Aluminum, Zinc Stockpiles in China Climb on Output

 March 16 (Bloomberg) -- Aluminum and zinc stockpiles in China, the largest metals consumer, have increased to more than double the amount stored in warehouses monitored by the Shanghai Futures Exchange after output jumped, according to CBI China Co.

Inventories held at commercial warehouses in Shanghai, and in Guangdong, Zhejiang and Jiangsu provinces, were about 965,000 metric tons as of yesterday, CBI analyst Eric Zhang said. That includes the 387,549 tons in storehouses surveyed by the exchange and stockpiles outside the bourse’s area, he said. The level was 626,000 tons at the end of 2009, he said. Smelters in China have restarted plants halted during the world’s biggest post-war economic slump as aluminum prices advanced 39 percent and zinc gained 73 percent in the past year in Shanghai. Production of aluminum grew 46 percent in the first two months from a year ago and zinc rose 48 percent, government figures show. The metals are used in construction and transport.

“We’ll have 1 million-ton inventories in the near future,” Zhang, of CBI unit Shanghai Metals Market, said in an interview from Shanghai today, referring to aluminum. Still, “demand may pick up soon too to run them down.” 

Zinc stockpiles in commercial warehouses in Shanghai and Guangdong increased to around 460,000 tons this month from 380,000 tons at the end of 2009, CBI analyst Monica Gao said today. That includes the 223,433 tons surveyed by the exchange.

‘Constantly Climbing’ 

Stockpiles of aluminum and zinc countrywide are likely to be even more than these amounts, the analysts said. Still, it’s not “feasible” to count them all, they said. “Aluminum inventories seem to be constantly climbing here as there’s a lack of speculators daring to take any,” said Yang Yongbin, an analyst at HNA Topwin Futures Co., from Shanghai. “We may have hundreds of thousands of tons of copper too but they easily and quickly change hands as there is demand.” 

Production of aluminum soared 46 percent to 2.57 million tons in the first two months of the year, zinc output increased 48 percent to 739,000 tons and copper was up 16 percent at 702,000 tons, according to government figures.

China may produce 18.1 million tons of primary aluminum this year, up from 13.8 million tons in 2009, and imports may decline to 400,000 tons from 1.5 million tons, Zhang said. Consumption may be 17.3 million tons, up from 14.1 million, he said. Gao didn’t give supply and demand figures for zinc. 

The June-delivery aluminum contract in Shanghai dropped 0.5 percent to 16,640 yuan a ton today, and zinc fell 0.7 percent to 18,460 yuan a ton. --Li Xiaowei.

Editors: Richard Dobson, James Poole