SEOUL (Reuters) - The South Korean agency that manages state stockpiles of commodities says it could ramp up its inventories of non-ferrous metals next year amid growing demand for such materials in churning out products like electric vehicles.
The Public Procurement Service (PPS) has stockpiled raw materials for around 50 years, using them to help local companies in times of shortage or when prices spiral upwards.
“We can’t confirm our plan next year, but think (non-ferrous metal stockpiles) will be higher than this year,” Park Chun-sup, the newly-appointed administrator of the PPS, told Reuters in an interview on Thursday.
The agency typically keeps total non-ferrous and rare metal stockpiles at around 250,000 tonnes, with aluminum accounting for over half of that.
Park added that companies involved in producing electric vehicles or other new technologies were helping to drive up appetite for metals.
Benchmark prices for nickel, which is used in electric car batteries, earlier this month touched their highest in over two years.
Park noted that the agency was currently stockpiling non-ferrous metals equivalent to nearly 58 days of national consumption, above the 56 days it is required to hold.
He said that the PPS would likely buy more zinc in 2018 as stockpiles of the base metals are lower-than-usual this year, without giving details.
The PPS has canceled several zinc tenders so far in 2017, mainly due to a lack of bidders. [MET/TEND]
But Park said the agency would not rush into any decisions on buying for next year.
“The stockpiling policy should take a long-term approach - it’s easy to fail with a short-term strategy,” he said.
South Korea, Asia’s fourth-largest economy, has imported about 1.7 million tonnes of six non-ferrous metals each year over the past three years, according to a PPS estimate based on data from the Korea Nonferrous Metal Association and customs office.
Reporting by Jane Chung; Editing by Joseph Radford