Summary of J.P. Morgan's China Metals Activity Tracker Industry Overview - The report focuses on the metals industry in China, specifically tracking inventory trends for steel, iron ore, copper, aluminum, and zinc for the week ended October 31, 2025 [2][16]. Key Insights 1. **Weak Demand Indicators**: The report highlights the eighth consecutive week of weak physical indicators for copper, aluminum, and zinc demand in China, with copper inventories increasing by 7,000 tons [2][16]. 2. **Copper Price Dynamics**: Despite weak demand signals, copper prices are at year-to-date highs, approximately $11,000 per ton, driven by supply-side factors, including an estimated removal of 500,000 tons of copper supply from 2026 projections [3][17]. 3. **Manufacturing PMI**: China's manufacturing PMI was reported at 49, indicating contraction, which was lower than the expected 49.9. This suggests slower fiscal policy deployment, potentially delaying growth until early 2026 [3][4]. 4. **Steel Consumption and Production**: Steel consumption in China increased by 3% week-over-week and year-over-year, while production rose by 1% week-over-week and year-over-year. However, steel mill margins have declined to negative $30 per ton for rebar due to strong iron ore prices above $105 per ton [4][12]. 5. **Iron Ore Shipments**: Global iron ore shipments increased by 2% week-over-week and 10% year-over-year, although typical seasonality suggests a decline in shipments in November compared to September [4][11]. 6. **China's 5-Year Plan**: The new 5-Year Plan (2026-2030) emphasizes proactive fiscal policy and tech self-sufficiency, particularly in sectors like semiconductors and advanced materials, which could positively impact metals correlated with China's manufacturing sector [4][3]. 7. **Geopolitical Factors**: A new phase in China-US relations was noted, with the effective tariff rate on China set to decrease from 42% to 32%, which may influence trade dynamics in the metals sector [4]. Additional Observations - **Inventory Trends**: The report indicates that China's physical copper and aluminum markets are no longer exceptionally tight, with inventories trending higher [16][20]. - **Future Price Forecasts**: J.P. Morgan forecasts that copper prices could rise to $12,000 per ton in Q1 2026, despite current weak demand signals [17]. - **Zinc Inventory Levels**: Zinc inventories are at the upper end of the historical range, indicating a potential oversupply situation [51]. Conclusion The report presents a mixed outlook for the metals industry in China, with strong prices driven by supply constraints but weak demand indicators suggesting caution. The geopolitical landscape and fiscal policies will play crucial roles in shaping future market dynamics.