Copper consumption continues to slow, while aluminum destocking momentum strengthens

Overview

This report is J.P. Morgan's high-frequency tracking of China's metals inventories for the week ended June 5, 2026. Using inventory drawdowns or builds as a proxy for end-demand activity, the report finds that China's copper consumption continues to slow, aluminum destocking is improving, and overall metals destocking has been weak since May, marking a clear cooldown from the exceptionally strong consumption period in March and April.

Core views

The core view is that copper demand has remained weak for a sixth consecutive week, with almost no meaningful inventory change over the past week; while this slowdown is weaker than the strong destocking seen in March and April, it is also consistent with normal seasonality. For aluminum, inventories fell by 26kt last week, slightly stronger than the seasonal average, indicating continued improvement in momentum. Zinc, by contrast, saw inventory builds, with stocks rising to 264kt, reflecting that demand for some metals remains under pressure. Combined with weak Chinese manufacturing activity, higher oil prices under a Strait of Hormuz closure scenario, and pressure from freight and mining consumables costs, the report reiterates its recommendation to reduce exposure to EMEA Metals & Mining.

Analysis framework

The report uses China's weekly visible inventories and inventory changes as proxies for consumption, observing the pace of destocking or restocking across base metals, steel, and iron ore; it also combines Chinese PMI, oil price scenarios, freight rates, and mining consumables costs to map these signals into EMEA metals & mining equity allocation recommendations.

Methodology notes

• High-frequency inventory trackingChina Metals Activity Tracker

  Use inventory drawdowns or builds to assess the strength of downstream consumption

  The report argues that rapid inventory drawdowns usually imply improving downstream consumption, while inventory builds or slower drawdowns may indicate weakening demand; therefore, it uses weekly changes in China's metals inventories to capture demand turning points.

• Scenario and cost pressure analysisCommodity price scenario analysis

  Pressure from oil prices, freight, and mining consumables on metals and mining profits

  The report cites JPM Commodities Research's forecast of Brent at around $100/bl in H2'26 under the current scenario, and treats rising oil prices, freight, and consumables as important sources of cost inflation for EMEA metals & mining.

Asset mapping & comparison

Structured mapping from thesis to named assets (strengths, weaknesses, peers, risks).

• Copper

  China's visible inventories are used as a proxy for end-demand consumption.

  Strengths

  Inventories are around 218kt, still at the low end of the seasonal range.

  Weaknesses

  Consumption has been weak for a sixth consecutive week, with little inventory change over the past week.

  Comparison

  A clear slowdown versus the exceptionally strong consumption period in March and April, and inventories are about 40kt higher than the same period in 2025.

  Risks

  If inventory drawdowns continue to slow or inventories rebuild, expectations for copper demand may be revised down further.

• Aluminum

  Inventory drawdowns are viewed as a signal of improving consumption and influence preferences for aluminum-related equities.

  Strengths

  Inventories fell by 26kt last week, slightly stronger than the seasonal average, with momentum continuing to improve.

  Weaknesses

  It still sits within a broader backdrop of weak overall metals destocking.

  Comparison

  Relative to copper and zinc, aluminum's inventory trend is more positive.

  Risks

  If Chinese demand or seasonal destocking fails to persist, aluminum's relative advantage may weaken.

• Zinc

  Inventory levels are used to observe divergence in base metals demand.

  Strengths

  The report does not provide clear positive factors.

  Weaknesses

  Inventories built last week, lifting total stocks to 264kt.

  Comparison

  Inventories have reached the highest seasonal level since 2022, underperforming aluminum.

  Risks

  Continued inventory builds may reflect weak demand or supply-demand imbalances.

• EMEA Metals & Mining exposure

  China's metals demand and cost inflation jointly drive sector allocation recommendations.

  Strengths

  Some aluminum-related exposures still retain relative appeal.

  Weaknesses

  Downside risks to China's metals demand coexist with pressure from oil prices, freight, and consumables costs.

  Comparison

  The report recommends relatively lowering overall EMEA Metals & Mining exposure rather than broadly adding to the sector.

  Risks

  Further increases in oil prices and costs, along with continued weak demand, would compress profits and valuations.

• Norsk Hydro (NHY.OL)

  The only stock rated Overweight in industrial metals coverage.

  Strengths

  Benefits from aluminum exposure and regional premium exposure.

  Weaknesses

  It remains affected by the overall metals demand backdrop and cost inflation environment.

  Comparison

  Preferred relative to BHP and Rio Tinto at Neutral and Anglo American and Lundin Mining at Underweight.

  Risks

  If aluminum destocking momentum weakens or costs continue to rise, the investment thesis may be undermined.

Key data

• Tracking weekweek ended 5 Jun’26Covers inventory trends in China's base metals, steel, and iron ore.
• Copper demandWeak for a sixth consecutive weekInventory changes were minimal over the past week, marking a clear slowdown from the exceptionally strong consumption in March and April.
• Copper inventoriesAbout 218ktAt the low end of the seasonal range, but about 40kt higher than the same period in 2025; the main text also mentions about 220kt.
• Aluminum destocking-26ktLast week's drawdown was slightly stronger than the seasonal average for the same period, with momentum continuing to improve.
• Zinc inventories264ktAfter building last week, inventories reached the highest seasonal level since 2022.
• Oil price scenarioH2’26 Brent around $100/blJPM Commodities Research's forecast under the current scenario; the report says the market is absorbing the shock through inventory drawdowns and demand destruction.
• Price reference datemarket close on 05 June 2026Unless otherwise stated, company prices in the report are as of the close on that date.

Impact & implications

The report takes a cautious view on the implications for metals demand: stalled copper destocking and weakening Chinese manufacturing imply declining demand momentum, which may weigh on metals prices and mining equity sentiment; improving aluminum destocking, by contrast, provides relative support for aluminum-related exposure. In equity strategy, J.P. Morgan prefers to reduce overall exposure to EMEA Metals & Mining, while remaining relatively constructive only on Norsk Hydro due to its aluminum and regional premium exposure.

Risks

• Further weakening in Chinese manufacturing activity could put additional pressure on onshore metals demand.
• If the Strait of Hormuz closure lasts beyond the base-case scenario, it could drive up oil prices, freight rates, and mining consumables costs.
• The market's absorption of the oil price shock through inventory drawdowns and demand destruction may mask true end-demand.
• If the pace of inventory drawdowns continues to lag seasonality, demand expectations for copper and steel-related sectors may be revised downward.
• The report discloses that J.P. Morgan has market-making, client, investment banking, brokerage, or other service relationships with multiple covered companies, so the investment views should be read alongside conflict-of-interest disclosures.

What to watch

• Whether copper inventories continue to show only small changes or begin rebuilding in the coming weeks.
• Whether aluminum destocking can continue to outperform the seasonal average.
• Marginal changes in Chinese manufacturing activity and metals orders after the May NBS PMI.
• Whether the duration of the Strait of Hormuz closure and Brent prices approach the H2'26 scenario of around $100/bl.
• Changes in cost inflation, freight, and consumables prices for EMEA mining companies.