Copper inventories on the Shanghai Futures Exchange (ShFE) declined this week, marking a second week of double-digit withdrawals that traders say could trigger a surge in prices and imports.
Copper inventories on the ShFE (CU-STX-SGH) fell by 27,446 metric tons to 89,307 on Wednesday, a 23.5% drop compared with the previous Friday. The previous week’s decline of 32% was the largest percentage decline on record.
Four traders told Reuters they expect withdrawals to lift prices for ShFE copper, a key metal for China’s vast manufacturing sector, and to attract more metal to the exchange warehouses, making a complete stock depletion unlikely.
Already, the tightness is showing in the Yangshan copper premium (SMM-CUYP-CN), a gauge of China’s appetite for importing copper. It stood at $94 a ton on Tuesday, the highest since December 2023 and up more than 40% since January 2.
Copper inventories on the ShFE (CU-STX-SGH) dropped 32% to 116,753 tons last week as local buyers took delivery of metal purchased during a price slump earlier this month.
One of the traders had predicted ShFE copper stocks could fall another 10,000 tons before the release of warehouse stocks on Wednesday, two days earlier than usual because of public holidays in China from May 1 to May 5.
Traders diverted copper to the U.S. amid a threat of tariffs on U.S. imports, leading to a slide in ShFE stocks and driving up prices on COMEX.
This fuelled a surge in COMEX stocks to 137,759 tons metric tons (HG-STX-COMEX) on Tuesday, up 45% since January 2 and at their highest since December 2018.
Consumers in China are struggling to secure supplies in an already tight Chinese market, partly because of U.S.-China trade tensions, which have reduced a major source of scrap metal from the United States.
Source: Reuters
