Mining Stocks Fall As China Restrains Metal Prices
The move comes amid fears that increasing metal prices could threaten China's post-pandemic recovery.
On Wednesday, mining stocks dropped after China announced it would release metal reserves to restrain commodity prices. China is the world’s largest consumer of raw materials. It fears that an increase in metal prices, and with it the extra costs that would be passed onto its consumers, could pose a serious threat to its economic recovery post-pandemic. Following the announcement, major mining stocks weighed heavily on the FTSE 100. Anglo American dropped 2%, Rio Tinto 0.9%, Antofagasta 1.5%, and Glencore 2.8%.
China has said it will release its major industrial metals reserves, which include copper, zinc, and aluminium, in steady batches in the near future. They will be available to non-ferrous metal processing firms and manufacturing firms via a public bidding process. However, China is yet to disclose the quantities of the batches, the auction process, or the specific manufacturers that will be welcomed to bid.
China’s stockpiling body, the National Food and Strategic Reserves Administration, said that the country’s decision would ensure price and supply stability of bulk commodities.