Open arbitrage sends Shanghai bonded copper stock levels to fresh low; zinc inventories also down

An open import arbitrage window during May has led to significant declines in copper and zinc stocks in the Shanghai bonded zone, while aluminium stocks rose following a rush by participants to deliver more metal in bonded warehouses to satisfy growing appetite to import the light metal into China.

Shanghai bonded copper stocks fall to all-time low
Copper stocks at Shanghai bonded warehouses have declined to the lowest level since Fastmarkets' began tracking the market in October 2014, with a profitable import arbitrage between London and Shanghai continuing to stimulate import activity.
Fastmarkets assessed Shanghai bonded copper stocks at 212,000-222,000 tonnes on Monday June 1, down by 26.7% from 291,000-301,000 tonnes on May 4.
"Import activity was high in the first half of May due to the positive arb, so copper inventories have declined further," a Shanghai-based copper trader said.

Fastmarkets' copper import arbitrage, which pits the London Metal Exchange three-month contract against the Shanghai Future Exchange's most actively traded contract - taking into account premiums, currency and other costs - was positive throughout the first half of May. The import arbitrage averaged positive $34.79 per tonne during May 6-18 before turning negative once...

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