China: SHFE base metal inventory jumps post New-Year holidays

After the Lunar New Year holidays, the Shanghai Futures Exchange (SHFE) reported a significant increase in overall inventory, particularly zinc, which rose by 164%. Most metal prices went down, except for copper and nickel, which increased by up to 2.3%.

China's new home prices showed a slight improvement in Jan'24, with major cities experiencing some stability. However, the overall national trend continued to decline, despite Beijing's efforts to boost demand. In January, new home prices decreased by 0.3% m-o-m.

The central bank reported a significant increase in household loans, mainly mortgages, reaching RMB 980.1 billion, compared to RMB 222.1 billion in Dec'23. The property market has been struggling since 2021 due to developer defaults. Policymakers are implementing measures to restore market confidence, but a full recovery in homebuyers' incomes and demand may take time.

Commodity-wise stocks and prices

Copper

Copper stocks in SHFE warehouses surged by 109.6% to 181,323 t from 86,520 t before the holidays in China. Similarly, futures were up by 0.7% to RMB 68,770/t ($9,558/t). Notably, copper has seen the largest inflow in the last eleven months.

Aluminium

In SHFE warehouses, aluminium inventories hiked by 65.6% to 173,482 t. Futures prices inched down by 0.3% to RMB 18,808/t ($2,6204/t), w-o-w.

Nickel

Nickel stocks were up and stood at 17,758 t, reflecting a 11.2% increase in line with a 2.3% up in future prices to RMB 128,130/t ($17,807/t) w-o-w.

Zinc

Zinc inventories jumped to 88,611 t and surged by 163.8%, in contrast with future prices, which fell by 1.1% to RMB 20,357/t ($2,829/t), w-o-w. This is the highest inflow since April 2023.

Lead

Lead inventories recorded a 32.9% increase, reaching 50,142 t. In contrast, futures prices declined by 2.2% to RMB 15,850/t ($2,203/t) w-o-w.