Singapore 30/09/2016 - Base metal inventories at Shanghai Futures Exchange warehouses dropped this week, with copper, aluminium and zinc registering huge declines.
Deliverable copper stocks at SHFE warehouses fell 23,722 tonnes or 18.1 percent week-on-week to 107,058 tonnes as of September 30, according to data from the exchange.
This week, Zhongchu Wusong in Shanghai saw the most stock exits - 8,427 tonnes left its sheds.
This is the seventh straight week of decline for copper inventories in SHFE-registered warehouses - inventory has fallen 38.7 percent or 67,505 tonnes over that period.
SHFE copper stocks have been declining in line with increased copper exports from China - evident in the recent increase in stocks in LME-listed warehouses in Asia - and also improved demand during the September-October peak demand season, sources said.
"We have been seeing outflows from China to LME warehouses and demand has also improved. This shows that even though production remains high among Chinese smelters there are places for those output to head to," a Beijing-based metals analyst said.
Asian locations have already taken delivery of more than 100,000 tonnes of copper since the start of August. After dropping earlier in September, there have been intermittent deliveries into listed sheds here recently - close to 5,000 tonnes entered Port Klang and Busan on Thursday.
For aluminium, SHFE stocks dipped 19,302 tonnes or 18.7 percent week-on-week to 83,775 tonnes as of September 30, making it the third straight week of decrease.
This took the cumulative decline over the past three weeks to 42,100 tonnes or 33.4 percent.
The decline parallels the tightening of stocks in the spot market, particularly since last week after transport disruptions owing to stricter regulations on truck overloading stalled deliveries in the country, particularly from western China to eastern China, sources noted.
For zinc, SHFE stocks fell 16,955 tonnes or 9.7 percent week-on-week to 158,317 tonnes as of September 30, the 10th straight week of decline. This is also the largest decrease in over those 10 weeks - Inventories have dipped a cumulative 52,812 tonnes or 25 percent since the week of July 25.
Stock levels are likely to continue to trend downwards due to tightening ore supply, analysts said, but most agreed that the tightness has yet to show up in the refined zinc market.
For lead, stocks slipped 7,904 tonnes or 23.5 percent to 25,672 tonnes as of September 30.
Chinese domestic refined lead supply continues to tighten alongside lead concentrate supply, analysts said.
In other metals, tin inventories fell 895 tonnes to 2,732 tonnes, and nickel stocks slipped 778 tonnes to 110,955 tonnes.
(Editing by Mark Shaw)