boost prices in city

China, the world's largest metals consumer, will purchase 290,000 tons of aluminum from domestic smelters to boost state reserves, helping lift prices to a three-week high in Shanghai.

Aluminum Corp of China Ltd, the country's largest smelter, will supply 150,000 tons to the government for 12,350 yuan (US$1,808) a ton by the end of next month, said an executive. Qingtongxia Aluminum Group Co, Yunnan Aluminum Co and five others will each supply 20,000 tons, the executive told Bloomberg News.

Prices of aluminum, used in car parts, have plunged 36 percent in China this year, leading to losses at almost all producers. Chalco, as the Aluminum Corp of China Ltd is known, and China's other major smelters are meeting today with government officials, including those from the State Reserve Bureau, to discuss the purchases.

China's State Reserve Bureau may buy a total of 1 million tons of aluminum and 300,000 tons of zinc from producers over three months from January, said Chen Yonglin, an analyst at CITIC Futures Co.

Aluminum for March delivery rose to 11,330 yuan a ton on the Shanghai Futures Exchange, the highest close since December 3.

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