China metals activity: China copper destocking lags seasonal norms while aluminium inventories continue to tighten

Overview

This weekly China Metals Activity Tracker assesses visible inventories, physical demand indicators and supply-demand conditions for copper, aluminium, zinc and iron ore/steel. JPMorgan finds contrasting metal-market signals: copper inventories remain low but the latest drawdown is weak for the season, whereas aluminium destocking is notably strong but faces a potential supply-side headwind.

Core views

Copper’s latest inventory movement was weaker than historical seasonal patterns ahead of China’s second peak-demand season. Visible China copper inventory declined by only 3kt in the week ended 18 September 2026, compared with a five-year seasonal average drawdown of about 17kt. The report nevertheless notes that total visible copper inventory was only 91kt, low and below the historical range after previous drawdowns. It also points to an improvement in physical buying after LME copper retreated closer to about $14,000/t: the Yangshan purchase premium rose significantly to above $120/t. The combination indicates low available inventory and revived onshore buying, even though the current pace of inventory reduction is not matching the normal seasonal pattern. Aluminium showed the stronger inventory signal. China visible aluminium inventories fell by 63kt last week, continuing an above-trend destocking run since mid-May. Total inventory had been reduced to around 800kt, which the report characterizes as a return to historical normal levels; a separate visible-inventory measure was cited at 73kt and back within its five-year range following more than three months of destocking. However, the supply picture tempers the supportive inventory trend. China NBS reported August aluminium production of 4Mt and 31Mt for the first eight months of 2026, implying an annualised year-to-date run rate of approximately 46.5Mt, above the 45Mt cap. JPMorgan states that this higher-than-expected supply could weigh on near-term aluminium pricing. Zinc destocking normalized after two weeks of significant drawdowns. Visible zinc inventory fell by 4.1kt last week, broadly in line with seasonal trends, although total inventory of 214kt remained at its highest level since 2022. The report attributes the sharp inventory decline over the preceding three weeks to an opening export arbitrage. JPMorgan Commodities Research expects continued outflows from China to reduce market tightness and potentially bring zinc prices down to around $3,500/t by year-end. For iron ore and steel, the tracker shows weak Chinese steel activity alongside higher arrivals. China weekly steel production was flat week on week but down 7% year on year, while apparent steel consumption fell 5% year on year. The detailed table shows weekly production of 7.94Mt and apparent consumption of 8.11Mt; rebar consumption rose 2.7% week on week but was down 9.5% year on year, while hot-rolled coil consumption fell 1.0% week on week and 10.2% year on year. China iron ore arrivals increased 7.3% week on week and 21.2% year on year to 28.98Mt at 47 ports. Global iron ore shipments rose 4.7% week on week to 35.17Mt but were down 1.6% year on year; Australian shipments rose 3.0% week on week but fell 3.5% year on year, while Brazilian shipments rose 8.3% week on week but declined 5.1% year on year. Brazil-China freight rose to $42.8/t from $42.4/t, while Australia-China freight declined to $16.5/t from $17.9/t. The report also identifies the forthcoming Trump-Xi summit as relevant to metals-market expectations. JPMorgan China economists expect tariff discussions, potentially including selected tariff exclusions and a one-year rare-earth truce extension. The report says any Trump administration commentary on tariffs could affect expectations for Section 232 tariffs, which it identifies as a key driver of copper prices in recent months.

Analysis framework

JPMorgan uses high-frequency Chinese visible-inventory data as a proxy for consumption, comparing weekly changes with five-year seasonal patterns around the Chinese New Year calendar. It combines these inventory signals with physical-market indicators such as the Yangshan copper premium, official production data, steel activity, port arrivals, shipment volumes and freight rates to assess demand, supply and market tightness.

Methodology notes

• Industry AnalysisSupply-demand framework

  High-frequency inventory, production, shipment and consumption tracking

  The report treats changes in visible inventories as a proxy for consumption and combines them with production and shipment data to judge whether supply-demand balances are tightening or loosening.

• Industry AnalysisVolume-price decomposition

  Physical copper premium and LME spot-price comparison

  The recovery in the Yangshan premium as LME copper fell is used to show that lower benchmark prices were associated with stronger Chinese physical buying.

Key data

• China visible copper inventory change-3ktWeek ended 18 September 2026; versus roughly -17kt five-year seasonal average.
• China visible copper inventory91ktLow and below the historical range.
• Yangshan copper premiumAbove $120/tRecovered as LME copper moved closer to approximately $14,000/t.
• China visible aluminium inventory change-63ktAbove-trend weekly destocking.
• China aluminium production4Mt in August; 31Mt in the first eight monthsAnnualised year-to-date rate of about 46.5Mt, above the 45Mt cap.
• China visible zinc inventory change-4.1ktIn line with seasonal trend; total inventory was 214kt.
• Weekly China steel production7.94MtFlat week on week and down 7.1% year on year.
• China iron ore arrivals at 47 ports28.98MtUp 7.3% week on week and 21.2% year on year.

Impact & implications

The report presents low copper inventory and improving physical buying as supportive market signals, but emphasizes that copper’s latest destocking remains weak relative to seasonality. Aluminium’s sharp inventory reduction signals tightness, yet above-cap production creates a near-term pricing headwind. Weak year-on-year steel production and demand contrast with rising iron ore arrivals, while zinc export outflows are expected to reduce tightness.

What to watch

• China copper inventory drawdowns and whether they accelerate toward the seasonal norm.
• The Yangshan copper premium and Chinese physical buying response to LME copper prices.
• Chinese aluminium production relative to the 45Mt cap and its effect on near-term pricing.
• The Trump-Xi summit, particularly any tariff commentary, selected tariff exclusions or rare-earth truce extension.
• China steel production and apparent demand, iron ore arrivals, shipments and freight rates.
• Zinc export-arbitrage-driven outflows and the reported potential for zinc prices to reach about $3,500/t by year-end.