China Has No Plans to Buy Nickel for Reserves Now

By Xiao Yu and Glenys Sim

March 2 (Bloomberg) -- China, the world’s largest metals consumer, has no plans to buy nickel for its strategic reserves now, according to the China Nonferrous Metal Industry Association.

There’s “no such plan” for the State Reserve Bureau to buy the metal from domestic smelters, said the association’s Deputy Chairman Wen Xianjun, over the phone in Beijing. Wen didn’t give details. The group advises on government policies.

Wen’s denial comes after Reuters said the country may buy 10,000 metric tons to 20,000 tons of the metal to bolster local smelters, citing unidentified people. China has bought aluminum, zinc, corn and cotton to support domestic producers as prices dropped and exports fell the most in almost 13 years in January.

“We suggested that the government buy about 20,000 tons of nickel around the end of last year when prices were very low,” said Xu Aidong of Antaike. Prices have “recovered a bit,” Xu said.

Nickel futures in London have gained 8 percent since Dec. 5, joining other metals in a rally on expectations that China’s planned 4 trillion yuan ($585 billion) stimulus package may increase demand. China plans to build railways, housing and other infrastructure to support sagging growth.

Buying 20,000 tons of the metal would equate to about 10 percent of China’s 2008 production, according to Antaike’s data.

“It isn’t a lot so I doubt it will impact prices, but I think the main reason would be to support domestic producers, which have acquired a lot of mines in the peripheral regions in the past few years,” Jia Zheng, an analyst at Southwest Futures Co., said from Shanghai today.

To contact the reporters on this story: Glenys Sim in Singapore at Gsim4@bloomberg.net; Xiao Yu in Beijing at yxiao@bloomberg.net;