Copper inventories in major domestic regions showed a destocking trend over the weekend [SMM weekly data].

SMM January 26:

Data Review: As of Monday, January 26, SMM national copper inventories in mainstream areas decreased 1.49% WoW, while total inventory increased 158,700 mt YoY.

By region, inventories in major domestic consumption areas showed slight destocking. In Shanghai, warehouse withdrawals improved, but the destocking pace was limited by continuous arrivals. Jiangsu inventory also dropped back slightly, mainly due to reduced arrivals of domestic supply. Guangdong also exhibited destocking, again primarily because arrivals of domestic goods shrank.

Looking ahead, supply side, arrivals of both imported and domestic copper are expected to see marginal improvement, making overall circulating supply more abundant. Demand side, stockpiling sentiment ahead of the Chinese New Year is boosting downstream consumption marginally. Survey indicates the weekly operating rate for copper cathode rod is expected to rebound to 71.2% this week, up 3.22 percentage points WoW. Considering the tug-of-war between sellers and buyers, the market currently shows a "supply increment, consumption recovery" pattern. Social inventory is expected to continue its slight destocking trend this week.