Metal Inventories in China China inventory trends during 5 weeks of stimulus_ China steel output fell last week, iron ore shipments & inventories increased. Aluminium inventory at seasonal lowest in 5 years

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 [2][4]. Key Insights Steel Production and Inventory - Steel Output: Recent data indicates a 1% increase in steel production over a 10-day period ending October 25, but a 2% week-over-week decline was noted in the week ending November 1, marking the first decline since stimulus hopes were raised in September [2][8]. - Steel Prices and Margins: Steel prices remained flat, but steel mill margins improved to their highest levels in approximately two years, although they are still negative or close to breakeven [2][14]. - Inventory Levels: Total steel inventory in China decreased by 1.9% week-over-week to 12.35 million tons, which is a 13.2% decline year-over-year [7][16]. Iron Ore Trends - Iron Ore Shipments: Iron ore shipments to China increased by 2.9% week-over-week to 25.44 million tons, but year-over-year shipments are down 8.6% [7][19]. - Port Inventories: Iron ore port inventories rose by 2 million tons to 149 million tons, which is above the normal seasonal average [18][19]. Copper Market Dynamics - Copper Inventory: There has been a significant slowdown in copper de-stocking, with inventories falling by 15,000 tons in the last two weeks, indicating weaker downstream demand [4][25]. - Copper Premiums: The copper premium fell by 10% last week to $48 per ton, which is a 30% decrease since October 10, reflecting increased consumer sensitivity to high prices [4][25]. Aluminum and Zinc Insights - Aluminum Inventory: Aluminum inventories are at their lowest levels for this time of year compared to the previous five years, indicating strong de-stocking trends [11][26]. - Zinc Inventory: Zinc inventories are in line with historical averages after a rapid de-stocking phase [30][32]. Additional Observations - Construction Activity: A slowdown in construction activity is expected in November and December, which may further constrain steel production as China's peak season for downstream steel consumption ends [2][8]. - Environmental Factors: Heavy air pollution occurrences in steel-producing regions may also impact production levels [2][8]. Conclusion - The current trends in China's metal inventories suggest a complex interplay of production, demand, and environmental factors that could influence future market dynamics. The steel and copper markets are particularly sensitive to changes in consumer demand and construction activity, while aluminum and zinc inventories indicate a tighter supply situation.