Base metals prices have come under pressure recently from regulators in China.

Decade high prices for commodities including copper and tin are beginning to put pressure on industrial production in the world’s biggest consumer of metals. With much of China’s economic recovery dependent on manufacturing, the government has begun to put pressure on companies to reduce their prices.

One such move has been to call on banks and other traders to wind in speculative long positions. Although the rise in base metals prices has slowed, the move has not had the desired effect.

Therefore, China’s National Food and Strategic Reserves Administration (NFSRA) has announced that it will release batches of stockpiled base metals into the market, in an attempt ensure supply and stabilize prices.

According to the announcement on 16 June 2021, the NFSRA will release stocks of copper, aluminium, and zinc – amongst other commodities. However, there has been no mention of tin.

Our view: It is currently understood that the NFSRA holds no tin stocks, while there are few other stockpiles that could also be released.

In July 2020, the Yunnan provincial government announced that it would offer incentives for producers in the province to stock tin. A 40,000-tonne stockpile was targeted to support companies when COVID-19 initially impacted demand in the first half of 2020. However, ITA research indicates that no producers in Yunnan made use of the policy.

As such, it is expected that the tin market will not be materially affected by the NFSRA announcement.