Shanghai Futures Exchange experienced its most significant decline since the 2007-2008 financial crisis, and copper inventories in warehouses took the biggest hit. Demand in China for the product improved after lockdown restrictions were lifted, but the stock values remain at a minimum.
Exchange data showed last Thursday revealed that the stockpiles of copper dropped by 36.6 percent to 230,56 tons in April compared to March values. Lead PB-STX-SGH also decreased by over half in a month to 6,658 tons. The values were marked as the lowest levels since the end of October 2019.
Aluminum stocks also fell in ShFE warehouses by 10.4 percent over the week to only 410,542 tons. Last month, inventories also fell by 22.3 percent, rendered the most significant monthly decrease since the end of December 2019.
Nickel, on the other hand, had the smallest inventory decrease during the month compared to other base metals in China. Its stocks only fell by 4.4 percent since March to only 27,421 tons. ShFE tin inventories also experienced a decline of 19.5 percent last April. It is only weighed at 3,572 tons, while zinc stocks were only at 120,881 tons.
Ferrous metals held by Chinese traders subsequently fell as well. Stockpiles of five main steel products decreased by 7.3 percent since last week to only 18.76 million tons last Thursday. The values were the fastest weekly drop since October 2019, fueled by robust construction activities. Chinese metal players have also been restocking demand ahead of China's May 1st to the 5th holiday.
This April, steel inventories, in general, dropped by 29 percent compared to April values easing similar levels during the Lunar New Year holiday and years preceding 2020. The steel industry body and analysts, however, hinted that there might be oversupply since mills have been cranking up their output to promote higher profit margins. The move was despite inventory overhangs and a slowdown in global demand caused by the pandemic.
In other news, Reuters reported that a private sector survey showed China as the top consumer in the industry, but factory activity started to decline. Lingering fears over the Chinese economy's recovery from the pandemic bulled the benchmark copper on the London Metal Exchange by 1.3 percent lower to only 5,196 USD per ton.
Prices also reached their highest in the last six weeks during the early trade. China's official factory activity then showed faster possible expansion by April this year. However, the remarks were offset by a Caixin survey that hinted slower factory activity last month as global demand remains at a minimum. Hence, there was a showing that substantial drops in export orders and more layoffs might occur in the succeeding weeks.
