London 07/01/2016 - Copper bonded stocks in Shanghai have increased for the fourth consecutive month to above 400,000 tonnes, warehouse sources tell FastMarkets.
Total stocks stood at 420,000-440,000 tonnes at the end of December, up 10 percent from 380,000-400,000 tonnes the prior month as demand turned sluggish due to the negative arbitrage between the London Metal Exchange (LME) and Shanghai Futures Exchange (SHFE).
“We’ve seen some shipments coming in during the past month but the amount of metals going out have been slower compared with previous months,” said a first warehouse source.
“People are cautious about further depreciation of the renminbi and hold wait-and-see attitudes regarding the currency arbitrage,” a trader in Shanghai said.
But premiums for copper cathodes in bonded zone were last at $75-90 per tonne, slightly up from $65-80 at the end of November, according to FastMarkets data.
Zinc stocks declined to 70,000-90,000 tonnes at the end of December from 75,000-95,000 tonnes in late November due to some buying interests.
“Inflows of zinc stocks are not enough to offset the outflow due to some interests from trading houses,” said a second warehouse contacts.
Bonded nickel stocks climbed to 70,000-80,000 tonnes from 65,000-75,000 tonnes at the end of November although premiums have climbed to $140-160 per tonne from $120-140 in end-November.
Aluminium stocks have edged up to 30,000-35,000 tonnes from 20,000-25,000 tonnes in December.
“There have been some overseas shipments of aluminium. Interestingly, I’ve noticed that there will be some shipments for exports in the coming days,” said the second warehouser.
Some warehousers mentioned that there have been some movement from bonded zone to overseas warehouses in Southeast Asia such as Singapore and Malaysia but stayed at off LME warrant due to cheap rents and tougher LME regulations.
“Some owners now prefer to store in our Singapore/Malaysia warehouses as it’s cheaper but still close to mainland China For some metals, rents could be as low as 6-10 cents per day per tonne for off-warrant stocks versus 0.6-0.8 yuan (9-12.5 cents) per day per tonne in bonded zone,” said a third warehouse in Asia.
(Edited by Tom Jennemann)