2 foreign banks get licences to import gold into China

PUBLISHED : Wednesday, 15 January, 2014, 2:59pm
UPDATED : Thursday, 16 January, 2014, 3:00pm

China has granted licences to import gold to two foreign banks for the first time, sources said, as moves to open the world's biggest physical bullion market gather pace.

Allowing more banks to import gold could increase the supply of the metal into the country, easing local prices that are higher than in most other Asian countries.

China's gold imports more than doubled last year to over 1,000 tonnes - the country ousting India as the biggest buyer - as demand soared to unprecedented levels during the first annual drop in international prices in 12 years.

Australia and New Zealand Banking (ANZ) and HSBC were awarded import licences late last year, two sources with direct knowledge of the matter said.

Other trading sources said China Everbright Bank has also received approval to join the nine local banks already allowed to ship gold into China. Beijing strictly controls how much the banks import through a quota system.

ANZ and HSBC declined to comment. Everbright could not immediately be reached for comment.

"China is actually increasing its transparency. I think there will possibly be further access to other banks as well," said Cameron Alexander, manager of Asian precious metals demand at metals consultancy GFMS.

China faced a supply crunch early last year when a sharp plunge in gold prices released pent-up demand that eroded inventories at banks and jewellery sellers.

Premiums in China tend to be higher, as supply is tighter than in other parts of Asia owing to the quota system and the limited number of import licences.

Premiums are about US$15 an ounce over London prices, compared with less than US$2 in Singapore and Hong Kong. They rose to a record high of US$30 in April and May last year.

Mainland China imported 1,060 tonnes of gold from Hong Kong in the first 11 months of last year. Beijing does not release gold trade data, so numbers from Hong Kong - the main conduit for gold - provide the best estimate of imports.

But traders warned the award of the new licences did not necessarily mean that imports would jump sharply from last year's record volumes, as the level of demand would be the main factor driving shipments. But they added that the move indicated appetite for gold would likely be strong.