China's Real Estate Slump Leads to 330,000 Tons of Copper Stock... Largest in 4 Years

330,000 Tons of Copper in Guri... Largest Since 2020
"Copper Inventory Expected to Rise Due to Oversupply"

Copper is accumulating amid an economic slowdown, including a slump in the Chinese real estate market. Chinese copper inventories have reached their highest level in four years since 2020.

According to Bloomberg data on the 19th (local time), metal inventories at the Shanghai Futures Exchange in China reached about 330,000 tons this month, the highest since 2020.

Jang Jipu, Chief Analyst at Jeongsin Futures, explained, "The slump in China's real estate sector is putting tremendous pressure on wire and cable manufacturers."

Copper is widely used after building construction for electrical wiring, plumbing, and home appliances. Nicknamed "Dr. Copper," it is considered a leading indicator reflecting the construction and manufacturing industry trends. As the Chinese real estate market worsened and new construction demand sharply declined, copper demand also decreased.

Last month, copper inventories increased after prices surged to an all-time high of over $11,000 per ton amid a speculative trading frenzy in the U.S. This reflects the slump in China's real estate sector, manufacturing, and credit activities, and shows that the Chinese government is avoiding directly stimulating household consumption, foreign media explained.

Copper prices have fallen 13% over four weeks to $9,600 due to weak demand in China after reaching record highs.

David Wilson, BNP Paribas commodity strategist, said, "Chinese companies are depleting their own inventories and postponing purchases in the market because global copper prices have surged."

Chinese copper inventories typically increase at the beginning of the year and start to decline after the Spring Festival, the biggest holiday, as factory production rises in spring. However, this year, the inventory increase period has been longer than usual.

In contrast to China, copper inventories worldwide remain low. Concerns about the risk of a price surge have also emerged.

Recently, Chinese copper smelters have resumed copper purchases, leading to a slight decrease in inventories over the past two weeks. Some believe that suppressed demand could cause copper prices to rebound in the second half of the year.

However, foreign media reported that global oversupply is expected to increase copper inventories. Qin Jingjing, Chief Nonferrous Metals Analyst at SDIC Security, said that although Chinese copper smelters raised the need for production cuts in March, actual production was not reduced. JP Morgan noted that although copper prices have recently fallen, it is questionable whether a roughly 10% decline is enough to change investment sentiment in China.

Daniel Smith, Head of Research at AMT, predicts that if some funds that purchased copper show weakness and start betting on price declines, the downward trend could accelerate. He said, "Copper prices have fallen too much. If funds run out, prices could fall back to $9,000 per ton."