China’s Copper Stocks Rebound as Demand Falters, Easing Shortage Fears Amid U.S. Tariff Rush

Copper inventories in Shanghai Futures Exchange (SHFE) warehouses surged 34% this week, snapping a three-week decline that had stoked concerns over shortages as global supplies were diverted to the U.S. ahead of potential Trump-era tariffs.

Key Drivers:

• Inventory Jump: SHFE stocks rose to 108,142 metric tons, the first weekly gain since mid-March, though still far above late 2023’s record lows (~30,000 tons).
• Weak Chinese Demand: Sluggish domestic consumption and smelter overproduction (despite negative margins) fueled the stock build.
• U.S. Tariff Effect:
  • Yangshan import premium fell 8% to $95/ton as Chinese buyers retreated from high prices.
  • Metal previously bound for China has been rerouted to U.S. warehouses, where CME stocks hit an 8-year high.

Market Implications:

• Short-Term Relief: The rebound eases fears of a China copper crunch, but highlights soft demand in the world’s top consumer.
• Global Divergence: While U.S. inventories swell on tariff hedging, LME stocks remain near 1-year lows due to supply shifts.