China: SHFE base prices weigh down on higher inventories w-o-w

The most recent weekly inventory report from the Shanghai Futures Exchange (SHFE) revealed a rise in overall inventory, primarily led by a notable 7.2% increase in nickel stocks and most of the base metals have been contracted on higher stock levels except lead, w-o-w.

In December, 2023, China's industrial profits displayed a positive trend with 16.8% y-o-y.

Meanwhile, China's central bank planned to reduce the bank reserve ratio starting on 5 February 2024, injecting $140 billion into the system to bolster the economy and address stock market declines. This marks the first cut of the year as policymakers make efforts to support the fragile economic recovery.

Commodity-wise stocks and prices

Copper

Copper stocks in SHFE warehouses notably increased for the fifth consecutive week at 50,532 t by 5.8% against 47,753 t last week despite better futures by 0.2% to RMB 67,985/t ($9,460/t).

Aluminium

In SHFE warehouses, aluminium inventories increased by 5.02% to 101,537 t in line with a minor downward correction of futures by 0.7% to RMB 18,765/t ($2,611/t), w-o-w.

Nickel

Nickel stocks reached 15,120 t, up by 7.2% aligned with future prices, down by 0.1% to RMB 127,612/t ($17,756/t), w-o-w.

Zinc

Zinc inventories witnessed a slight uptick of 0.2% to 22,647 t, balanced with future prices down by 1.3% to RMB 20,844/t ($2,900/t), w-o-w.

Lead

Lead inventories recorded the outflow for the week, declining 1.1% and stood at 36,700 t lacking supply and demand proportionate chain and futures down by 1% to RMB 16,490 t ($2,294/t), w-o-w.