(Bloomberg) -- China is considering selling about 500,000 metric tons of aluminum from state reserves, according to a person with knowledge of the plan, in a move that would help cool the market and meet the Asian nation’s emissions objectives.Aluminum prices plunged, hitting a daily decline limit in Shanghai, as traders sold futures contracts on earlier speculation of China’s plans. Releasing stockpiles of the highly carbon-intensive metal could offset production losses caused by China’s commitment to limiting energy usage as it plots its course to a carbon-neutral economy by 2060.Calls to China’s National Food and Strategic Reserves Administration seeking comment weren’t answered.China’s plan and its details, including the volume of aluminum to be released, are subject to change, the person said. Beijing is keen to prevent elevated prices of the industrial metal widely used in a range of goods including appliances, window frames and car parts from feeding through into inflation, according to the person.“Price weakness on the back of this possibility presents a buying opportunity,” Citigroup analysts including Oliver Nugent said in a note. While “this may well occur, albeit most likely gradually over the next 5 years or so, it would have only a minimal impact on the aluminium market.”Aluminum had climbed to its highest price in a decade in Shanghai earlier this month after Inner Mongolia, a major coal-fired production hub in northern China, said it’ll stop approving new projects following a reprimand from Beijing for failing to control its energy consumption.China is by far the world’s dominant supplier of aluminum. The country’s primary aluminum output totaled 37 million tons last year, and production in the first two months of this year rose to record levels.China previously sold aluminum from its reserves in 2010, when production cuts aimed at meeting energy-saving targets tightened supply. That same year also saw the sale of commodities from zinc to magnesium, cotton and corn to ease shortages and curb price gains.Aluminum traded 2.3% lower to settle at $2,219.50 a metric ton at 5:59 p.m. on the London Metal Exchange. In equity markets, producer Alcoa Corp. dropped 9% while European producer Norsk Hydro ASA slumped 5.2% and Granges AB and AMG Advanced Metallurgical Group also slipped.Other metals were mixed, with copper slipping below $9,000 a ton as the dollar climbed. Trafigura, the world’s biggest copper trader, expects the metal to hit $15,000 a ton in the coming decade as demand from global decarbonization produces a deep market deficit.For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2021 Bloomberg L.P.
One of the world’s leading commodity traders, Louis-Dreyfus Company (LDC), has opened up to outside ownership for the first time in almost 170 years. The trader has sold a 45pc stake to ADQ, the Abu Dhabi state-owned holding company and also agreed a long-term supply agreement for the UAE. Owner Margarita Louis-Dreyfus, who also chairs LDC’s supervisory board, said the partnership marked a “milestone" in the firm's strategy. She has been seeking new investment after tightening her control in December 2018 when she bought out family members, borrowing about $1bn (£755m) from Credit Suisse to do so, pledged against her stake. Micheal Gelchie, LDC chief executive, said the firm and ADQ had a “shared ambition” to invest in innovation and technology that could “transform food and agricultural production”. LDC is one of the ABCD quartet of leading commodity traders, alongside Archer Daniels Midland, Bunge and Cargill. Founded as a grain trader in 1851 by Leopold Louis-Dreyfus, it produces, stores and ships about 80m tonnes of cotton, rice, sugar, grain and other agricultural products a year, with 2019 sales of $33.6bn and profit of $230m. Leopold’s great grandson, Robert Louis-Dreyfus, took over in 2006, three years before his death from leukaemia, when he put his wife Margarita in charge of the trust that held his 61pc stake. Commodities traders have been trying to diversify in recent years amid rising competition and trade wars. LDC has invested in partnerships with Leong Hup International, the poultry business based in Malaysia, and Luckin Coffee, the Chinese coffee chain. The terms of its deal with ADQ were not disclosed. LDC said at least $800m from the sale would be invested to support its long-term plans. H.E. Mohamed Hassan Alsuwaidi, chief executive of ADQ, said: "We share LDC’s vision for future growth of the business, and look forward to partnering with LDC’s existing shareholders and management team to capitalize on the sector’s emerging opportunities."
The Commitments of Traders report covering positions held and changes made by money managers in the week to June 2 found that speculators only made relatively small changes. Buying of WTI crude oil, gas oil, copper and cotton were off-set by selling of gold, soymeal, corn and coffee.