SHANGHAI, Aug. 4 (SMM) – The Shanghai Futures Exchange reported copper inventories in its approved warehouses declined some 10,000 tonnes in July. This occurred at the same time when a large number of imported goods entered China during this slack season for the red metal. Nevertheless, SMM does not consider it a sign of robust demand.
SMM survey shows that utilization rates at copper fabricators have underperformed past years in the first half of the year, leading SMM to believe that improving demand was not the reason behind this inventory fall during low-demand season.
Where have these copper stocks gone?
SMM team speculates that these inventories may be on the hand of traders or smelters.
Spot copper was offered at high premiums in Chinese market in July, which prompted some cargo holders to sell directly in spot market, rather than delivering goods to SHFE warehouses.
Moreover, the plunge in copper prices left smelters unwilling to ship out goods, reducing the volume of copper shipped into SHFE warehouses.
Spot discounts were reported from China’s copper market Monday afternoon, which may place pressure on futures prices.
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