Key Macroeconomic Indicators for Base Metal Prices (2016-8-26)

[SMM Shanghai Spot Copper] Looking ahead to next week, SMM recorded social inventory in Shanghai at 46,300 mt, up 2,400 mt WoW, mainly due to the gradual arrival of some imported copper replenishing supply. Social inventory in Jiangsu was recorded at 18,200 mt, down 2,400 mt WoW, mainly due to relatively limited arrivals. On the demand side, as some downstream enterprises have largely completed pre-holiday stockpiling, market purchasing enthusiasm has cooled noticeably. Intraday spot transactions weakened significantly compared with the previous trading day, with market trading turning sluggish and suppliers forced to lower quotes to facilitate deals. According to SMM, during this year's National Day holiday, some downstream processing enterprises will have slightly more days off YoY, leaving relatively limited room for further restocking before the holiday. Meanwhile, high copper prices combined with a steep backwardation structure continue to exert strong restraint on downstream purchasing. On the supply side, if imported cargoes continue to arrive at ports, the tightness of available supply in the market may ease somewhat. Overall, demand-side support is gradually weakening while the supply side is marginally improving, and spot premiums are expected to continue edging down next week.