Metal Inventories in China China physical inventory trends during 3 weeks of stimulus_ largest increase in weekly steel output of 2024, steel rebar demand surged +33% last week

Summary of Key Points from the Conference Call Industry Overview - The report focuses on the European Metals, Mining & Steel industry, particularly analyzing trends in China's metal inventories including steel, iron ore, copper, aluminum, and zinc [1][2]. Core Insights and Arguments - Steel Production and Demand: - China experienced the largest increase in weekly steel output of 2024, with steel rebar demand surging by 33% in the last week [1][2]. - Domestic steel consumption increased by 11% week-over-week (WoW), although total steel demand remains -4% year-over-year (YoY) [2][8]. - Preliminary data indicates a 1% increase in steel production WoW, but a 6% decrease YoY [2]. - Steel Prices and Profitability: - Steel prices in China have rallied by 15-20% over the past four weeks, leading to the highest margins for steel mills in approximately two years [2][8]. - Blast furnace utilization increased by 2 percentage points to 87.5%, the highest since early August, which is atypical for Q4 [2]. - Iron Ore Arrivals: - Landed iron ore arrivals in China decreased significantly by 29% WoW, amounting to an 8 million ton drop [2][4]. - Global iron ore shipments also fell by 12% WoW [2]. - Copper and Aluminum Trends: - Copper inventories saw a 15,000 ton increase after a prolonged de-stocking period, with visible copper inventories dropping to approximately 215,000 tons, the lowest since January 2024 [9]. - Aluminum prices bounced back by 7% following strong de-stocking trends, although the pace of de-stocking slowed recently [10]. - Overall Metal Inventory Trends: - Total steel inventories in China fell by 3% WoW and are down 17% since the beginning of August, reaching their lowest level year-to-date at 10.1 million tons [8]. - The report indicates that physical stocks could rise quickly if positive sentiment and improved margins lead to a surge in steel output [2]. Additional Important Insights - Seasonal Trends: - The report notes that seasonal patterns typically see high levels of metal inventory mid-year, followed by significant de-stocking in Q3/Q4 [9]. - Future Price Forecasts: - J.P. Morgan Commodities Research forecasts copper prices to reach $11,000 per ton** in Q2 2025 and **$11,500 per ton in Q3 2025, approximately 15% above current spot prices [9]. - Aluminum is projected to be around $2,750 per ton in 2025 [10]. - Market Sentiment: - The report emphasizes the importance of market sentiment and economic stimuli in influencing inventory levels and production rates in the metals sector [2][10]. This summary encapsulates the key findings and insights from the conference call, providing a comprehensive overview of the current state and future outlook of the metals industry in China.