Singapore 15/04/2016 - Copper stocks at Shanghai Futures Exchange warehouses dropped 28,983 tonnes or eight percent week-on-week to 331,942 tonnes as of April 15, the fourth consecutive week of decline, according to data from the exchange.
This week, Zhongchu Wusong in Shanghai saw the most copper exits, with 11,052 tonnes leaving its sheds.
Total copper stocks have fallen 13.7 percent or 62,835 tonnes over the past four weeks although the current inventory level remains close to a historical high.
"The downward trend for SHFE stocks should continue in the near term although the size of the decline this week was rather out-of-expectations," Qian Peng, a copper analyst with Shanghai Metals Market, said.
Market participants identified several reasons for the decline, of which the main one is the arbitrage window between Shanghai and London - which was the main reason for the surge in inventory between mid-January and mid-March - remaining closed since late-January.
Some improvement in downstream demand since the Chinese New Year holidays ended in February and the move into the country's peak consumption period of April-May have also helped lower SHFE stock levels, market participants said.
Industry watchers also believe that SHFE stocks are falling due to Chinese copper smelters delivering metal into London Metal Exchange-registered warehouses in Southeast Asia.
Some 17,825 tonnes of copper cathodes have been delivered into LME sheds in Taiwan, South Korea, Malaysia and - most significantly – Singapore over the past two weeks.
With warehouses reportedly offering incentives of around $60 on some brands to attract metal, 12,275 tonnes of copper have been delivered into Singapore over the past fortnight. Some 15 percent of total LME stocks of copper are now held there, up from seven percent at the end of March.
China's State Reserve Bureau's purchase of 150,000 tonnes of copper cathodes in the first quarter also helped lower SHFE and market inventories, a Shanghai-based trader added.
In other metals, aluminium warehouse stocks fell 5,047 tonnes to 318,868 tonnes while zinc inventories increased 132 tonnes to 268,925 tonnes this week.
Lead stocks dipped 694 tonnes to 19,730 tonnes, while nickel inventories gained 1,027 tonnes to 78,434 tonnes. Tin stocks were unchanged at 778 tonnes.
(Additional reporting by Ian Walker, editing by Mark Shaw)