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Jae Hur
Seoul, Nov 4: South Korea's Supply Administration (Sarok) will maintain a high profile in the metals market next year to help local firms during the country's economic crisis, officials said on Wednesday.
"We will continue to buy next year the same amount of base metals we have bought this year," Kang Seung-hyun, deputy director of the administration's stockpile division, told Reuters in a telephone interview from the central city of Taejon.
The government procurement body has become a major metals supplier to the ailing domestic market, with private firms still finding it difficult to obtain trade financing, traders said.
"Sarok is taking a major role in the domestic base metal market by supplying base metals to the local export manufacturers and end-users, who still have difficulties getting banks to finance trade deals," said a trader with Samsung Corp.
Metal supplies by private local trading companies have shrunk since early this year, Kang said.
Sarok has supplied 15-20 per cent of thecountry's total base metal demand in 1998, up from about five per cent in all of 1997, Kang said.
The administration has bought 113,500 tonnes of aluminium ingots so far this year, compared to 30,330 tonnes for all of 1997, a Sarok official said.
Its copper and zinc purchases have soared to 32,000 tonnes and 8,400 tonnes respectively in the first 11 months of 1998, including purchases for November, compared with 4,000 tonnes and 139 tonnes in all of 1997, Kang said.
Lead, nickel and tin buying has totalled 7,000 tonnes, 1,240 tonnes and 1,000 tonnes respectively in the same period, compared to no purchases in 1997, Kang said.
The administration has been trying to stabilise prices and the supply of base metals by selling its stockpiles to local metal firms at an annual interest rate of 6.5 to 9.5 per cent for six-month financing terms, he said.
The government procurement body has lowered the interest rates to the current level from 7.5 to 10.5 per cent since early October, in line with lower domesticinterest rates, Kang said.
Sarok has also started metal futures trading on the London Metal Exchange to hedge price risks through six LME brokerages, he said.
The administration has been supporting the local port industry's efforts to invite LME warehouses in Pusan and acting as a go-between for the industry and overseas parties, Kang said.
Traders said the administration was planning to hold an international metal conference in Seoul next year with support from the local base metal industry.
Copyright © 1998 Indian Express Newspapers (Bombay) Ltd.
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