China's Hunan Nonferrous eyes metals stockpiling loan

HONG KONG, May 14 (Reuters) - China's Hunan Nonferrous Metals is considering borrowing 1.2 billion yuan ($176 million) in bank loans to build stocks of metals produced by its plants, a top executive said on Thursday.

Such a stocking plan by the firm, a leading producer of zinc, tungsten, antimony, indium and lead in Hunan province, could drive up Chinese prices of those metals, which could limit the country's exports and attract imports.

China is the world's top producer of lead, zinc, tungsten and antimony.

Hunan Nonferrous' general manager, Li Li, said the Hunan government would give 50 million yuan annually to subsidise interest for the bank loans.

'We are studying such a plan and have not finalised details yet,' Li told Reuters, without providing a timeframe for the completion.

'The provincial government's plan is to support nonferrous metals industry in the province. It mainly is to secure (economic) growth,' Li said.

'By doing stocking, our plants would have orders and those that hold stocks could cash in,' Li said.

He added the stocks could be stored for one year but could also be sold before that if prices rose.

The firm controls Zhuzhou Smelter, which is China's top zinc producer and has 500,000 tonnes of zinc capacity and 100,000 tonnes of lead capacity.

It also controls Hsikwangshan Twinkling Star, the top antimony smelter in the country, which aims to produce 28,000 tonnes of the metal this year.

An antimony analyst at state research firm Antaike, Yang Xue Ling, said Hunan Nonferrous' stocking could drive up prices if the stocking amount was more than 10,000 tonnes as that could change the supply and demand situation.

'The news has impact on prices. It is driving the price trend upward,' Yang said.

China produced less than 60,000 tonnes of antimony metal last year and output would slightly rise this year, she predicted. She added consumption would also rise this year, but gave no estimate.