China Weekly Inventory Summary and Data Wrap (Jul 15)

SHANGHAI, Jul 15 (SMM) - This is a roundup of China's metals weekly inventory as of July 15.

SMM Aluminium Ingot and Billet Inventory Data as of July 14

Aluminium ingot inventory: The aluminium ingot social inventories across China’s eight major markets totalled 697,000 mt as of July 14, down 26,000 mt from last Thursday and 136,000 mt lower than in the same period last year. A wave of downstream dip buying was seen in the middle of this week. Due to pandemic-induced decline in arrivals and active cargo outflows from warehouses, the inventory in Wuxi fell. The inventory in south China stopped growing and has begun to fall as lower aluminium prices attracted buyers. Trading activities picked up after aluminium prices fell to 17,000 yuan/mt. However, whether the destocking can sustain will depend on the recovery of downstream orders.

Aluminium billet inventory: The domestic aluminium billet social inventory stood at 98,500 mt as of July 14, down 3,200 mt from last Thursday, but up 9,200 mt from this Monday. With increased arrivals, the inventories in Wuxi and Foshan accumulated. The inventories declined across Changzhou, Huzhou and Nanchang, where downstream producers restocked as needed. On the whole, lower aluminium prices boosted downstream purchasing sentiment. However, in view of the stable production of aluminium smelters and increased arrivals, the sustainability of destocking will be worthy of close attention.

Copper Inventory across Major Chinese Markets Added 1,500 mt from Monday

As of Friday July 15, SMM copper inventory across major Chinese markets increased by 1,500 mt from Monday to 120,700 mt, up by 2,600 mt from last Friday. Compared with Monday's data, the inventory in Shanghai and Chongqing rose, while that in Guangdong, Chengdu and Tianjin decreased. The total inventory dropped by 62,400 mt compared with the same period last year when the inventory was recorded at 183,100 mt. Among them, the inventory in Guangdong fell by 48,700 mt, that in Jiangsu dropped by 7,900 mt, while that in Shanghai was higher than in the same period last year. The higher inventory this week was caused by the increase in shipments from smelters near the delivery of the 2207 contract and the poor downstream consumption amid the falling copper prices.

In detail, the inventory in Shanghai increased by 3,600 mt to 86,800 mt due to poor consumption, while the inventory in Guangdong fell by 2,100 mt to 24,000 mt because of the maintenance of a smelter in Guangxi.

Looking forward, after the delivery of the 2207 contract, the shipment from smelters and the import volume will both decrease, so the overall supply may fall slightly. The change in inventory mainly depends on consumption, while the consumption will hardly improve amid the falling copper prices. The weekly inventory next week will rise slightly due to the weak supply and demand.

SMM Zinc Ingot Social Inventory Dropped 3,000 mt from Monday

SMM zinc ingot social inventory across seven markets in China totalled 153,700 mt as of Friday July 15, down 3,000 mt from Monday July 11 and 5,200 mt from last Friday July 8. The inventory in Shanghai dropped slightly amid downstream restocking demand though it weakened significantly following active purchases earlier when zinc prices dropped; and the sellers also held firm to the prices amid tight supply. The inventory in Guangdong was flat amid sluggish downstream demand and bearishness over future zinc prices. In Tianjin, the inventory dropped further due to low arrivals and dip purchases although the sellers and buyers were wrestling over the prices. Overall, the inventory in Shanghai, Guangdong and Tianjin dropped 2,500 mt from Monday, and those across seven markets in China fell 3,000 mt.

Bonded Zone Inventory of Nickel Increased Slightly as the Price Ratio Improved

The price ratio gradually recovered this week, and the spot imports gained considerable profits even though the US dollar rose slightly. According to the SMM research, the bonded zone inventory stood at 7,800 mt this week. The inventory of nickel briquette was 2,900 mt, and that of nickel plate was 4,900 mt, 200 mt higher than last week. The higher nickel inventory in the bonded warehouses this week was contributed by the better demand from the domestic alloy sector, the customs clearance of some goods and the arrival of goods at ports due to the improved price ratio.

Copper Inventory in China Bonded Zone Declined 8,100 mt on Week

Copper inventories in domestic bonded zones decreased by 8,100 mt from last Friday July 8 to 278,300 mt as of July 15, according to the SMM survey. The inventory in Shanghai bonded zone fell by 6,500 mt to 249,500 mt, and that in Guangdong dropped by 1,600 mt to 28,800 mt. When the import window opened in the past several weeks, copper cathode stored in the bonded warehouses was moved to the domestic market one after another and approaching the delivery of the 2207 contract, some imported goods were registered as warrants. In the past two weeks, the import window remained closed mostly, and the imported copper trading was slack. SMM expected that the decline in the bonded zone inventory will slow down, and the inventory may rise soon.

Nickel Ore Inventories at Chinese Ports Fell 61,000 wmt WoW

As of July 15, the nickel ore inventory at Chinese ports dipped 61,000 wmt from a week earlier to 5.21 million wmt. The total Ni content fell by 400 mt to 41,000 mt. The nickel ore inventory was at a historically low level this week. The port inventory of nickel ore across seven major Chinese ports stood at 2.547 million wmt, 149,000 wmt higher than the previous week. The inventory at Lianyungang port rose sharply due to the pandemic outbreak in this area, while the inventory at Jinzhou Port and Tieshan Port dropped palpably because of the restocking rhythm. At present, the shipment from the Philippines has returned to normal, but the downstream demand is weak and the nickel ore prices are on a downward trend, which can hardly boost the nickel ore imports. In the short term, port inventory of nickel ore may remain rangebound at the current level.