China: SHFE base metals inventories see mixed movements; lead stocks record 24% drop
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In the week ending 24 May, deliverable stocks of base metals in Shanghai Futures Exchange (SHFE)-registered warehouses witnessed mixed movements. Meanwhile, lead stocks on SHFE recorded the highest outflow over 24% for the week, as per the exchange's weekly stocks report.
China recently announced sweeping measures to stabilise its property sector, including reducing down payment requirements and initiating a 300 billion yuan relending facility to stimulate demand. Local governments can instruct state-owned firms to purchase unsold apartments for conversion into social housing. However, analysts doubt the efficacy of the programme, given the scale of unsold inventory and reluctance from both banks and SOEs to participate.
Province-wise inventories
Copper
Copper stocks in SHFE warehouses witnessed a slight increase in inflows this week. The stocks were up by 3.4% to 300,964 tonnes (t) from the previous week's 291,020 t. Meanwhile, futures were up by 4.4% to RMB 84,857/t ($11,716/t).
Aluminium
Aluminium inventories in SHFE warehouses remained largely stable with a marginal drop of 0.3% to 214,946 t, while futures prices saw a slight rise by 2.1% to RMB 21,003/t ($2,899/t) for the week.
As per sources, China's major markets reported a 767,000 t inventory of aluminium ingots, with 641,000 t for sale, marking a 20,000 t w-o-w increase and a 110,000 t y-o-y rise. Rising prices dampened consumption, despite a 5,300 t w-o-w uptick in weekly warehouse withdrawals. Factors include increased arrivals and high prices hindering cargo pick-up, signalling a mismatch with demand fundamentals.
Nickel
Nickel inventories saw a rise of 4.9%, reaching 25,699 t. Meanwhile, nickel futures prices increased notably by 7.3%, settling at RMB 154,765/t ($21,368/t) w-o-w.
In March, China's FeNi and NPI imports totalled 633,200 t, down 14.0% m-o-m but up 20.4% y-o-y. FeNi imports were 15,500 t, decreasing by 6.5% m-o-m and 73.3% y-o-y due to slow Indonesian RKAB approval causing raw material supply tightness. High nickel ore prices led overseas FeNi smelters to operate at a loss, prompting some to halt production and redirect exports to Europe and the US.
Zinc
Zinc inventories fell to 129,083 t, marking a 1.1% decrease, while future prices increased marginally by 3% to RMB 24,350/t ($3,362/t) from RMB 23,614/t ($3,260/t) for the week.
Lead
Lead inventories recorded a remarkable 24.2% decrease, settling at 55,213 t this week. Similarly, futures prices witnessed a rise by 1.7% w-o-w to RMB 18,672/t ($2,578/t) from the previous week's RMB 18,357/t ($2,534/t).
