China Weekly Inventory Summary and Data Wrap (May 13)

SHANGHAI, May 13 (SMM) - This is a roundup of China's metals weekly inventory as of May 13.

Aluminium Ingot Inventory Extended Decline

 As of May 12, aluminium ingot social inventory across eight major markets in China totalled 1 million mt, down 30,000 mt from a week ago and 58,000 mt lower than a year ago. Shipments were smooth across many regions, and traders were also more motivated to sell. The inventory in Wuxi fell by 16,000  mt to 469,000 mt amid moderate sales and limited arrivals. Currently, shipments and arrivals in Gongyi area are normal, and previously delayed shipments are gradually arriving. Spot premiums in Gongyi declined after aluminium prices rebounded in recent days, and market activities turned brisk.  The inventory in Foshan stopped growing and dropped by 8,000 mt thanks to strong demand. Inventory in Hangzhou fell to 56,000 mt due to strong consumption. Trades in south China showed signs of weakening, while those in Henan and east China remained modest. More cargoes will arrive in Henan in the future.

Inventory of Aluminium Billets Rose 10,100 mt as of May 12

The domestic aluminium billet inventory stood at 138,700 mt as of May 12, an increase 10,100 mt or 7.84% from a week ago. The inventory changes in the five major regions were as follows: Foshan (+9,500 mt or 13.48%); Wuxi (-3,600 mt or 15.72%); Changzhou (+3,100 mt or 22.96%); Huzhou (-2,000 mt or 13.33%); Nanchang (+3,100 mt or 45.83%). High conversion margins suppressed demand. Active production resumption of aluminium smelters in Yunnan caused large amounts of aluminium billets to be shipped to Foshan, pushing up local inventory. The pandemic situation in Wuxi is gradually under control, and local enterprises purchased on demand. Consumption in Nanchang area was poor, the arrival of aluminium billets increased, and causing local inventory to grow. Lower conversion margins may attract buyers in the future. Market sentiment has improved after the pandemic is gradually brought under control. As such, aluminium billet inventory may decline next week.

Inventories of Zinc Ingots across Seven Markets in China Decreased 14,200 mt from May 5

Total zinc ingots inventories across seven markets in China stood at 266,900 mt as of Friday May 13, down 9,100 mt from May 9 and 14,200 mt from May 5. Inventory of zinc decreased further this week. In Shanghai, the fall of zinc prices boosted the market purchasing sentiment after the recovery of pick-up. And due to the extremely low arrivals in Shanghai in recent times, the inventory in Shanghai decreased sharply. In Tianjin, as the raw material inventory of enterprises hovered at a low level, the downstream restocked actively after the sharp fall of zinc prices. In the case of improved consumption and the demand for restocking, inventory in Tianjin reduced sharply. In Guangdong, with stable arrivals and modest operating rates of die-casting enterprises, the purchases in downstream for rigid demand lowered, leading to a slight increase in the inventory. Inventories in Shanghai, Guangdong and Tianjin dropped 9,900 mt and inventories across seven major markets decreased 14,200 mt.

Copper Inventory in Major Chinese Markets Fell 2,600 mt on Week

As of May 13, copper inventory across major Chinese markets dropped 2,600 mt from Monday to 118,900 mt, a decrease of 1,100 mt from last Friday.  The total inventory fell 222,700 mt from the same period last year when the inventory was recorded 341,600 mt. The pandemic and the transportation problem dragged down the operating rates of copper processing enterprises, even though the copper prices dropped significantly after the Labour Day holiday this year. Moreover, most downstream enterprises have completed their restocking at the beginning of this week due to the huge spread between the front-month and next-month contracts, so their willingness to restock became weak at the end of this week.

In detail, the inventory in Shanghai decreased 300 mt to 84,600 mt, the inventory in Guangdong dropped 200 mt to 26,300 mt, the inventory in Jiangsu fell 2,000 mt to 5,100 mt, and the inventory in Tianjin dipped 100 mt to 300 mt. Looking forward to next week, the supply will increase as the imported copper will continue to rise, while the consumption is expected to remain stable. Therefore, SMM expects that the weekly inventory next week will probably increase.

Copper Inventory in Bonded Area Decreased 2,100 mt on Week

According to SMM research, copper inventories in the domestic bonded zone dipped 2,100 mt from May 6 to 327,000 mt on May 13. Inventory in the Shanghai bonded zone dropped 2,800 mt to 290,000 mt, and inventory in the Guangdong bonded zone rose 700 mt to 37,000 mt. SMM expects the inventory will drop further due to the huge import profits. In addition, according to the SMM survey, the inventory that was previously piled up at ports due to the pandemic has been greatly decreased.