Copper Inventory in Major Chinese Markets Dipped 1,500 mt This Week

SHANGHAI, Feb 10 (SMM) - As of Friday February 10, copper stocks in mainstream markets decreased by 1,500 mt from Monday to 312,900 mt, while grew by 15,200 mt from a week earlier. The inventories increased 116,300 mt from pre-CNY holidays levels and were slightly higher than 113,100 mt in the same period last year. Since the end of December, the domestic inventory has accumulated for seven consecutive weeks, but the weekly accumulation rate has begun to decline this week. The market can keep an eye on whether the inflection point will come next week.

The inventory changes were mixed across China with the total inventory 127,600 mt higher than the 185,300 mt in the same period last year. The inventory was 74,600 mt higher than the same period last year in Shanghai, 8,700 mt higher in Guangdong, and 34,400 mt higher in Jiangsu. The inventory in Zhejiang exceeded the same period last year by 3,600 mt, and that in Chongqing was 5,000 mt more. Chengdu saw a 1,800 mt increase in inventory from the same period last year.

The inventory in Shanghai increased by 1,900 mt to 186,600 mt compared with Monday, and the inventory in Jiangsu increased by 1,000 mt to 52,600 mt compared with Monday. The inventory in east China continued to grow due to slow downstream recovery and the continued inflows of cargoes from north China. Inventory in Guangdong fell by 5,300 mt to 55,500 mt.

As far as we know, a large producer has been producing at capacity after Chinese New Year holidays while many downstream producers resumed production this week. This spurred the consumption in Guangdong, as reflected in the recent rapid growth in average daily shipments there. The decline in inventories in Tianjin was mainly due to the resumption of production by local downstream companies starting this week as well as the active transfer of cargoes from smelters in north China to east China. Overall, the market in south China was hectic while that in north China was lacklustre.

Shipments from smelters are expected to increase as the delivery of the SHFE front-month copper contract nears. But due to scarce arriving shipments of seaborne copper, SMM believes that total arrivals next week will increase only slightly. Downstream consumption, however, will increase driven by production resumption at more companies. On the whole, both supply and consumption will be picking up next week, and the inventory is likely to fall.