Oversupply Concern for China Copper Market

Chinese copper market turned into oversupply. World copper inventory halved at warehouses registered to London Metal Exchange from the level in late February and the reduced volume is estimated to go to China. However, copper inventory at Shanghai Futures Exchange hit the highest level in one year and 3 months. Japanese export of copper ingot and scrap apparently slows down. Imported copper could be piled up before it reaches to end users.

LME copper inventory decreased by 2,900 tonnes to 290,275 tonnes on Friday from Thursday, which was 47% lower than the level on February 25. The inventory is very thin at warehouses in Asian area including Busan and Singapore due to strong buy from China.

Chinese copper ingot import around 1.2 million tonnes in January-April, which was as high as averaged yearly import in past 4 years, due to higher demand with stimulus package and purchase by State Reserve Bureau. The import including semi-finished products hit monthly record in May.

However, SHFE’s copper stock increased by 33% to 60,647 tonnes on Friday from a week earlier. The stock doubled in June and reached the heist level since March 2008. The stock increase indicates speculative stock demand in China, instead of actual demand.