China base metals and iron ore market: China copper inventories tighten ahead of holidays, while aluminium supply and steel indicators soften

Overview

This China Metals Activity Tracker reviews high-frequency inventory and supply-demand indicators for copper, aluminium, zinc, steel and iron ore through the week ended 25 September 2026. J.P. Morgan sees particularly tight near-term copper conditions, but a mixed broader picture as aluminium supply recovers and Chinese steel activity remains weak.

Core views

J.P. Morgan uses weekly Chinese visible metal inventories as a proxy for consumption and reports that broad industrial-metal drawdowns continued ahead of the 25–27 September Mid-Autumn Festival break and the first-week-of-October Golden Week holiday. The most notable move was copper: visible inventory across SHFE and bonded warehouses fell 16kt in the week ended 25 September, an acceleration in de-stocking that the report says was consistent with the seasonal second peak-demand period. China’s onshore copper purchase premium remained above $110/t, with the accompanying chart showing a level above $115/t, supporting the view that physical buying was strong. Total visible copper inventory was only 75kt, below its historical range, which J.P. Morgan views as a potential sign of a very tight market. The report attributes the copper drawdown partly to domestic purchasing before the holidays. It also cites J.P. Morgan Commodities Research’s view that shortages of imported copper concentrate, invoicing issues disrupting domestic scrap supply, and smelter maintenance could constrain China’s refined-copper production over the next roughly one to two months. The combination of low inventories, resilient physical premiums and possible supply constraints is the report’s central tightening signal. Aluminium also de-stocked strongly, falling 55kt in the latest week. The report says inventories have rapidly returned toward historic normal levels after more than three months of drawdowns; its inventory chart places visible stock at 678kt, back within the five-year range, while the narrative refers to approximately 780kt. However, the supply interpretation differs from copper. Bahrain’s Alba said it was producing aluminium at about 80% of pre-Iran-war levels, implying a relatively quick recovery from earlier conflict disruption. J.P. Morgan says this points to a potentially less-tight aluminium supply market; LME aluminium fell 2% over the week to about $3,250/t. Zinc also returned to strong de-stocking, declining 8.7kt in the latest week and outperforming the normal seasonal pattern. Total visible zinc inventory remained high at 205kt—the highest level since 2022—but had declined sharply over the prior four weeks as the export arbitrage opened. Separately, the report notes that Nyrstar was reportedly reviewing Dutch zinc-smelting operations with 315ktpa capacity because of energy costs and government policies. If this occurred, it could create regional supply tightness in Europe. Steel and iron ore indicators were softer. CISA data showed Chinese steel output running at an annualised 880Mt for the 10 days to 20 September, unchanged from the prior 10-day period but 6% lower year on year. Trailing 30-day output was also down 6% from the preceding 30 days and down 5% year on year; the report places output at the bottom end of its seasonal range. Steel-mill margins remained loss-making, while steel inventories were 28.8Mt as of 24 September, down 1% week on week but up 1% year on year. China port iron-ore inventories were about 152Mt, up 1Mt week on week but about 6Mt lower than in early August. Global iron-ore shipments totalled 113Mt in August, down 10% year on year and flat versus July. J.P. Morgan attributes the weakness largely to Brazilian exports of 28Mt, described as roughly a 10-year low. It cites the view that iron ore below $100/t combined with high freight rates is already forcing marginal Brazilian supply from the market. The report therefore juxtaposes reduced global iron-ore shipments with weak Chinese steel demand and loss-making mill economics.

Analysis framework

The report tracks weekly visible inventories in Chinese exchanges, bonded warehouses and regional warehouses as a consumption proxy, compares the latest changes with seasonal history, and combines these indicators with physical premiums, production data, shipment data, inventory levels and supply disruptions. It then links changes in metal availability and downstream activity to near-term market tightness or easing.

Methodology notes

• Industry AnalysisSupply-demand framework

  High-frequency inventory, physical-premium, production and shipment tracking

  The report treats inventory drawdowns and physical buying premiums as demand and availability signals, then assesses whether mine, concentrate, scrap, smelter or shipment conditions can tighten or loosen supply.

• Industry AnalysisVolume-price decomposition

  Comparison of inventory and production changes with commodity-price movements

  The report relates physical volume indicators, such as de-stocking and steel output, to weekly aluminium and raw-material price movements to explain the differing market conditions across metals.

Key data

• China visible copper inventory75ktWeek ended 25 September 2026; low and below the historical range.
• China copper inventory change-16ktWeekly de-stocking, with onshore purchase premiums sustained above $110/t.
• China aluminium inventory change-55ktWeekly de-stocking; the report says the pace since mid-May significantly exceeded the historic norm.
• China visible aluminium inventory678ktWeek ended 25 September 2026; back within the five-year range after more than three months of de-stocking.
• China zinc inventory change-8.7ktWeekly de-stocking stronger than the seasonal trend.
• China visible zinc inventory205ktStill the highest level since 2022 despite a sharp four-week decline.
• China steel output880Mt annualisedFor the 10 days to 20 September; flat versus the preceding 10 days and down 6% year on year.
• Global iron ore shipments113MtAugust shipments, down 10% year on year and flat versus July.
• Brazilian iron ore exports28MtAugust level described as roughly a 10-year low.

Impact & implications

J.P. Morgan’s indicators point to potentially very tight near-term copper availability in China, supported by low inventories, strong physical premiums and possible refined-production constraints. Aluminium’s inventory drawdown is offset by evidence of supply recovery, while weak steel production, loss-making mills and reduced iron-ore shipments leave the ferrous-market backdrop softer and more mixed.

Risks

• Potential disruption to China refined-copper production from concentrate-import shortages, scrap-supply invoicing issues and smelter maintenance over the next roughly one to two months.
• A possible review of Nyrstar’s 315ktpa Dutch zinc-smelting operations could create regional zinc supply tightness in Europe.

What to watch

• China copper inventory changes and onshore purchase premiums after the Mid-Autumn Festival and Golden Week holidays.
• Whether copper concentrate shortages, scrap-supply disruption and smelter maintenance constrain refined-copper output over the next one to two months.
• The pace of Alba’s aluminium production recovery and its effect on aluminium market tightness.
• Chinese steel output, mill margins, steel inventories and port iron-ore inventories.
• Brazilian iron-ore exports, freight rates and whether low iron-ore prices force marginal supply out of the market.