Multiple Regions See a Contraction in Supply Arrivals, Copper Social Inventory Continues to Decline [SMM Weekly Data]

According to feedback from an Indian refinery, the relevant national authorities have issued a directive to prioritise domestic sulfur supply and ban exports, in order to safeguard local availability. Trade data shows that India's sulfur exports are heavily concentrated on the Chinese market. According to WITS data, in 2024 India's exports of crude or unrefined sulphur totalled approximately US$81.02 million, with a volume of about 805.2 million kg (approximately 805,200 tonnes). Among this, exports to China reached US$78.33 million, with a volume of about 797.2 million kg (approximately 797,200 tonnes), accounting for roughly 99% of India's total sulfur exports. Other major destinations included Tanzania, South Africa, Sri Lanka, and Australia, but in very limited quantities. Previously, Indian industry lobbying groups had repeatedly called on the New Delhi government to ban sulfur exports. Of India's annual sulfur demand of about 2 million tonnes, more than half is met by imports, nearly half of which come from the Middle East. The immediate trigger for this export ban is the severe disruption to shipping in the Strait of Hormuz caused by geopolitical conflicts in the Middle East, which has continuously tightened global sulfur supply.

According to SMM statistics, as of July 16, social inventories of copper cathode in major Chinese regions fell to 123,400 mt, down by 16,600 mt from July 13. The recent destocking was mainly due to unplanned maintenance at some smelters, reduced domestic arrivals, and the diversion of overseas supply to the US market, while imported copper remained limited. In the secondary copper market, substitution of copper cathode was weak owing to compliance reviews on invoices. Although demand entered the traditional off-season, with downstream users making just-in-time procurement, the larger contraction in supply is expected to keep inventories low in the short term. Notably, the ratio of cancelled warrants in LME copper inventories has continued to rise recently, and some of the cancelled material has been arranged for shipment to China, indicating that low domestic inventories and tight spot supply are gradually attracting overseas material back. While demand is in the off-season and downstream users are making just-in-time procurement, the supply contraction has been more significant, and inventories are expected to remain low in the short term.