Over the weekend, SMM copper inventories in major regions across China decreased by 19,200 mt [SMM Weekly Data]

As of Monday, December 16, SMM data showed that copper inventories in major regions across China fell by 19,200 mt WoW to 103,100 mt. However, total inventories were 39,800 mt higher YoY compared to 63,300 mt in the same period last year. Among them, Shanghai's inventory was 35,800 mt higher YoY, Guangdong's inventory was 7,700 mt lower YoY, and Jiangsu's inventory was 13,100 mt higher YoY.

Specifically, Shanghai's inventory decreased by 17,300 mt WoW to 72,700 mt, and Jiangsu's inventory decreased by 1,400 mt WoW to 15,300 mt. Over the weekend, although there were arrivals of imported copper, the arrivals of domestic copper were limited, resulting in a negligible increase in total supply. In contrast, downstream consumption in east China performed well recently due to some enterprises rushing to deliver orders at year-end. Guangdong's inventory increased by 400 mt to 8,800 mt, mainly due to increased arrivals and weakened consumption, as reflected by the low daily outflows from warehouses in Guangdong.

Looking ahead, according to our understanding, imported copper is expected to continue arriving, but the arrivals of domestic copper remain limited, leading to a constrained increase in total supply. On the demand side, as demand declines, copper usage by downstream end-user enterprises has started to decrease slightly but remains at a high level. According to our survey, the weekly operating rate of copper cathode rod producers is expected to drop to 81.91% this week, down 0.46 percentage points WoW but up approximately 14% YoY. Therefore, we believe that this week will see demand outpacing supply, and weekly inventories are likely to continue declining.