Network Metals LLC

Today a couple of the Chinese provinces announced further reserves purchases of their own. Shaanxi Province is buying 77,000 tons of lead and zinc, and the Guangxi Province has announced its intention to buy 50,000 tons of aluminum, both to shore up the provinces’ smelters. The Chinese are taking very aggressive steps in the industrial space to shore up their domestic production of finished metal products, and the province purchases are just additional steps in the mold of the State Reserve Bureau purchases we have been seeing over the past few months. Particularly interesting, especially in the case of Guangxi purchases, is that the transactions will be funded with central Chinese government funds.

This is a directly coordinated event, and specifically designed to keep domestic Chinese producers functioning, even through periods of extensive losses. One further concern, however, is the rising prices of metals over the past week or so. If these increases continue, will the Chinese government continue to purchase reserves? Maybe not…