China's Non-Ferrous Metal Industry: Here Are Inventory Updates And Their Impact On The Indian Industry

China, the world’s largest producer and consumer of aluminium, zinc, and copper ingots plays a crucial role in shaping the global market. The recent weekly updates on China’s social inventories provide valuable insights into the current market conditions and future trends. These developments have significant implications for India’s industry, which heavily relies on China for raw material imports. In this article, let’s explore more about the same.

Chinese Inventory Highlights

• Aluminium Ingot And Billet Social Inventories Hit Five-Year Low– According to the latest data from SMM, China’s major markets have witnessed a sharp decline in aluminium ingot and billet social inventories. As of 20 April 2023, aluminium ingot inventories were at a five-year low of 906,000 mt, down 60,000 mt from the previous week. The domestic aluminium billet inventory stood at 152,600 mt, down 7,000 mt from the previous week. These numbers indicate a tight supply situation, which may lead to higher prices in the coming weeks.
• Zinc Ingot Social Inventory Down Across Major Markets– The data shows that social inventories of zinc ingots in seven major markets in China have decreased by 6,000 mt from 17 April 2023. The inventory in Shanghai saw a sharp decline due to buyers mainly picking up cargoes at smelters, in addition to on-dip purchases before the Workers’ Day holiday. The overall inventory in Shanghai, Guangdong, and Tianjin fell by 4,200 mt.
• Copper Inventory Decline Continues- As per the data, there is a decline in copper inventory across major Chinese markets, with the total inventory decreasing by 8,100 mt from 17 April 2023. The inventories in Shanghai, Zhejiang, and Tianjin contributed the most to the decline.

Impact On India

When it comes to the Indian non-ferrous industry, lower inventory levels in China may result in higher pricing and longer lead times for India’s importers of aluminium. However, this might help indigenous producers in India. Rising zinc prices could also result from declining Chinese inventory levels, which would be advantageous for Indian zinc producers. Due to China’s dropping inventory levels, India’s copper importers may likewise see higher costs and longer lead times. Nevertheless, this could present chances for Indian copper producers to meet the rising demand in the domestic market.

OFB’s Insight

The weekly updates on China’s social inventories provide valuable insights into the current market conditions and future trends. India as a major importer of these metals from China is likely to feel the impact of these changes. The tight supply situation in Aluminium and falling inventory levels in zinc and copper may lead to higher prices and longer lead times for Indian importers. However, this could also create opportunities for Indian domestic producers to cater to the growing demand in the local market.

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