Singapore 15/07/2016 - Deliverable copper stocks at warehouses in the Shanghai Futures Exchange system jumped 15,069 tonnes or 9.3 percent week-on-week to 177,199 tonnes as of July 15, according to data from the exchange.
This is the third consecutive week in which stocks have increased. This week, Zhongchu Wusong in Shanghai saw the most copper arrivals, with 8,314 tonnes entering its sheds.
The increase in stocks over the past two weeks was small at a combined 6,895 tonnes, a rise of 4.4 percent since the June 27 week. But the latest gain takes the rise to 21,964 tonnes or 14.1 percent over the past three weeks.
The rise has largely been attributed to slow demand given the start of the off-peak demand season in China in June. The upward trend could continue at least until the end of the summer lull in August, sources said.
"There could be some cash-strapped companies being forced to deliver from the bonded warehouses into SHFE warehouses but, at current prices and premiums, the majority are still unlikely to deliver," a Shanghai-based trader said.
The SHFE-LME arbitrage has been closed for the most part since January although the Shanghai price closed between parity and a small premium to the LME (plus logistical premiums) very briefly late in June.
SHFE aluminium stocks continue lower albeit at a slower rate - they fell 5,263 tonnes or 3.5 percent week-on-week to 144,058 tonnes as of July 15.
Other than a slight increase of 513 tonnes in the week of April 18, SHFE aluminium stocks have been falling for almost four months.
The decline - inventories have fallen 57.8 percent or 197,557 tonnes since the week of March 21 - reflects tightness in the domestic spot market following production cuts among Chinese smelters since last year, industry participants said. The spot market tightness has been evident in SHFE aluminium remaining in a backwardation since late-April.
But the pace of the decline has eased this week, sources noted, as has stocks in five Chinese major cities - Shanghai, Wuxi, Hangzhou, Gongyi and Nanhai - by just 9,000 tonnes week-on-week to 283,000 tonnes as of July 14, according to surveys by Shanghai Metals Market. Stocks have dropped 69.5 percent from the first-half peak of 928,000 tonnes in the week of March 14.
"We could be close to a turning point for the stock decline," a Beijing-based metals analyst said.
Analysts largely expect Chinese aluminium stocks to rise from the end of July at the earliest on production restarts, the commissioning of new capacity and slow summer demand.
The backwardation in the spreads between the SHFE July contract and most active September contract has eased to 270 yuan from above 400 yuan at Friday's close last week.
In other metals, zinc inventories decreased 3,922 tonnes to 202,800 tonnes and lead stocks rose 9,243 tonnes to 45,954 tonnes this week.
Nickel inventories gained 1,375 tonnes to 104,547 tonnes and tin stocks gained 24 tonnes to 2,948 tonnes.
(Editing by Mark Shaw)