China: Base metals inventories in SHFE warehouses increase w-o-w

The Shanghai Futures Exchange (SHFE) in China released its weekly inventory data which showed a hike in inflow across all non -ferrous commodities.

The rise in inventory can be attributed to a combination of factors, including ongoing maintenance activities at several smelters and reduced demand during the off-season. Additionally, the SHFE is actively exploring opportunities to extend its commodities warehousing network beyond China.

Commodity-wise inventories

Aluminium

In SHFE warehouses, aluminium inventories increased by 5,743 t w-o-w this week. Total inventory was assessed at 107,762 t, up from 102,019 t last week primarily due to the influx of imported ingots.

Additionally, the aluminum billet conversion margins were negatively impacted by weak demand, leading to a reduction in operating rates at billet plants and subsequently affecting demand for aluminum. As a response to these conditions, aluminum smelters opted to decrease the proportion of their liquid aluminum production.

SHFE aluminium futures inched up by 1.3% w-o-w to RMB 18,170/t ($2,544/t) this week.

Copper

Copper stocks in SHFE warehouses increased to 82,690 t this week from 74,638 t last week. Simultaneously, copper futures increased by 0.4% w-o-w to RMB 68,208/t ($9,551/t).

Significantly, inventory levels have witnessed a consecutive three-week growth as domestic producers resumed production following the completion of their annual maintenance shutdown in June.

Nickel

Nickel stocks rebounded this week to 2,784 t from last week's 2,583 t. Meanwhile, nickel prices moved up by 3% w-o-w to RMB 165,814/t ($23,219/t) compared to RMB 161,416/t ($22,603/t) last week.

Zinc

Zinc inventories in major SHFE warehouses moved upward. Currently, the inventory stands at 51,975 t compared to 51,929 t last week. Meanwhile, future prices inched up by 0.8% w-o-w to RMB 20,258/t ($2,836/t).

Smelters have entered a regular maintenance cycle, with the maintenance activities primarily concentrated in specific provinces. It is anticipated that in August, routine maintenance of domestic smelters will intensify, resulting in a further decline in overall output.

Lead

Lead inventories recorded a significant rise of 21%, reaching 35,145 t against last week's 29,108 t. Lead futures remained range-bound (+0.1%) w-o-w at RMB 15,549/t ($2,177/t).