Singapore 12/08/2016 - Deliverable copper stocks at warehouses in the Shanghai Futures Exchange system rose 9,324 tonnes or 5.6 percent to 174,563 tonnes as of August 12, ending three straight weeks of declines, according to data from the exchange.
This week, Zhongchu Dachang in Shanghai saw the most copper arrivals, with 3,802 tonnes going into its sheds.
Market participants had reckoned the declines over the past three weeks – a total of 11,960 tonnes and cumulative decrease of 6.7 percent – was temporary.
Before the declines, stocks had increased for three consecutive weeks since the week of July 4 - a trend industry watchers believed is in place in the near-term, or at least till end-August, due to slower demand in China during the summer lull.
Demand is expected to improve during the peak season of September-October.
Conversely, copper stocks in Shanghai bonded warehouses have declined seven percent month-on-month to 580,000-610,000 tonnes at end-July, according to FastMarkets’ survey.
This is mainly due to outflow of materials into non-bonded warehouse sheds for either delivery against the SHFE copper contracts or to fulfil long-term contracts commitment, sources said.
Meanwhile, SHFE aluminium stocks rose 6,171 tonnes or 5.7 percent week-on-week to 113,691 tonnes as of August 12. This is the first increase after 15 straight weeks of decline.
Other than a slight increase of 513 tonnes in the week of April 18, SHFE aluminium stocks had fallen 68.5 percent or 234,905 tonnes between March 21 and August 5 on domestic market spot supply tightness following production cuts among Chinese smelters since last year.
The trend is similar in the spot market. Spot stocks in five Chinese major cities – Shanghai, Wuxi, Hangzhou, Gongyi and Nanhai – rose 11,000 tonnes week-on-week to 252,000 tonnes as of August 12, according to surveys by Shanghai Metals Market (SMM). This is the biggest weekly growth since mid-March and the second increase in nearly five months, the Chinese metals research firm said.
Last week, stocks had cumulatively dropped 74 percent from the first-half peak of 928,000 tonnes in the week of March 14.
Despite the increase, total spot stocks remain at their lowest since March 2009, said SMM.
SHFE aluminium remains in a backwardation since late-April. The backwardation in the spreads between the SHFE August contract and October contract was at 265 yuan at Friday’s close.
Domestic aluminium inventories are expected to grow, particularly in the fourth quarter of this year, due to production restarts and new capacity commissioning.
Latest production data from China's National Bureau of Statistics showed the country's electrolytic aluminium falling 1.5 percent year-on-year to 2.66 million tonnes in July, but rising 1.1 percent compared to June.
In other metals, zinc inventories decreased 5,661 tonnes to 197,299 tonnes and those of lead slipped 1,674 tonnes to 46,827 tonnes this week.
Nickel inventories were unchanged at 109,043 tonnes while tin stocks fell 190 tonnes to 2,728 tonnes.
(Editing by Martin Hayes)