China: SHFE future contracts rebound despite weighing inventories largely w-o-w

The Shanghai Futures Exchange (SHFE) in China has issued its weekly inventory report, indicating improved future contract prices despite a significant influx of non-ferrous commodities into inventory, with the exception of copper.

The Yulong copper mine, China's second-largest single copper deposit, has recently expanded its operations, as reported by Zijin Mining, a mining company with a stake in the mine. The mine, situated in Tibet's autonomous region in southwest China, has boosted its copper mining capacity from 120,000 to 150,000 t/annum, along with an additional ore processing capacity of 4.5 mnt/year.

West Mining, a diversified mining company in China, holds a 58% ownership stake in the Yulong copper mine, while Zijin Mining owns 22%. Zijin Mining saw increased copper production in the first nine months of 2023, primarily due to higher output from its Kamoa-Kakula mine in the Democratic Republic of Congo.

Commodity-wise inventories

Copper

Copper stocks in SHFE warehouses fell by 14% to 34,846 t this week from 40,516 t last week. However, copper futures gained by 0.1% w-o-w to RMB 67,448/t ($9,252/t).

Aluminium

In SHFE warehouses, aluminium inventories increased by 10.2% to 126,433 t, up from 114,739 t last week. SHFE aluminium futures increased by 0.3% w-o-w to RMB 19,208/t ($2,635/t). The inventory pressure is relatively large, mainly due to limited power and the shift to the off-peak season of downstream consumption.

Nickel

Nickel stocks rose this week to reach 10,957 t from last week's 9,767 t, up 12.2% w-o-w. Conversely, nickel prices were down by 1.3% w-o-w to RMB 141,770/t ($19,448/t) compared to RMB 143,637/t ($19,705/t) last week.

Zinc

Zinc inventories in major SHFE warehouses rose by 6.1%. The inventory stood at 35,578 t, compared to 33,547 t last week. Similarly, future prices went up by 1.8% w-o-w to RMB 21,567/t ($2,958/t).

Lead

Lead inventories increased slightly by 2.7%, reaching 68,896 t against last week's 67,064 t. Meanwhile, lead futures are up by 1.1% w-o-w to RMB 16,529 t ($2,267/t).