Copper Inventories Fall in July Despite Off-Demand Period, SMM Reports

SHANGHAI, Aug. 1 (SMM) –The off-demand period has begun in the copper market, but copper inventories in major markets have fallen recently according to SMM data.

As of Jul. 29, inventories on the SHFE and LME grew nearly 30,000 tonnes, and those in Shanghai bonded area fell about 50,000 tonnes. But total inventories of the three fell more than 20,000 tonnes from the level seen in late June, according to SMM data. 

In the week ending Jul. 29, copper inventories on the SHFE, LME and Shanghai bonded area all dropped on a weekly basis, down 9,503, 13,275 and 20,000 tonnes respectively to 165,468 tonnes, 209,450 tonnes, and 580,000 tonnes. 

“The decline in total inventories reflects that demand is not that weak despite arrival of low-demand period, and there is no distinct difference between high and low-demand season,” SMM copper analyst points out.  

SMM survey finds that downstream orders had dropped since late June, a shortened high-demand period this year, and utilization rates fell on a monthly basis, but rose on a yearly basis. The month-on-month drop was due partial to high base in June. 

“The drop in bonded area’s inventories is due to import losses from the price ratio and exports contribution, not because of decent domestic consumption,” SMM notes, a sign of improving global copper consumption as LME copper stocks fell. 

In summary, falling inventories helped alleviate market pessimistic sentiment, but outlook for copper consumption in China should be not too rosy as economic growth in world’s second largest economy has entered New Normal with structural adjustment and slowing growth.   

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