Copper and aluminium inventories fell for three consecutive weeks, indicating stronger marginal Chinese metals consumption

Overview

This report is JPMorgan’s China metals activity tracker, using weekly inventory changes in Chinese base metals, steel and iron ore as high-frequency proxy indicators of demand strength. The core conclusion is that by the week ended July 3, 2026, China showed destocking in copper, aluminium and zinc, with especially copper and aluminium inventories falling in consecutive weeks, indicating improvement in China metals demand versus an earlier weak phase.

Core views

The report’s key judgment is that after roughly six weeks of subdued change in copper inventories, there have now been three consecutive weeks of stronger drawdowns, with last week down about 13k tonnes, taking total Chinese copper inventories to 163k tonnes, near a multi-year seasonal low; aluminium fell by about 75k tonnes last week, the strongest weekly drawdown since the Lunar New Year, and declined by more than 300k tonnes cumulatively over the past eight weeks; zinc also drew down about 11k tonnes. JPMorgan also notes that until the US Department of Commerce’s tariff decision on copper imports, metal inflows to COMEX continued, and Yangshan copper premium in China rose above USD 70 per tonne, further supporting the interpretation of improving regional demand.

Analysis framework

The report uses a high-frequency inventory monitoring method, tracking weekly changes in SHFE, bonded warehouses, regional warehouses and port inventories, treating rapid drawdowns or rebuilds as signals of downstream demand improvement or weakness. For iron ore, it also combines Chinese port inventory data with shipping pace in Australia, Brazil and globally to assess supply-demand pressure.

Methodology notes

• High-frequency supply-demand monitoringChina metals inventory activity tracking

  Inventory drawdown as a demand proxy

  The report treats Chinese weekly visible inventory changes as a high-frequency proxy for downstream demand activity; rapid drawdowns are generally interpreted as demand improvement, while stock rebuilds or slower drawdowns may indicate weaker demand.

• Spot commodity signalsYangshan copper premium versus LME copper price

  Regional spot demand premium

  The Yangshan copper premium’s recovery above USD 70 per tonne is interpreted by the report as a signal of improving Chinese regional copper demand, especially meaningful against the backdrop of sideways LME copper prices since late June.

• Macro and sector interactionObservation of China fixed-asset investment and high-end manufacturing chain demand

  Structure of demand recovery

  The report cites JPMorgan China economists’ view that while inventory signals improved, fixed-asset investment remains soft; demand recovery is narrow, with policy more focused on high-end manufacturing supply chains, so support for copper and aluminium demand is relatively stronger.

Asset mapping & comparison

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

• Copper

  A core beneficiary of Chinese demand improvement and US COMEX attraction of metal inflows

  Strengths

  Inventories have drawn down for three consecutive weeks, total stock is at a multi-year seasonal low, and Yangshan copper premium has recovered above USD 70 per tonne.

  Weaknesses

  Inventory moves were relatively weak for around six weeks before this, and demand improvement still needs ongoing confirmation.

  Comparison

  Compared with steel and iron ore, copper’s inventory and spot premium signals are more constructive.

  Risks

  US copper import tariff decision, changes in COMEX flows, and Chinese demand recovery below expectations.

• Aluminium

  Base metal supported by demand from high-end manufacturing supply chains

  Strengths

  Last week’s drawdown of 75k tonnes was the strongest since the Lunar New Year, and cumulative eight-week drawdown exceeded 300k tonnes.

  Weaknesses

  Total inventories around 1.1 million tonnes remain at a relatively high level.

  Comparison

  Drawdown momentum is strong, but absolute inventory pressure is higher than for copper.

  Risks

  Insufficient persistence of drawdown, manufacturing demand slowdown, and policy support below expectations.

• Zinc

  Base metal with synchronized drawdown but still high absolute inventory pressure

  Strengths

  An about 11k-tonne drawdown last week indicated marginal demand improvement.

  Weaknesses

  Total inventories of 265k tonnes remain high since 2022.

  Comparison

  Signals are better than in the earlier rebuild phase, but weaker than copper and aluminium.

  Risks

  High inventory levels limit price responsiveness, and downstream demand improvement may not be continuous.

• Steel

  Indicator for Chinese industrial demand and cost pressure

  Strengths

  Inventory data provide a high-frequency demand monitoring window.

  Weaknesses

  Chinese steel inventories rose 1% week-on-week and 11% year-on-year, while steelmaker profits are constrained by rising coking coal prices.

  Comparison

  Compared with base metals, steel chain signals are relatively weak.

  Risks

  Further inventory build, margin compression, and weak property and infrastructure demand.

• Iron ore

  Indicator of black-metal chain supply and inventory pressure

  Strengths

  Global, Australia and Brazil shipment data help monitor seasonal supply conditions.

  Weaknesses

  Chinese port inventories around 160 million tonnes are at historical highs, with slower drawdown.

  Comparison

  Compared with the copper and aluminium drawdown signals, iron ore still shows higher inventory pressure.

  Risks

  Seasonal increases in shipments, persistently high port inventories, and soft Chinese steel demand.

• Metals and mining equities

  Impacted via commodity pricing and demand outlook

  Strengths

  Improving copper and aluminium demand may support sentiment toward related miners and smelters.

  Weaknesses

  The report itself does not provide a unified sector rating change; stock recommendations are differentiated.

  Comparison

  Norsk Hydro is OW in disclosures, Rio Tinto plc is N, Anglo American and Lundin Mining are UW, and BHP Group Ltd is N.

  Risks

  Company valuation, costs, capex, regulatory disclosure and investment-banking exposure may affect investment judgment.

Key data

• Copper weekly inventory change-13k tonnesFor the week ended July 3, 2026, visible Chinese copper inventories showed a clear drawdown.
• Total Chinese copper inventories163k tonnesAt a multi-year seasonal low and near the 2025 trough.
• Yangshan copper premium>USD 70 per tonneSpot premium recovered, interpreted as a sign of improving regional demand.
• Aluminium weekly inventory change-75k tonnesThe strongest single-week drawdown since the 2026 Lunar New Year.
• Aluminium eight-week cumulative changedown more than 300k tonnesShows strengthening aluminium destocking momentum.
• Total Chinese aluminium inventoriesabout 1.1 million tonnesAlthough still relatively high, stronger drawdowns over recent weeks are beginning to pull inventories lower.
• Zinc weekly inventory change-11k tonnesThe first meaningful drawdown after the Lunar New Year.
• Total Chinese zinc inventories265k tonnesStill at a high level since 2022.
• Chinese steel inventories+1% WoW, +11% YoYInventories have risen since June, and steelmaker margins are pressured by rising coking coal prices.
• Chinese port iron ore inventoriesabout 160 million tonnesAt a historical high, and drawdown speed has slowed since the March peak.
• Global iron ore shipments+8% MoM, +6% YoYGlobal shipments entered a seasonal upturn in April.
• Australia iron ore shipments+8% MoM, +3% YoYLatest data for April.
• Brazil iron ore shipments+10% MoM, +10% YoYLatest data for April.

Impact & implications

For investment implications, the report is more constructive on base metals demand linked to China’s high-end manufacturing chain, especially copper and aluminium; however, steel and iron ore signals remain cautious, with steel inventories rising, steelmaker margins under pressure, and elevated iron ore port inventories suggesting continued supply-demand pressure in the black-metal chain. Overall, signals of improving base-metal consumption have strengthened, but demand recovery is not yet broad-based and still requires policy support to expand the demand base.

Risks

• China demand recovery remains narrow, and if policy support is insufficient, inventory drawdowns may not persist.
• The US Department of Commerce copper import tariff decision could alter trade flows and inventory distribution.
• High Chinese iron ore port inventories and seasonally rising global shipments could pressure the black-metal chain.
• Steelmaker profits are weighed by rising coking coal prices, which could weaken steel production and raw material demand.
• Chinese zinc and aluminium absolute inventories are still high, and price elasticity may be constrained by inventory pressure.

What to watch

• Whether visible Chinese copper, aluminium and zinc inventories continue to draw down over the next few weeks.
• Whether Yangshan copper premium can hold above USD 70 per tonne.
• The US Department of Commerce decision on copper import tariffs and its impact on COMEX and global copper flows.
• Whether Chinese policy expands domestic demand further beyond a focus on high-end manufacturing supply chains.
• Changes in Chinese steel inventories, steelmaker profits and coking coal prices.
• Whether Chinese port iron ore inventories can accelerate drawdown again and whether Australia and Brazil shipments continue to rise.