China's Copper Inventory Builds Up Amid Suppressed Demand

The nationwide copper social inventory in China increased by 15,900 metric tons (mt) from last Monday to 133,900 mt as of August 17. This represents a month-over-month (MoM) increase and a year-over-year (YoY) rise of 200 mt.

The buildup in inventory is attributed to various factors across different regions. In Shanghai, higher arrivals of domestically produced material combined with weak consumption led to the buildup. Jiangsu saw a significant increase due to delivery-related factors and price spreads between futures contracts. Guangdong's inventory rose sharply due to concentrated shipments to delivery warehouses by smelters and a wide price spread between futures contracts.

On the demand side, copper prices have been high, suppressing downstream purchasing sentiment and keeping demand persistently weak. A survey showed that this week's operating rate of copper cathode rod is expected to fall to 59.01%, down 0.29 percentage points from last Monday. With China's spot supply turning marginally looser and end-user purchasing remaining weak, the SMM expects nationwide social inventory of copper cathode to continue building up this week.