Market Dynamics and Inventory Trends in Copper, Aluminum, Zinc, and Stainless Steel Sectors: August Update

Global visible copper inventories have significantly accumulated. As of August 9th, global visible copper inventories reached 743,000 tons, up by 37,300 tons (+5.29%) from the previous week. With the formal implementation of the Fair Competition Review System, sentiment among recycled copper rod producers remains cautious, leading to tight supply of invoiced scrap copper. Consequently, copper rod manufacturers are shifting towards the consumption of refined copper, increasing demand for refined copper. Combined with recent declines in copper prices and improving downstream demand, domestic inventories are continuing to draw down. Additionally, there is a risk of strike action at Escondida, the world's largest copper mine, maintaining tight supply conditions at the mine level, and causing treatment charges for copper ore to continue their decline. 

In the domestic aluminum market, ingot inventories have slightly increased, while overseas inventories are depleting. The tight supply of spot alumina remains unchanged on the raw material side, and the gradual stabilization of electrolytic aluminum production capacity indicates that supply is nearing its peak. On the demand side, with the upcoming 'golden September and silver October' period, there is a trend of stabilization and recovery in demand, awaiting aluminum prices to find a bottom. 

Global visible zinc ingot inventories continue to decline, with stocks decreasing domestically while increasing abroad. As downstream restocking may be nearing completion, the pace of inventory depletion is expected to slow. Short-term tightness in mine supply persists, with treatment charges remaining at low levels and smelter losses widening, strengthening the support for zinc prices on the downside. 

For stainless steel, raw material support remains, and steel mill production is expected to increase in August. However, sales pressure in the spot market is significant, resulting in weak and volatile stainless steel prices. Future focus will be on steel mill production schedules. This week, stainless steel social inventories increased slightly, with downstream purchasing driven mainly by immediate needs, and market expectations for the 'golden September and silver October' period remain subdued. Recently, there has been a significant inflow of warrants into the market, with traders offering discounts to clear stock, so attention should be paid to inventory levels and changes in downstream consumption.