Singapore 20/05/2016 - Deliverable copper stocks at warehouses in the Shanghai Futures Exchange system fell 28,876 tonnes or 10.1 percent week-on-week to 257,334 tonnes as of May 20, according to data from the exchange. This is the second consecutive week inventories have declined.
This week, Zhongchu Wusong in Shanghai saw the most copper exits, with 15,243 tonnes leaving its sheds.
Excluding the May 2 week, SHFE copper stocks have declined on a weekly-basis since the week of March 21. This week takes the year-to-date inventory decline to 137,443 tonnes or 34.8 percent over the past nine weeks.
Market participants said the decline was expected given that the arbitrage window between Shanghai and London remained closed, as it has been since late-January.
"The downtrend for stocks should remain intact in the near term. The fundamentals have remained unchanged while the arb remains unconducive for imports," a Shanghai-based trader said.
The trend may reverse in June-July, however, when China enters a traditional lull after the April-May peak demand period, industry watchers said.
Chinese consumers are so far mixed on copper's demand growth prospects in the second half, with some reporting or flat demand growth year-on-year so far in the second quarter and others pessimistic about sales due to high stock levels.
In other metals, aluminium warehouse stocks fell 22,154 tonnes to 271,033 tonnes and zinc inventories decreased 3,281 tonnes to 248,552 tonnes this week.
Lead stocks rose 1,473 tonnes to 25,850 tonnes and nickel inventories climbed 2,074 tonnes to 95,411 tonnes. Tin stocks decreased 409 tonnes to 4,079 tonnes.
(Editing by Mark Shaw)