China: SHFE base metal inventories increase w-o-w

China's Shanghai Futures Exchange (SHFE) has released its weekly inventory report, revealing a surge in incoming inventory across non-ferrous commodity markets, excluding aluminium and lead. Prices witnessed a w-o-w decline due to the escalation in warehouse inventories.

In July, Chinese banks disbursed $47.80 billion in new loans, experiencing a significant drop compared to June and greatly undershooting predictions. According to data released by the central bank, the broad money supply (M2) saw a 10.7% y-o-y growth in July, falling short of the anticipated 11%, as per the poll. This marks a decrease from the 11.3% expansion recorded in M2 in June. The growth rate of outstanding yuan loans in July was 11.1% compared to the previous year, slightly lower than the 11.3% growth observed in the previous month.

The consumer price index (CPI) fell by 0.3% in July after staying flat last month, according to China's National Bureau of Statistics. Notably, the CPI fell for the first time in the last two years.

Commodity-wise inventories

Aluminium

In SHFE warehouses, aluminium inventories decreased by 7,574 t w-o-w. Total inventories were assessed at 105,223 t, up from 112,807 t last week. SHFE aluminium futures inched down by 0.04% w-o-w to RMB 18,482/t ($2,579/t).

Notably, there is a acceleration in aluminium production in the Yunnan region, leading to emerging supply-side pressures. While certain downstream sectors have witnessed a surge in orders, overall consumption in mainstream markets is yet to display significant strength.

Copper

Copper stocks in SHFE warehouses increased to 52,915 t this week from 52,152 t last week. Simultaneously, copper futures decreased by 1.3% w-o-w to RMB 68,682/t ($9,706/t). Due to the increase in the volume of overseas arrivals, the inventory increased slightly.

Nickel

Nickel stocks surged this week to 3,593 t from last week's 3,113 t. Nickel prices moved down by 2.8% w-o-w to RMB 165,846/t ($23,796/t) compared to RMB 170,624/t ($23,629/t) last week. The actual downstream demand has not recovered yet. Downstream buyers restocked only as needed.

Zinc

Zinc inventories in major SHFE warehouses increased slightly. Currently, the inventory stands at 63,069 t compared to 61,993 t last week. Meanwhile, future prices inched down by 0.7% w-o-w to RMB 20,842/t ($2,928/t).

Lead

Lead inventories recorded a drop of 1%, reaching 49,722 t against last week's 50,330 t. Lead increased by 0.3% w-o-w to RMB 15,950/t ($2,223/t). Adverse conditions such as floods led to diminished arrivals this week, consequently driving up prices.