Summary of J.P. Morgan's China Metals Activity Tracker Industry Overview - **Industry Focus**: Base metals, specifically copper, aluminium, and zinc in China - **Date of Analysis**: Week ended January 16, 2026 Key Insights - **Inventory Trends**: Significant re-stocking of base metals occurred in late 2025 and early 2026, with copper, aluminium, and zinc inventories starting the year at higher-than-average levels [1][8] - **Copper Demand**: Weaker domestic demand for copper in China is attributed to semi-finished product producers halting production due to lower orders and challenges in hedging copper exposure during price rallies [1] - **Copper Inventory Levels**: Copper inventory reached 293,000 tons at the end of the reporting week, the highest for this period since 2021, indicating a continuation of the re-stocking cycle into the Chinese New Year [8][30] - **Aluminium and Zinc Trends**: Similar trends observed for aluminium and zinc, with inventories also above average levels as the Chinese New Year approaches [8] Macroeconomic Context - **Chinese Economic Indicators**: Money supply (M2) increased by 8.5% year-over-year in December 2025, indicating a potential boost in economic activity [2] - **Monetary Policy**: The People's Bank of China (PBOC) implemented monetary easing measures, including a 25 basis point cut for structural policy tools, aimed at supporting policy-driven sectors such as technology and green initiatives [2] Market Outlook - **Copper Demand Outlook**: Positive outlook for global copper demand and mining equities, supported by a projected RMB 4 trillion investment in Chinese grid infrastructure, which is a 40% increase compared to the previous five-year plan [2] - **Substitution Risks**: Analysis suggests that substitution of copper is unlikely to significantly mitigate supply deficits before 2030 [2] Additional Observations - **Steel Production**: China's steel output reached an annualized run rate of 905 million tons, showing a 23% increase compared to the previous period, indicating seasonal acceleration ahead of the Chinese New Year [21] - **Steel Inventory**: Steel inventory levels were flat week-over-week but up 24% year-over-year, starting the year at relatively high levels [28] Conclusion - The analysis indicates a robust re-stocking phase for base metals in China, driven by macroeconomic factors and seasonal demand patterns. The outlook for copper and other metals remains positive, although challenges in demand and production adjustments may impact market dynamics in the near term.