LME copper inventories jumped as coronavirus dampened demand in China

SHANGHAI, Feb 27 (SMM) – Copper inventories across LME-approved warehouses jumped 38.17%, or 61,175 mt in one day to 221,425 mt on Wednesday February 26, according to data from the London Metal Exchange. This marketed the highest level of inventories since November last year, with the increase being the largest since 2004. 

The significant buildup in LME stocks reinforced demand concerns amid the coronavirus outbreak. 

The COVID-19 impact has depressed demand in top consumer China and driven up domestic inventories of seaborne copper. This weakened spot prices of copper and deterred import of the metal to China, which may triggered the large deliveries of copper to LME warehouses, SMM believes. 

According to SMM data, social inventories of copper cathode in Shanghai, Guangdong and Jiangsu stood at 458,000 mt as of February 21, up 243,000 mt from January 23. A turning point in the post-holiday trend of domestic copper inventories this year is expected to be delayed till mid-April on the back of the slow resumption of demand.

Transportation curbs aimed at containing the virus disrupted copper imports to China and kept some cargoes stranded at ports, and this may also accounted for the rise in LME inventories. 

SMM expects China’s imports of copper cathode to fall significantly in February-March. According to SMM data as of February 21, copper stocks across Shanghai bonded area were only 38,000 mt higher from January 23, with the increase much slower than expected.