China steel, copper inventories dip as demand recovers from virus

Steel and copper inventories in China fell this week for the first time in months, exchange and consultancy data showed, as downstream metal consumers severely hit by the coronavirus come closer to restoring normal operations.
Total steel product stocks in China stood at 37.05 million tonnes as of Thursday, according to Mysteel. That was down 4.8% from 38.91 million tonnes a week earlier and marked the first drop since Dec. 19 as the traditional stock build ahead of the Lunar New Year was exacerbated by a virus-driven collapse in demand.
Inventories of copper in warehouses tracked by the Shanghai Futures Exchange fell 0.7% from last week's near four-year high to 377,247 tonnes, the first dip since Jan. 10.
In the virus epicentre of Hubei province, fabricators of copper products - widely used in power and construction - have not fully restored production but companies everywhere else in China essentially have, an industry official overseeing the sector said on Friday.
"Medium-to-large sized firms that have resumed production are mainly back to pre-epidemic levels," the official said.
Industrial output in China contracted at its sharpest pace in 30 years in the first two months of 2020 but this week's inventory declines indicate manufacturing and construction are returning to normal, with the country reporting no locally transmitted new virus cases for three days running.
"We were only allowed to send limited products for some infrastructure projects before," one China-based steel trader said. "But this week orders for a few property construction sites were also approved."
The picture outside China, however, is bleak, with transport restrictions around the world set to hit consumption.
"Metals will suffer in the coming weeks from lack of physical demand," Malcolm Freeman, director of Kingdom Futures, wrote in a note. "With, it seems, the exception of China, stocks wherever they may be held will grow."
ShFE zinc stocks also declined this week, falling 0.9% to 168,325 tonnes and lead stocks plunged 31.9% to a four-month low.
Inventories of aluminium, meanwhile, nudged up another 2.8% to their highest since May last year.
About 65% of Chinese aluminium fabricators are back at work, up 25 percentage points from February, research house Antaike said on Thursday, adding that operating rates at aluminium foil producers had risen to more than 85%.