November 13, 2001	Tuesday	Shaba’an 26, 1422

LONDON, Nov 12: China, which has completed a 15-year quest to join the World Trade Organization, is set to be an unpredictable influence on Europe’s commodity markets, maintaining its “wild card” status, analysts said on Monday.

They said the world’s most populous country needed — and was now committed to importing — thousands more tons of wheat, metals and sugar, but its secretive buying patterns were bound to inject more volatility into prices.

For years China has been the wild card for markets, Gerald Mason, senior economist at Britain’s Home Grown Cereals Authority, told Reuters.

China’s entry into the World Trade Organization (WTO) is another big wild card...(For wheat) they now have a structural commitment as well as a balance sheet requirement. But as ever, when they will buy it and in what volume remain the big question marks.

The vast market opening pledged by China, which was accepted into the WTO on Saturday, will see European and other countries rush to secure lucrative deals, toughening already stiff competition in several commodities markets, analysts said.

For wheat, Mason said reduced stocks and a change in agricultural policy would free a market for between six and seven million tonnes per season.

Agricultural policy has changed over the last few seasons to reduce the amount of support they give for the very low quality spring wheat that used to be planted in significant areas, he said.

He said producers of soft milling wheat in France, Denmark and Britain would benefit, while Canada and the United States could market high quality, high protein spring wheat.

They will be in the market, or need to be in the market, at some point for these types of wheat, he said.

But anything more than that is difficult to say — particularly the timing and the volumes...With the balance sheets getting tighter all the time, then it will be quite important for the price and international values.

It was the same story for metals, analysts said, adding that the impact would vary because China is a swing supplier.

It (Chinese entry) will only have an impact on the margins of the metals market, it will not have much effect for a year or two, analyst Robin Bhar of Standard Bank London said.

He said producers could grab an opportunity to market copper scrap, blister and concentrate to make up China’s shortage of the red metal, while the country could add a few thousand tons to its 500,000 annual exports of zinc.

The average imports tariff on mineral products will be reduced to 4.13 per cent in 2005 from 4.48 per cent at the end of 2000, while the average import tariff for base metals will fall to 8.07 per cent from 10.58 per cent, a Chinese official has said.

But some analysts said there could be difficulties in channelling imports into the vast country.

One question mark over China’s ability to implement (the tariff rate quota) is, who will actually have authority to import sugar in the future into China which still remains fairly unclear this stage, Roger Bradshaw, Rabobank’s global sugar and sweetener specialist, said.

At the moment in China there are five organisations allowed to import sugar officially. But only two of those are in a position to actually import sugar. There is still some way to go in bridging the import export window in China and its domestic distribution and importing requirements.

But others said they held out hope that the picture could become clearer, helping others to calculate supply and demand for key commodities, like metals.

Western accounting standards may help to make metals data more transparent and less opaque.

It is a very confusing picture at present, and there has to be more understanding of China’s role in the metal trade world, Bhar said.—Reuters