China's copper import market became more expensive and harder to replenish in the week to 29 October, with Yangshan registered-warrant premiums at record levels while the loss on importing cathode widened to about ¥1,243/t. SMM attributed the tightening largely to reduced arrivals rather than stronger orders, and lead's social inventory roughly halved as secondary smelters restarted.
TL;DR
Copper: National social inventory fell 24,900 tonnes to roughly 80,000 tonnes, against 21,500 tonnes the week before.
Copper imports: Yangshan warrant premiums averaged $193/t, up $48/t, as the import loss widened to about ¥1,242.77/t.
Bonded copper: Stocks fell 1,200 tonnes to 26,800 tonnes, both Shanghai and Guangdong contributing.
Aluminium: Major-region billets fell 10,500 tonnes to 138,000 tonnes, but Foshan destocked while Wuxi accumulated.
Zinc: Guangdong inventory hit a cyclical low of 14,900 tonnes, yet premiums returned towards parity.
Lead: Five-region social inventory fell 14,600 tonnes to 17,100 tonnes as secondary utilisation rose 3.55pp to 36.7%.
Nickel: Sulphate coverage fell at smelters and precursor plants as prices weakened.
Tin:LME stocks fell 15 tonnes to 4,020 after one session's increase, with Yunnan and Jiangxi utilisation at 27.11% in the week to 23 October.
Sources: Shanghai Metals Market, 26–30 October 2026. Regional, national, bonded, exchange and supply-chain inventories have different definitions and reporting periods, and are not additive. SMM separately reports lead social inventory down 8,500 tonnes since 26 October, a shorter comparison than the weekly change above.
The import-arbitrage comparison should be read as a change in the published assessments, with contract and valuation conventions preserved as reported. The LME cash–three-month backwardation is not comparable with last week's November–December spread.
Copper: The Import Premium Breaks Its Previous Range
Yangshan registered-warrant premiums averaged $193/t during 26–29 October, a rise of roughly 33% in one reporting period, and SMM reported transactions above $200/t in both the registered-warrant and bill-of-lading categories, describing the levels as historical highs. Registered warrants represent metal already held against warehouse documentation while bill-of-lading quotations relate to cargo still in transit, so the two need not move together. Both rose sharply, which indicates the shortage extends beyond a single quotation category.
The more consequential development was import economics. The loss widened by around ¥832/t in a week, while the LME cash–three-month backwardation reached $204.66/t and made nearby metal substantially more expensive relative to later delivery. A rising physical premium would ordinarily pull in imports if the domestic price covered replacement cost. Chinese buyers are instead competing for scarce nearby cathode while LME pricing, exchange relationships and physical premiums together make replacement expensive, so the premium can rise even as import economics worsen.
SMM attributed the squeeze to smelter maintenance, limited domestic cathode, gaps in some long-term supply arrangements, weather-related shipping delays and elevated LME nearby spreads. The import window opened briefly early in the week before arbitrage deteriorated. This is a more severe version of the imbalance described on 23 October: the shortage is no longer visible only in falling inventories and high premiums, because replenishment cost has become a constraint in its own right.
Copper Inventories: Both Pools Decline Again
Shanghai accounted for 800 tonnes of the bonded reduction and Guangdong 400 tonnes, unlike the previous week's all-Shanghai decline. SMM linked the fall to reduced arrivals alongside continued shipments out of bonded warehouses. The nationwide survey draw was 3,400 tonnes larger than the previous week's, though both are approximate measures.
Material leaving a bonded warehouse may enter domestic circulation after customs clearance, so the two changes cannot be added and read as consumption. SMM placed current stocks around 110,000 tonnes below the comparable 2025 level while also describing that earlier period as approximately 180,000 tonnes; those rounded figures do not bridge exactly and should not be treated as if they did.
In eastern China consumption was stable while arrivals stayed low, and in southern China maintenance at nearby smelters continued to restrict deliveries. SMM reported existing orders supporting consumption but identified no broad increase in new purchasing. Metal is leaving warehouses faster than it arrives, which is not the same as demand expanding at the pace of the draw.
Aluminium: The National Draw Conceals Regional Divergence
Billet inventory across major consuming regions fell 10,500 tonnes from the previous Thursday and 4,000 tonnes from Monday, a third consecutive weekly decline after the National Day holiday. Warehouse withdrawals during 19–25 October reached 56,800 tonnes, down 1,100 tonnes on the week but above the comparable periods of the preceding three years, consistent with continued movement through the distribution chain rather than accelerating offtake.
The regional breakdown is more revealing, and it belongs to the shorter comparison. Measured since Monday 26 October, Foshan fell 5,500 tonnes while Wuxi rose 2,500 tonnes, with Changzhou, Huzhou and Nanchang accounting for the remaining 1,000 tonnes. The opposing moves largely reflect arrivals: Foshan received less material and kept drawing down, while Wuxi took increased deliveries. Processing fees followed, Foshan's 90mm fee rising ¥20/t to ¥380/t while Wuxi's fell ¥40/t to ¥360/t, and Foshan's 120mm rising ¥20/t to ¥330/t against Wuxi's ¥50/t fall to ¥210/t. A falling aggregate does not mean processors across China face the same conditions.
Three-region primary ingot inventory fell 12,000 tonnes, Gongyi accounting for 7,500 tonnes, Guangdong 3,000 and Wuxi 1,500, after two trading days of increases that SMM attributed to stronger cargo collection and reduced arrivals. This is a daily three-region series, not the national weekly measure behind last week's 53,000-tonne ingot decline, and treating them as one population would overstate the draw's continuity.
Zinc: Low Stocks Fail to Sustain the Premium
Zinc is the clearest counterexample to the proposition that falling inventories indicate stronger demand. Guangdong ingot inventory touched a cyclical low below its three-year average, and limited arrivals initially lifted spot premiums: having traded roughly ¥40/t below the nearby contract after the National Day holiday, Guangdong zinc moved to a premium SMM assessed at ¥15–55/t against December on 22 October.
That improvement did not persist. Guangdong spot zinc has since returned towards parity despite inventory remaining low, which suggests buyers were unwilling to sustain higher prices. SMM reported weaker year-on-year orders in galvanising and die-casting, with downstream enterprises largely restricting purchases to periods of lower prices. Local scarcity has prevented a deeper discount without generating pricing power, leaving the market dependent on arrivals and opportunistic restocking.
Lead: Social Stocks Halve as Secondary Supply Recovers
Lead produced the largest proportional inventory movement in the complex, five-region social inventory roughly halving from 31,700 tonnes, with 8,500 tonnes of the reduction coming since 26 October alone. Exchange stocks moved far less: SHFE registered warrants were unchanged, while LME inventory declined 1,150 tonnes. That contrast places the tightening in Chinese domestic circulation rather than in the exchange-visible pools.
The more interesting development is on the supply side. Secondary smelter utilisation rose 3.55 percentage points to 36.7% in the week to 29 October, and secondary refined lead finished-product inventories reached 7,900 tonnes, up 3,600 tonnes month on month. Secondary producers are restarting and accumulating finished metal at the same time as social inventory falls, which argues against reading the social-stock draw as demand strength.
Pricing supports that. Primary lead carried an ex-works premium of ¥0–100/t against SMM's #1 lead average while secondary refined lead traded at a discount of ¥0–50/t. A narrow primary premium alongside a secondary discount is not the pattern of a market bidding for metal; it is consistent with the cautious battery-sector purchasing SMM continues to report. The distinction that matters for lead is between a drawn-down visible stock position and a recovering secondary supply stream, currently moving in opposite directions.
Nickel: Weak Sulphate Demand Follows the Matte Contraction
Last week's analysis focused on the reduction in Indonesian matte production and its limited effect on Chinese refined nickel inventories. The latest evidence comes from a different part of the chain. SMM reported battery-grade nickel sulphate prices declining in the week to 29 October, with precursor manufacturers limiting external spot purchases partly because long-term contracts covered much of their immediate requirement, while some upstream producers considered lower operating rates and additional inventory sales and recycling operations stayed relatively active.
Coverage declined modestly, from 7.5 to 7.0 days at smelters and 10.3 to 9.7 days at precursor plants, with integrated producers unchanged at 9.0 days. Being inventory-day measures rather than tonnage balances, those falls can reflect stocks, expected consumption or the calculation's assumptions, and they do not overturn the weak demand picture: SMM's purchasing-sentiment measures remained subdued. Matte production can contract because conversion margins are uneconomic while Chinese sulphate stays under pressure because buyers are adequately supplied; the two are not mutually exclusive.
Tin: The Inventory Signal Becomes Less Clear
SHFE registered warrants rose 61 tonnes while LME tin inventory stood at 4,020 tonnes on 29 October, down 15 tonnes on the day after a 35-tonne increase on 28 October. The two exchanges therefore moved in opposite directions, and the LME series has resumed falling after a single session's increase. Both are small movements, and they sit alongside smelter utilisation in Yunnan and Jiangxi of 27.11% in the week to 23 October, which SMM attributes to maintenance and raw-material constraints. Neither exchange measure is equivalent to China's total social inventory.
Prices also weakened, SMM's #1 tin average falling ¥3,100/t, while the LME curve stayed in contango, with cash at $50,390 bid against $50,450 for three-month metal on 29 October. Nearby availability is not being bid up, which is consistent with the rise in exchange stocks rather than in tension with it. SMM reported downstream peak-season purchasing approaching its end, limiting support from immediate demand. Tin remains constrained in production while the latest evidence is less supportive of an uninterrupted squeeze.
Key Risks
Copper import economics. Record Yangshan premiums and a negative arbitrage measure different components of the physical market, and a high premium does not make imports profitable. The imbalance may ease if shipping delays resolve, smelters restart or nearby LME spreads narrow.
Supply-driven destocking reversing. Zinc, lead and nickel all show cautious purchasing, and destocking that reflects restricted arrivals rather than consumption can reverse once deliveries recover.
Aluminium regional divergence. Foshan and Wuxi moved in opposite directions. Aggregate reductions conceal differences in deliveries, fees and local demand, so a national figure is no guide to regional conversion economics.
Lead's opposing signals. Social inventory has roughly halved while secondary utilisation and secondary finished-product stocks both rise. If secondary output keeps recovering into weak battery demand, the visible draw is unlikely to persist.
FAQ
Why did Yangshan copper premiums reach record levels?
Imported cathode became scarcer as smelter maintenance, reduced arrivals and shipping delays restricted supply. SMM reported warrant premiums averaging $193/t, with transactions above $200/t.
Why did China's copper import loss widen despite higher premiums?
Nearby replacement metal became more expensive, driven by elevated LME backwardation and an unfavourable SHFE/LME price relationship. The loss reached approximately ¥1,242.77/t, around ¥832/t wider on the week.
Does the copper inventory decline prove stronger demand?
No. SMM attributed much of it to lower arrivals, maintenance and shipping disruption, and described consumption as supported by existing orders rather than new purchasing.
Are aluminium inventories falling everywhere?
No. Aggregate billet stocks fell, but since 26 October Foshan dropped 5,500 tonnes while Wuxi rose 2,500 tonnes, and that divergence moved local processing fees in opposite directions.
Why did lead's social inventory halve?
Restricted immediate availability drew five-region stocks down 14,600 tonnes to 17,100 tonnes. Secondary smelter utilisation rose to 36.7% in the same week and secondary finished-product stocks increased, so the draw is not evidence of stronger battery demand.
Are tin inventories now increasing?
No. LME stocks stood at 4,020 tonnes on 29 October, down 15 tonnes on the day, having risen 35 tonnes the session before. SHFE warrants rose 61 tonnes over the same period. Neither series establishes the direction of total Chinese inventory, which sits outside both.
The Bottom Line
Copper's import squeeze intensified in the week to 29 October. Yangshan registered-warrant premiums averaged $193/t, up $48/t, while the import loss widened to approximately ¥1,243/t and domestic social inventories fell another 24,900 tonnes. The combination matters more than any single figure: China is paying more for immediately available copper while the economics of importing replacement metal have deteriorated. That is a clear physical constraint, but SMM's evidence points primarily to reduced arrivals and supply disruption rather than a broad acceleration in demand.
The rest of the complex tells that story in different registers: aluminium's regional split shows why national reductions cannot be read as uniform tightening, zinc's low Guangdong inventory has failed to sustain premiums, lead's social stocks have halved while secondary smelters restart and accumulate finished metal, nickel sulphate remains under pressure from weak purchasing, and tin's exchange stocks resumed falling after a single session's increase.
The question for copper is whether the shortage persists once deliveries recover. For the other five metals, it is whether consumption becomes strong enough to support physical premiums without relying on restricted supply.
Data and Source Note
Physical-market observations are drawn from Shanghai Metals Market reports published between 26 and 30 October 2026, compared with the readings preserved in Bloodstone Research's 23 October edition.
Copper national social inventory is an approximate survey figure, and bonded-zone inventory is reported separately. Yangshan registered-warrant, bill-of-lading and equivalent-quality CIF premiums are distinct quotation categories, compared here across successive weekly assessments of the same category. The latest copper import-loss estimate and the previous edition's arbitrage estimate are preserved as published; changes in underlying contract and valuation conventions can affect direct comparisons, and the LME cash–three-month spread is not treated as equivalent to the previous edition's November–December spread.
Aluminium billet and ingot surveys cover different regions and products, and the regional billet movements cited here are measured from Monday 26 October rather than week on week. Lead social inventory covers five Chinese regions and is not comparable with SHFE registered warrants or LME warehouse stocks, and the lead premium and discount are quoted against SMM's #1 lead average rather than as absolute prices. Nickel sulphate inventory is expressed in days of coverage, and tin's SHFE warrants and LME stocks are separate exchange measures.
All figures are quoted in the original units and currencies reported by SMM. Forecast production, realised production, survey inventories and price assessments are treated as distinct measures.
This document is published by Bloodstone Research for informational and institutional research purposes only. It does not constitute investment advice, an investment recommendation, an offer or solicitation to buy or sell any financial instrument, commodity or security, or a forecast of future performance. Market conditions and data may change without notice. Readers should conduct their own analysis and, where appropriate, seek independent professional advice before making investment decisions. For institutional enquiries contact research@bloodstonecapital.co.uk.
