China Copper Social Inventory Plummets Amid Regional Divergence

Copper social inventory in China continued to destock at a faster pace than expected, dropping by 24,900 mt WoW and 17,600 mt YoY as of August 27. The sharp decline was driven mainly by supply contraction and month-end restocking.

Regional divergence emerged with varying performance across major regions: Shanghai saw an increase in domestic arrivals and a slight inventory build, Jiangsu witnessed destocking due to contracted arrivals rather than surging demand, while Guangdong consumption gradually recovered as copper prices pulled back, leading to warehouse withdrawals and declining inventories.

The largest downstream demand segment, major domestic copper cathode rod enterprises reported a 62.44% operating rate, up 1.24 percentage points WoW, but the recovery was largely passive due to orders on hand from previous weeks and production halts at certain enterprises.

Supply-side outlook indicates that domestic copper cathode arrivals will shrink, while import supply remains stable, resulting in marginally tight overall supply. SMM expects nationwide copper social inventory to continue destocking mildly next week, but the sustainability of this trend depends on whether copper price pullbacks can drive actual orders.