China Weekly Inventory Summary and Data Wrap (May 20)

SHANGHAI, May 20 (SMM) - This is a roundup of China's metals weekly inventory as of May 20.

Aluminium Ingot Social Inventory in China Extended Decline 

The aluminium ingot social inventories across China’s eight major markets totalled 965,000 mt as of May 19, down 38,000 mt from a week ago and 22,000 mt from the end of April. Low arrivals were the main reason for the decline. The decline was still led by Wuxi and Gongyi. The inventory in Wuxi fell 30,000 mt due to a sharp drop in arrivals and normal cargo pick-up. Fewer arrivals also led to a decline in the inventory in Gongyi. Sellers in Gongyi held back cargoes, even as the local spot premium rose. The inventory in Foshan rose slightly amid normal arrivals and modest shipments out of warehouses. Inventories in Hangzhou, Shanghai, Chongqing and other regions were basically stable.

Aluminium Billet Inventory Recorded Weekly Decline of 2,300 mt as of May 19

The domestic aluminium billet inventory stood at 136,400 mt as of May 19, a drop of 2,300 mt or 1.66% from a week ago. The regional inventory changes were as follows: Nanchang (unchanged); Changzhou (+1,400 mt or 8.43%); Wuxi (-1,300 mt or 6.74%); Huzhou (+1,000 mt or 7.69%); Foshan (-3,400 mt or 4.25%). Downstream buyers were more willing to enter the market following the decline in aluminium prices and conversion margins. SMM will keep a close eye on whether consumption will recover further to sustain the recent the destocking process.

Copper Inventory in Bonded Area Decreased 12,300 mt on Week

Copper inventories in domestic bonded zone decreased by 12,300 mt to 309,700 mt from May 13 to May 20, according to SMM survey. Inventory in the Shanghai bonded zone decreased 5,700 mt to 284,300 mt, and inventory in the Guangdong bonded zone dropped 6,600 mt to 30,400 mt. Importers, who locked in the prices when the import was profitable, continued to transport the goods in bonded zones to China this week, causing the inventory of bonded zones in Shanghai and Guangdong to decline. In addition, it is known that there are still many traders who are waiting to pick up goods in bonded warehouses in Shanghai, so the inventory is expected to drop further.

Copper Inventory in Major Chinese Markets Fell 6,900 mt on Week

As of May 20, copper inventory across major Chinese markets dropped 6,900 mt from Monday to  119,900 mt, a decrease of 1,000 mt from last Friday. Compared with the data on Monday, the inventory in most regions of China this week fell, while the inventories in Shanghai and Zhejiang rose slightly. The total inventory fell 232,700 mt from the same period last year when the inventory was recorded at 352,600 mt. This week, because the arrival of imported copper in Shanghai increased, and the logistics shipped outside the city have not fully recovered, the inventory in Shanghai rose slightly. In Guangdong, since mid-week, special railway lines needed to be repaired, which leads to a decrease in arrival and inventory. The inventory in Jiangsu rose due to the increase in pick-up aroused by the recovered downstream consumption. Stimulated by the maintenance of smelters in the north and the improved local consumption, the inventory in Tianjin continued to drop.

In detail, the inventory in Shanghai increased 1,100 mt to 86,500 mt, the inventory in Guangdong dropped 7,100 mt to 26,000 mt, the inventory in Jiangsu fell 1,000 mt to 4,100 mt, and the inventory in Tianjin dipped 100 mt to 200 mt.

Looking forward, the arrival of imported copper will increase next week. Besides, the supply will rise as the railways in Guangdong will return to normal. However, the consumption may weaken as the end of the month approaches. Therefore, SMM expects that the weekly inventory next week will increase slightly.

Imports of Pure Nickel Turned Profitable this Week, while Inventory in Bonded Zone Declined Slightly

From Monday to Wednesday, LME nickel prices dropped, and SHFE nickel remained rangebound due to the tight supply. Under this background, pure nickel imports turned profitable, even though LME nickel rebounded sharply on Thursday night.  Nickel inventory in Shanghai bonded zone totalled 8,600 mt this week, a decrease of 200 mt from last week. The inventory of nickel briquettes and nickel plates was 2,900 mt and 5,700 mt respectively. Due to the high spot premiums and the weak demand, the bonded zone inventory did not drop sharply when the import window was opened. Therefore, the current import profits could not cover the premiums.

Nickel Ore Inventories at Chinese Ports down 7,000 wmt on Week

As of May 20, the nickel ore inventory at Chinese ports dipped 7,000 wmt from a week earlier to 5,363,000 wmt. The total Ni content decreased by 50 wmt. The total inventory at seven major ports across China stood at 2.231 million wmt, 23,000 wmt higher than the previous week. The port inventory of nickel ore dropped slightly, which is at a historically low level. The main reason is that the shipment of nickel ore from the Philippines was reduced by the poor weather conditions. At the same time, some preliminary orders were not delivered, and NPI plants with a low in-plant inventory of nickel ore consumed raw material quickly, hence the arrival of nickel ore at ports could not increase. The inventory at Lanshan, Lanqiao and Tieshan Port dropped sharply, while the inventory at Jingtang and Lianyungang Port increased. It is expected that the port inventory of nickel ore may increase slightly, and the shipment from the Philippines is of utmost concern.