JPM-China Metals Activity Tracker Copper data suggests a flip to improved downstream consumption-20250728

We present our high-frequency inventory trends for steel, iron ore, copper,aluminium and zinc in China for the week ended 25 July. Our data plots Chinainventory trends, a proxy for metals consumption. High frequency data during theprevious ten weeks had shown a slowing pace of inventory drawdowns. Last weekwe predicted that weak physical demand for copper could strengthen this week,given that historic trends typically indicate a ~200kt copper de-stocking that startsnow until end-Sept. This appears to be evident in the data, with copper flippingback to destocking last week (-8kt). If this trend continues, it coincides withChinese copper inventories at their lowest levels in >5 years (~155kt) and tightphysical markets could herald higher copper prices.

Also of note, is sustained improvement in China steel mill margins in the last fourweeks, which has pushed iron ore prices ~10% higher to $103/t. We calculateChina HRC steel mill margins are back in profit for the first time since ~2023 andrebar margins are close to breakeven, also the strongest profitability since ~2023.Mysteel high-frequency data again indicates flat China steel production andconsumption last week. High-frequency data signals global iron ore shipments lastweek were +4% WoW, but +7% YoY due to stronger Brazil shipments. Iron orearrivals landing in Chinese ports fell 13% WoW.

JPM Commodities Research recently published an analysis on the impact on thecopper market stemming from 50% US copper import tariffs implied from 1 Aug.Our colleagues estimate that a full 50% tariff could negatively impact US demandby ~4% and, since the US accounts for~6% of global demand, that would equateto a 0.2% drag on global copper demand. The US exports ~540-580kt of copperscrap annually and retaining these tonnes could help close the country’s 700-800ktpa primary deficit, but recycling capacity increases will likely need 2-3 years.On mine supply additions, ~3Mtpa of potential projects are estimated, but evenwith potential permit fast tracking, incremental new supply is unlikely before thenext decade (link).