Industrial metals are in the spotlight after Chinese authorities made a pledge to release government reserves to tackle concerns over shortages and high prices.

The National Food and Strategic Reserves Administration said in a statement on Wednesday that it would release batches of metals, including copper, aluminium and zinc, making them available to manufacturers.

The move comes after government concerns over a commodity price rally, which has pushed factory gate prices up to their highest since the 2008 financial crisis and threatened to squeeze industry profits.

It marks the latest effort by Chinese policymakers to damp down commodity prices. Last month, China’s economic planning agency warned of “excessive speculation” and vowed to tackle the spread of false information and hoarding.

Local press reports on Wednesday said Beijing had ordered state-owned enterprises to limit their exposure to overseas commodity markets.

Metals prices initially fell on Tuesday, following speculation that China may be preparing to release reserves. On Wednesday, benchmark copper prices were down 0.2 per cent at $9,550 per tonne, while aluminium was down 0.4 per cent at $2,458 and zinc was down 1.75 per cent at $2,978.

Metals have led a broad-based rally in global commodities prices, initially buoyed by China’s rapid and industry-driven recovery from the pandemic and fired up further after other big economies start to rev up. Copper, used in everything from electric vehicles to household wiring, hit a record high of above $10,500 a tonne last month.

China does not officially disclose its state reserves of industry metals, which it holds as insurance against price spikes.

Based on the difference between net supply and consumption, analysts said Beijing could have stockpiled 500,000 tonnes of copper, 1.5m of aluminium and up to 700,000 of zinc. However, they cautioned that these were only informed guesses. To put those figures in perspective, China consumes about 15m tonnes of copper a year.

Colin Hamilton, an analyst at BMO Capital Markets, said it was unlikely that China would release significant amounts of metal into the market.

“I think this is another bit of rhetoric to message the Chinese market that they think prices should be lower,” he said. “They will hope the market sorts itself out.”

The government’s warning last month over speculation in commodity markets hit prices hard, sending the price of iron ore 10 per cent lower. In 2020, China produced record volumes of steel and mills have remained active, despite a push to limit output over environmental concerns.

China’s ambition of net zero carbon emissions by 2060 will require cuts to the production of metals, adding to worries over potential shortages and helping to fuel higher prices. The country’s role as a major exporter of metals, as well as the world’s biggest commodities consumer and producer, has added to these concerns.

Last month, the Chinese government released draft regulation requiring energy-intensive projects to assess their carbon emissions.