China: SHFE base metal inventory largely moves northward, limited demand

The Shanghai Futures Exchange (SHFE) in China released its weekly inventory data which showed a positive inflow of inventory in most of the non-ferrous commodities markets.

The majority of downstream buyers remained passive observers, resulting in a subdued transaction that subsequently led to an increase in inventory. Market participants anticipate that these downstream buyers will adopt a cautious approach in the near future, purchasing only as necessary, due to prevailing market conditions.

Commodity-wise inventories

Aluminium

In SHFE warehouses, aluminium inventories decreased by 2,049 t w-o-w. Total inventory was assessed at 110,996 t, up from 113,045 t last week. SHFE aluminium futures inched up by 0.9% w-o-w to RMB 18,369/t ($2,570/t) this week.

The nation experienced a decline in inventory due to a combination of limited arrivals and an increased consumption.

Copper

Copper stocks in SHFE warehouses decreased to 61,290 t this week from 77,898 t last week. Simultaneously, copper futures increased by 0.3% w-o-w to RMB 68,882/t ($9,636/t).

The Zhongchu Wusong warehouse in Shanghai currently holds the largest inventory of copper. However, there has been a decline in the arrival of imported copper shipments last week, as most of the cargo has already been purchased by buyers. Consequently, this has limited the number of shipments arriving at the bonded warehouses.

Nickel

Nickel stocks rose this week to 2,837 t from last week's 2,490 t. Nickel prices moved up by 2.3% w-o-w to RMB 169,428/t ($23,702/t) compared to RMB 165,654/t ($23,174/t) last week.

Zinc

Zinc inventories in major SHFE warehouses increased. Currently, the inventory stands at 61,313 t compared to 56,942 t last week. Meanwhile, future prices inched up by 1.2% w-o-w to RMB 20,514/t ($2,870/t).

Despite initial expectations of domestic policy stimulus, the market has experienced a lack of transaction activity, leading to a noticeable increase in inventory levels.

Lead

Lead inventories recorded a significant rise of 20%, reaching 47,637 t against last week's 39,555 t. Lead futures increased by 1.4% w-o-w at RMB 15,989/t ($2,237/t). Zhongchu Lutong warehouse in Tianjin saw the largest increase in lead stocks over the week,

The downstream transaction situation has been unfavourable. Several battery companies are contemplating the idea of postponing production during the holidays as a strategy to manage the soaring lead prices. Nevertheless, it is important to note that the third quarter is traditionally the peak season for lead consumption.