Yet, as we reconnect the world, and handle post-Covid-19 fears, supply and inventory constraints are temporarily pushing commodity prices higher. Whereas inventories have been decreasing for industrial metals in LME warehouses, we notice a pick-up in inventories for some metals, especially copper and aluminum, in Chinese SHFE warehouses. Furthermore, metals stockpiling implemented by the State Reserve Bureau (SRB) has historically been a policy support measure in China. During the financial crisis between December 2008 and January 2009, for instance, the SRB bought 590,000 tons of aluminum and 159,000 tons of zinc. Although figures are unknown, we can certainly assert that the SRB supported its metals industries by stockpiling in 2020. 

Copper is a particularly striking example: Chinese warehouses were restocking and maintaining high levels of inventories while the global production balance (production minus use/sales) was in deep negative territory.

On top of using stockpiling as policy support for its industry, China also stockpiled food commodities for strategic reasons. Although we do not have data on SRB purchases, Chinese imports of grains & cereals (i.e. rice, wheat and corn) have surged by +71% in 2020 compared to 2019. Interestingly, in a context of tensions with Washington, China did not ramp up its food imports from the US. Imports of soybeans, the most imported food commodity from the US, have not recovered to pre-pandemic levels yet.