China Weekly Inventory Summary and Data Wrap (Mar 4)

SHANGHAI, Mar 4 (SMM) - This is a roundup of China's metals weekly inventory as of March 4.

Aluminium Ingot Social Inventory Up 21,000 mt on Week

SMM data showed that the aluminium ingot social inventory in China totalled 1.11 million mt as of March 3, 2022, up 21,000 mt from last Thursday February 24, with Wuxi (+23,000 mt), Nanhai (+12,000 mt) being the major contributors to the overall increase. The inventory in Tianjin and Linyi was flat, and dropped slightly in Gongyi, Hangzhou, Chongqing, and Shanghai.

In the spot market, the smelters and traders were active in making shipments, but the downstream demand was sluggish amid high prices and still hibernating consumption, which resulted in thin transactions. It is expected that the inventory will keep rising slightly in the following week, and the market shall watch the arrivals as well as the marginal changes of the demand side.

Inventory of Aluminium Billets Declined 19,200 mt

The domestic aluminium billet inventory stood at 241,500 mt on March 3, a drop of 19,200 mt or 7.35% from a week ago, marking three consecutive weeks of decline. Nanchang (-4,600 mt or 29.35%), Changzhou (-7,800 mt or 25.74%) and Foshan (-6,900 mt or 5.52%) were the biggest contributors to the decline. Some downstream producers preferred aluminium billets over aluminium ingots amid soaring aluminium prices and natural gas prices, allowing aluminium billet inventory to decline. 

Some large aluminum extruders have resumed their production, while others did not fully resume until the end of February or the beginning of March. Given the high aluminium prices, it remains to be seen by how much and for how long the aluminium billet inventory will decline.

Copper Inventory in Major Chinese markets Added 400 mt from Monday

As of Friday March 4, the copper inventories in major domestic markets stood at 228,900 mt, up 400 mt from Monday February 28, and up 130,200 mt from pre-CNY holiday level of 98,700 mt. From the date of Chinese New Year (CNY) until the 26th calendar day post the CNY holiday, the increment of inventory was 10,400 mt more than the same period in 2021, when the inventory recorded an increase of 119,800 mt. However, the increment of domestic inventory has dropped significantly since this week. Some inventories in China increased, while some decreased.

In detail, inventory in Shanghai increased 2,100 mt to 134,400 mt WoW, and inventory in Guangdong increased 2,000 mt to 66,400 mt WoW. Inventory in Jiangsu decreased 3,000 mt to 16,100 mt, and inventory in Tianjin dropped 600 mt to 2,700 mt.

Looking forward, the inventory increases slowly in the fourth week post the CNY holiday. SMM expects that there will be a turning point as soon as next week or the week after at the latest.

Copper Inventory in Domestic Bonded Zone up 19,500 mt from Monday

The copper inventories in domestic bonded zones rose 19,500 mt from Friday February 25 to 320,100 mt as of March 4, according to SMM survey.

The inventory in the Shanghai bonded zone increased 17,500 mt to 278,500 mt WoW, while that in Guangdong added 2,000 mt to 41,600 mt WoW.

The increase of inventory this week was mainly contributed by the exports of domestic smelters and the warehousing of arrival bills of lading. The import losses were huge this week, exceeding 3,000 yuan/mt on Friday. Most domestic smelters wished to export and shipped their goods to the bonded zone. However, the bill of lading for overseas arrivals at ports was stored at bonded zone due to falling premiums of Yangshan copper.

Zinc Ingot Social Inventory in Seven Major Regions in China Rose by 7,800 mt

As of March 4, the zinc ingot inventory across the seven major regions in China totalled 284,200 mt, up 700 mt from Monday February 28 and up 7,800 mt from last Friday February 25, according to SMM data. The inventories in Shanghai increased significantly as the increase in downstream demand fell short of expectations while the arrivals were relatively stable. Despite high zinc prices, the inventory in Guangdong declined as demand continued to improve amid downstream production resumption. In Tianjin, downstream consumption improved only slightly, and the inventory increased slightly. The total inventories across Shanghai, Guangdong, and Tianjin rose by 8,800 mt from last Friday.

Lead Ingot Social Inventory Rose 7,700 mt on Week

Social inventories of lead ingots across Shanghai, Guangdong, Zhejiang, Jiangsu and Tianjin increased 7,700 mt from February 25 and 3,400 mt from February 28 to 106,800 mt as of March 4.

According to SMM survey, the lead prices kept rising this week, and the downstream users were wait-and-see. Some downstream enterprises with higher demand chose to purchase the goods under long-term orders or the low-priced goods from the smelters. The quotations for small orders of primary lead stood at discounts of 100-200 yuan/mt (ex-factory) over SMM average price of 1# lead, and that of secondary refined lead stood at discounts of 300 yuan/mt. As the price spread between spots and futures reached 300 yuan/mt, more goods holders tended to send their goods to delivery warehouses, hence the social inventory of lead ingots increased. The lead ingot supply is expected to stand stable this week, but the holders may continue to deliver their goods to social warehouses if the price spread remains wide, so the social inventory of lead ingots may continue to rise.

Silicon Metal Social Inventory Increased by 5,000 mt on Week

The social inventory of silicon metal across Huangpu port, Kunming city and Tianjin port increased 5,000 mt from the previous week to 87,000 mt as of Friday March 4.

The social inventory in south and north China increased simultaneously. The stocks at Tianjin port rose by 3,000 mt on the week, as some domestic traders sent their goods to Tianjin for the more convenient supply to downstream users in north China. The total social inventory of silicon metal was nearly 40% higher YoY, mainly due to the raised operating rates of silicon plants. The days of inventory were basically flat on the year at around 11 days.

Import Losses Likely to Sustain amid High LME Nickel Prices

The imports losses of nickel briquette and nickel plant continued to expand this week, and NORNICKEL nickel even recorded an import loss of nearly 20,000 yuan/mt as of Friday. The arrivals in the bonded zone and domestic imports have been low amid poor SHFE/LME price ratio.

Currently, the nickel briquette inventory in the Shanghai bonded zone dropped 400 mt on the week, and nickel plate inventory stood at 4,700 mt, flat from a week ago. The import losses of nickel briquette were narrow, hence some of them passed customs clearance. In addition, US-Russia disputes also resulted in low arrivals in the bonded zone.

If the spread between SHFE and LME remained wide next week, there will exist basically no demand for customs clearance.

Nickel Ore Inventory at Ports down 390,000 wmt on Week

The domestic nickel ore inventory at ports dropped 390,000 wmt on the week to 6.94 million wmt, or 54,500 mt in nickel content. The inventory across the seven major ports in China stood at 3.23 million wmt, down 320,000 wmt from a week ago.

Nickel ore imports remained low, and tight ocean transport capacity will further reduce the weekly nickel ore inventory. As NPI plants are unlikely to purchase high-priced nickel ore, and will reply on in-plant stocks instead.