The announcement triggered a brief rally in the base metal sector in London and Shanghai, sending tin prices up to 10 per cent higher. But prices dropped later amid traders' doubts about the plan and a new bout of gloom about the prospects for the global economy.
The move suggests China is willing to absorb excess metal production through stockpiling, stimulating domestic demand or propping up exports through rebates – in an effort to maintain output and employment levels – rather than by encouraging production cutbacks, Barclays Capital said.
In a statement posted on its website, China's Yunnan provincial government said it would buy 150,000 tonnes of copper, 300,000 tonnes of aluminium, 150,000 tonnes of lead, 300,000 tonnes of zinc and 100,000 tonnes of tin.
