As of Monday, October 21, SMM copper inventories in major regions nationwide decreased by 9,800 mt compared to last Thursday, reaching 219,400 mt. Post-holiday, inventories finally showed a decline. However, total inventories were 135,100 mt higher compared to 84,300 mt in the same period last year, with Shanghai 58,300 mt higher, Guangdong 30,600 mt higher, and Jiangsu 11,600 mt higher.
Specifically, inventories in Shanghai decreased by 3,400 mt from last Thursday to 150,700 mt, influenced by a decline in arrivals of both domestic and imported copper. However, we understand that there are still significant arrivals of imported copper expected, so attention should be paid to whether Shanghai can continue destocking. Inventories in Jiangsu decreased by 600 mt to 20,200 mt, with general consumption leading to a small decline in inventories. Inventories in Guangdong decreased by 5,600 mt to 42,500 mt, mainly due to reduced arrivals from nearby smelters and a slight increase in the operating rate of downstream enterprises, as reflected in the rise in Guangdong's daily outflows from warehouses.
Looking ahead, while domestic copper arrivals are expected to decrease, attention should be paid to whether there will be a significant increase in imported copper arrivals. We expect total supply this week to slightly decrease compared to last week. On the demand side, with rising copper prices and no significant increase in orders from downstream enterprises, our survey indicates that the weekly operating rate of copper cathode rod producers will drop to 76.28%, down 2.61 percentage points from last week. Therefore, we believe this week will see a scenario of reduced supply and reduced demand, with weekly inventories likely to decrease slightly.
