FT reported that as depressed light metal prices continue to batter the global aluminium industry, China’s State Reserves Bureau, Beijing’s stockpiling agency plans to buy up to 300 kilo tonne of aluminium for delivery between April 1st and May 31st 2013.

China acounts for 40% of global aluminium output and the move by the SRB while unlikely to have any effect on metal prices, could help to keep Chinese smelters in business and that, ironically, will perpetuate the oversupply situation that has been adversely affecting the industry worldwide and forcing aluminium producers to cut capacity.

Chinese prices have however, gained 1.9% on the Shanghai Futures Exchange but industry watchers claim the move is designed solely to support China’s domestic market.

Mr Paul Adkins MD of AZ China said that the move changes nothing, stressing that the market is seriously over supplied and awash with inventory.