Global Copper Cathode Stocks: Increasing or Decreasing Post-Price Swings?

Copper prices have been rising since March 13 following a series of news about "possible production cuts by Chinese smelters." During this period, geopolitical factors, the US dollar trend, favourable macro front in China, and the COMEX short squeeze event pushed copper prices to a historical high in May. As bullish funds retreated from high levels and downstream operations suffered under high copper prices, leading to negative feedback on consumption, copper prices began to decline gradually from June. In early August, the market briefly traded on recession logic, with LME copper falling to $8,714/mt, then rebounding slightly to $9,200/mt. From June to August, during the continuous decline in copper prices, SMM copper cathode social inventory showed a significant destocking trend, but global visible inventory continued to build up.

Please note that in this article, the visible inventories of the three major global exchanges are SHFE + LME + COMEX; the total global researchable inventory (hereinafter referred to as the total global inventory) is SMM China's domestic and bonded copper cathode social inventory + SMM China's smelter copper cathode inventory + SMM China's consumer copper cathode inventory + LME + COMEX.

First, let's observe the trends in visible inventories at the world's three major exchanges. Since returning from the Chinese New Year, SHFE inventories have continued to rise as smelters delivered most of their supplies to the delivery inventory, leading to an increase in stocks. During this period, LME and COMEX inventories remained at historically low levels. Subsequently, copper prices have been rising continuously since March 13, and the SHFE copper futures structure has turned into a contango structure, with spot copper showing a significant discount. The high copper prices have reduced downstream purchasing demand, and holders have maintained delivery actions from the 2403 contract to the 2406 contract, making it difficult for SHFE inventories to decrease.