- Chinese metal inventories hit seven-year highs
- Weak demand drives China’s growing surplus
Total base metal inventories at Shanghai Futures Exchange (SHFE) warehouses reached 1.04 million tonnes (mnt) on 12 June, the highest level for the same week of the year in seven years. The accumulation stands in stark contrast to concerns over shortages in the rest of the world. A growing slowdown in Chinese demand is the major contributor to this trend.
Latest data show that China’s economic undercurrents have weakened across different sectors. Fixed asset investment fell in April and May, marking the first contraction in these months since Covid. Retail sales declined 0.6% y-o-y, the first fall outside a crisis period. Property investment dropped 16.2% in January-May.
Demand from key downstream industries has also weakened. Passenger vehicle sales, including EVs, fell by 22% y-o-y in May 2026. In the first five months of this year, Chinese vehicle sales dropped by 19%, a decline unseen since Covid.
Steel output fell 4% y-o-y in January-April, pushing production to its lowest level since 2018, as the prolonged real-estate crisis and weaker construction activity continue to weigh on demand.
On the other hand, output of base metals continued its steady rise. NBS data showed that the output of the top 10 non-ferrous metals grew by 3% y-o-y in January-April this year.
The accumulating surplus is now reflected in Chinese local metal prices, with aluminium and zinc trading at their deepest discounts to LME prices since 2022.
Note: This article has been published as part of a content partnership between MIC and BigMint.
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