As of Thursday, July 4, SMM copper stocks in major regions across China increased by 2,600 mt from Monday to 409,800 mt, and increased by 10,700 mt WoW, marking the stock accumulation for two consecutive weeks. Compared to Monday, stock changes varied across regions, with slight decreases in Shanghai and Tianjin, and increases in Guangdong, Sichuan and Chongqing. Total inventory is 289,500 mt higher than 120,300 mt in the same period last year, with inventory in Shanghai up 183,000 mt YoY, that in Jiangsu up 50,100 mt YoY, and that in Guangdong up 55,500 mt YoY.
Specifically, copper inventory in Shanghai decreased by 1,300 mt from Monday to 270,000 mt, while copper inventory in Jiangsu held flat. The limited arrivals of imported copper and a recovery in downstream consumption contributed to the stock decline in East China. Copper inventory in Guangdong increased by 3,300 mt to 80,700 mt, with significant arrivals of imported copper and overall poor performance in end-user consumption, as reflected by the decline in the average daily pick-ups from warehouses. The copper inventory decrease in Tianjin was mainly due to reduced supply from nearby smelters undergoing maintenance. The inventory increase in Sichuan and Chongqing was due to the production ramp-up at smelters in Southwest China.
Looking ahead, SMM understands that the arrivals of imported copper will decrease next week, but approaching delivery will prompt smelters to actively make shipments to warehouses. Therefore, the total supply is expected to increase next week. On the demand side, the widening price spread between the current-month and next-month contracts and copper prices rising back above 80,000 yuan/mt are expected to reduce consumption next week. Therefore, SMM anticipates a scenario of increased supply and decreased demand next week, with weekly inventory likely to continue rising.
