China: SHFE inventories increase across all base metals w-o-w

This week, deliverable stocks of base metals in Shanghai Futures Exchange (SHFE) warehouses displayed a hike in the inflow of inventories, with lead experiencing the most significant increase in stocks by 19%, w-o-w.

China's central bank is likely to ramp up liquidity in the financial system without changing the main interest rate. This move is expected when renewing existing medium-term policy loans. Currently, the interest rate on these loans is 2.5%.

Furthermore, most of the market participants believe that the central bank will put in new funds exceeding the 650 billion yuan ($91.11 billion) of the maturing medium-term loans. China has recently taken steps to boost its economy, including a surprising decision in late October to allow the issuance of CNY 1 trillion in sovereign bonds for the year.

This marks the first time in 23 years that the country has expanded its budget deficit in a fiscal year. Additionally, a bill was passed to enable local governments to use part of their 2024 bond quotas earlier than planned.

Commodity-wise inventories

Copper

Copper stocks in SHFE warehouses increased sharply by 13.4% to 34,396 t this week from 30,342 t last week. Meanwhile, copper futures fell by 0.1% to RMB 68,028/t ($9,608/t). Notably, it is the highest level of stock this month.

Aluminium

In SHFE warehouses, aluminium inventories inched up by 0.1% to 112,002 t from 111,869 t last week. However, SHFE aluminium futures decreased by 0.4% w-o-w to RMB 18,427/t ($2,603/t). After the continuous outflow of material, inventories increased slightly this week.

Nickel

Nickel stocks reached 13,358 t from last week's 12,856 t, an increase of 3.9% w-o-w. Similarly, nickel prices were up marginally by 2.4% w-o-w to RMB 131,744/t ($18,607/t) compared to RMB 128,660/t ($18,171/t) last week.

Zinc

Zinc inventories in major SHFE warehouses witnessed a slight hike of 0.1%. The inventory stood at 24,109 t, compared to 24,084 t last week. Likewise, future prices went up by 0.4% w-o-w to RMB 20,714/t ($2,925/t). After a continuous fall for three weeks in a row, zinc inventories saw an inflow.

Lead

Lead inventories recorded a notable rise of 19% and stood at 59,393 t against last week's 49,913 t. Meanwhile, lead futures were down by 0.7% w-o-w to RMB 15,549 t ($2,196/t).