30 Jun-01 Jul, 2015 - Singapore, SINGAPORE
Novotel Singapore Clarke Quay
Novotel Singapore Clarke Quay
In 2015, China looks to build its commodity stock piles and the Ministry of Finance has announced that - It would spend 154.6 billion yuan ($24.7 billion) this year to build up its reserves of grains, edible oils and what it termed "other materials." Although "other materials" is not specified, crude oil is said to be among the commodities that China plans to hoard. It's said that country plans to hoard 90 days' worth of oil in reserves to cover for supply disruptions, in line with other major economies.
The spending on stockpile has risen by 33% compared to 2014, when stockpile-spending was only 22%.
China has also imported oil, iron ore, copper and other commodities in record-high quantities in 2014 as prices for key commodities fell to their lowest levels in more than five years.
While the country is going for massive stock-piling, it is controlling the consumption of coal with policy changes to clean up highly-polluting industries.
The higher imports underline China's appetite for resources which it regards as essential for long-term development, despite a recent downward trend in actual consumption levels.
China's domestic supply of industrial metals like copper is weak and these metals are likely to be stockpiled by the country too. Besides, China also buys agricultural commodities such as corn, wheat and soybeans from farmers when market prices fall below preset state-guaranteed levels.
With this year's spending, China will try to cover losses from auctioning its cotton stockpiles - which traders say could be approximately 10 million metric tons - bought mostly when cotton prices were higher than the current rates.
More on China's commodity trade will be discussed at ASIA STCF: Asia Structured Trade & Commodity Finance on 30 June - 1 July, 2015 in Singapore.
Contact Ms. Grace Oh at grace@cmtsp.com.sg or call +65 6346 9147 for more details.
