China copper inventories have posted strong drawdowns for six consecutive weeks, becoming the most prominent high-frequency signal in metals demand

Overview

This report tracks China metal inventories, steel output, iron ore shipments, and macro energy risks. The core conclusion is that China copper consumption continues to show the strongest high-frequency signal: copper inventories have drawn down sharply over roughly the past six weeks, and visible copper inventories in China have fallen to the lowest level for the same period in a decade. In contrast, aluminum and zinc inventories continue to build, indicating that China’s response to price trends and supply shocks differs across base metals.

Core views

First, the continued strong drawdown in copper inventories is the most positive micro signal in the report, implying strong Chinese end-use copper consumption or dip-buying demand, and potentially lifting the floor for Chinese copper buying above $12,000/tonne. Second, aluminum and zinc inventories continue to be rebuilt, indicating that purchases of some metals may have paused or demand may be weak at high prices. Third, steel production has rebounded in the short term, and iron ore inventories have begun to decline but remain elevated, suggesting steel mills may rely on more timely inventory management and overseas shipments to reduce working capital usage. Fourth, at the macro level, tail risks remain from surging energy prices and pressure on global growth.

Analysis framework

The report uses cross-validation through visible metal inventories in China, exchange and bonded inventories, steel mill production, iron ore port inventories, global iron ore shipments, and J.P. Morgan macro scenario analysis. Inventory drawdowns are viewed as a potential sign of improving downstream consumption, while inventory builds are viewed as a potential sign of slowing purchases or weakening demand.

Methodology notes

• High-frequency inventory trackingChina metals inventory channel check

  Observe copper, aluminum, and zinc consumption strength through changes in visible inventories such as SHFE and bonded-zone inventories.

  Rapid destocking usually implies improving downstream consumption or strong purchasing; continued restocking may reflect weakening demand, prices suppressing purchases, or relatively ample supply.

• Seasonal comparisonPost-Lunar-New-Year weekly inventory seasonal comparison

  Compare weekly inventory changes after the 2026 Lunar New Year with the five-year average or the historical level for the same period.

  The report emphasizes that the scale of copper inventory drawdowns is significantly greater than typical seasonality, while aluminum inventory builds run counter to normal destocking seasonality.

• Scenario analysisMacro scenario of energy price shock

  Assess the macro impact of Brent rising to $150/bbl over the next three months before partially retreating.

  J.P. Morgan global economists’ model shows that this adverse price shock could raise inflation by more than 2 percentage points and drag 2026 global GDP growth by 1.6 percentage points.

Asset mapping & comparison

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

• Copper

  Strongest positive high-frequency signal

  Strengths

  China inventories have fallen sharply for six consecutive weeks, dropping to the lowest level for the same period in a decade; buying has continued even at high prices, indicating a strong floor for consumption or procurement.

  Weaknesses

  J.P. Morgan Commodities Research believes near-term copper price risks are skewed to the downside, with macro and demand headwinds potentially outweighing some supply risks.

  Comparison

  Compared with aluminum and zinc, copper inventory performance is clearly stronger and the demand signal is more supportive.

  Risks

  Slowing macro demand, high copper prices suppressing consumption, and U.S. tariffs causing distortions in logistics and inventories.

• Aluminum

  Weak or cautious signal

  Strengths

  Inventory data provide a high-frequency window into purchasing behavior.

  Weaknesses

  Inventories increased by 42kt to about 1.5Mt and are above historical seasonal levels, indicating that China has paused or slowed purchases at high prices.

  Comparison

  This forms a clear divergence from copper’s strong drawdown.

  Risks

  If inventories continue to build, it may reflect weak downstream demand or increased price pressure.

• Zinc

  Weak inventory signal

  Strengths

  Inventory levels can serve as an indicator of marginal demand changes.

  Weaknesses

  China zinc inventories rose to 260kt, the highest level for the same period since 2020.

  Comparison

  In contrast to copper destocking, zinc is still being restocked.

  Risks

  Continued restocking may weigh on price and production margin expectations.

• Steel

  Production improving but inventory pressure remains

  Strengths

  Production accelerated over the 10 days ending April 20, with the annualized run rate at about 1,022Mt, returning to around the median of the past five-year average.

  Weaknesses

  Steel mill profits remained negative in 1Q26, and weekly and year-on-year steel inventories are still under pressure.

  Comparison

  Steel activity is better than previous lows, but the signal is not as clear as that from copper inventories.

  Risks

  If the production recovery is not absorbed by demand, it may lead to renewed inventory accumulation and margin pressure.

• Iron ore

  Inventories high but declining at the margin

  Strengths

  China port iron ore inventories have recently begun to draw down, and global shipments are entering a seasonal upswing.

  Weaknesses

  Port inventories are about 173Mt, still historically high for this time of year and above the previous peak.

  Comparison

  Iron ore faces more visible supply and inventory pressure than copper.

  Risks

  A recovery in Australian and Brazilian shipments and weaker-than-expected steel demand could prolong inventory pressure.

Key data

• Change in China copper inventories over roughly the past six weeksDown more than 250ktSignificantly exceeds the typical seasonal destocking trend.
• China refined copper inventoriesAbout 245-246ktThe lowest level for the same period in a decade, and about 75kt below the same period last year.
• Copper inventory change in the week ending April 24, 2026-40ktVisible copper inventories in China continued to draw down strongly.
• LME copper price and China buyingLME copper back above $13,000/tonne, with Yangshan copper premium around $70/tonneThe report believes China is still buying on dips, and the buying floor may have risen above $12,000/tonne.
• China aluminum inventoriesUp 42kt to about 1.5MtSignificantly above historical seasonal levels, indicating slower purchases at high prices.
• China zinc inventories260ktThe highest level for the same period since 2020.
• China steel production run rateAbout 1,022Mt annualizedOutput rose about 2.6%-3% sequentially over the 10 days ending April 20, returning to around the median of the past five-year average.
• China iron ore port inventoriesAbout 173MtStill at a historically high level for this time of year, above the previous peak of about 161Mt in 2023/24, though a recent drawdown has emerged.
• Global iron ore shipmentsUp about 3% month over month in MarchEntering the seasonal upswing phase for global iron ore shipments.
• Energy shock scenarioBrent at $150/bbl could raise inflation by more than 2 percentage points and drag 2026 global GDP by 1.6 percentage pointsThis scenario is seen as an adverse macro risk that could threaten global expansion.

Impact & implications

In terms of investment implications, copper’s inventory signal is clearly stronger than that of aluminum, zinc, and parts of the steel chain, supporting the view of resilient copper demand and spot tightness; however, high copper prices, the U.S. Section 232 copper tariff path, energy price shocks, and macro demand headwinds may limit near-term upside. The divergence within metals means a single China demand narrative cannot simply explain the performance of all base metals; inventories, prices, import pull, and downstream consumption should be tracked separately.

Risks

• Macro economy and demand headwinds may outweigh support from copper supply disruptions.
• If Brent rises toward $150/bbl, it could significantly push up inflation and drag on global GDP growth.
• If U.S. Section 232 refined copper tariffs are implemented in phases, they may continue to attract physical copper flows into the U.S. and distort global inventory distribution.
• Continued restocking in aluminum and zinc may indicate that end demand for some base metals remains weak.
• If steel production rebounds alongside insufficient demand, steel inventories and margin pressure may rise again.

What to watch

• Whether China SHFE plus bonded copper inventories continue to stay below the historical seasonal range.
• Whether the Yangshan copper premium can remain around $70/tonne or higher.
• Whether Chinese buying can continue when LME copper stays above $13,000/tonne.
• Whether aluminum inventories continue to stay above seasonal levels and maintain the restocking trend.
• Whether zinc inventories remain at the highest level for the same period since 2020.
• Whether China steel production, apparent consumption, and steel inventories become imbalanced again.
• Whether iron ore port inventories can continue to decline from the high level of about 173Mt.
• Changes in Brent prices, Middle East supply disruptions, and global inflation expectations.