Singapore 05/08/2016 - Deliverable copper stocks at warehouses in the Shanghai Futures Exchange system slipped for the third straight week to 165,239 tonnes as of August 5, albeit at only 229 tonnes or 0.1 percent, according to data from the exchange.
This week, Timax Logistics in Jiangsu saw the most copper exits, with 4,130 tonnes leaving its sheds. This was, however, offset by deliveries of more than 2,000 tonnes each at two Shanghai warehouses.
The increase over the past three weeks totalled 11,960 tonnes, a cumulative decline of 6.7 percent. But market participants said this decrease does not necessarily mean the trend will continue, especially since the decline this week was very small.
Before the declines, stocks had increased for three consecutive weeks since the week of July 4 - this is the dominant trend and will remain so due to slower demand in China during the summer lull, industry observers generally believe.
"Demand remains weak during the off-peak demand season. We don't expect it to pick up until September or at the earliest late-August," a Shanghai-based copper analyst said.
Demand is widely expected to improve during the peak season of September-October.
Meanwhile, SHFE aluminium stocks continued lower, dropping 9,363 tonnes or eight percent week-on-week to 107,520 tonnes as of August 5. Other than a slight increase of 513 tonnes in the week of April 18, SHFE aluminium stocks have been falling consistently for more than four months.
The decline - inventories have fallen 68.5 percent or 234,095 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 tightness has been exacerbated by heavy rains and floods in parts of China that have delayed ingot shipments and most recently shut part of the Jiaozuo Wanfang Aluminium's operations.
The spot market tightness has been evident in SHFE aluminium remaining in a backwardation since late-April. The backwardation in the spread between the SHFE August contract and October contract was at 280 yuan at Friday's close.
While domestic aluminium inventory continues to trend downwards, the extent of decline has narrowed, Shanghai Metals Market (SMM) on Friday said.
Spot stocks in five Chinese major cities - Shanghai, Wuxi, Hangzhou, Gongyi and Nanhai - dropped just 5,000 tonnes week-on-week to 241,000 tonnes as of August 4, according to surveys by SMM. Stocks have dropped 74 percent from the first-half peak of 928,000 tonnes in the week of March 14.
Domestic aluminium inventories are expected to grow slightly later this month due to the release of production from new and restarted capacities and slow demand during the off-peak season, the Chinese metals research firm said.
Production restarts among Chinese aluminium smelters, particularly in the second half of this year, are expected to keep global aluminium prices below $1,700 per tonne till 2018, ANZ Research said in a report on Friday.
LME three-month aluminium was last at $1,637.50 per tonne on Friday, up $15 on Thursday' close.
In other metals, zinc inventories decreased 2,528 tonnes to 202,960 tonnes and those of lead slipped 1,427 tonnes to 48,501 tonnes this week. Nickel inventories gained 2,030 tonnes to 109,043 tonnes but tin stocks slipped 131 tonnes to 2,918 tonnes.
(Editing by Mark Shaw)