China Metals Intelligence — Copper Premiums Fall as Holiday Stocks Rebuild

China's return from the National Day holiday has brought a measurable increase in copper and aluminium inventories alongside weaker copper spot premiums and cautious downstream purchasing. The immediate physical market has loosened, though the scale of the rebuild has to be read against a seven-day closure and against last year's stock levels, which remain substantially higher.

TL;DR

• Copper: major-region social inventories rose 27,300t to around 100,000t, but remain more than 60,000t below the comparable 2025 level.
• Premiums: Shanghai cathode premiums averaged ¥710/t, down ¥265/t, across an unusually wide ¥600–820/t range; all three Guangdong grades fell ¥500/t, taking standard-grade to ¥100/t.
• Aluminium: primary ingot inventories increased 48,000t to 686,000t, reversing last week's 2026 low, while 6063 billet stocks rose 38,000t to 187,500t.
• Zinc: September refined output fell 1.9% month on month and 6.4% year on year; SMM forecasts October at approximately 564,000t, up 0.6% month on month but down 8.5% year on year.
• Lead: five-region social inventories reached 50,400t, up 1,800t from 30 September.
• Nickel: Indonesian 1.5% ore traded roughly $2/wmt below its official HPM benchmark as purchasing interest softened.

A Note on the Comparison Period

Domestic Chinese market reporting was suspended from 1 to 7 October. Every change in this edition measures 8 October against 30 September and spans an eight-day closure, including price and utilisation movements described in SMM's releases as against "the previous trading day." These are not ordinary daily or weekly moves, and the inventory builds should be assessed against a recurring seasonal pattern rather than read as a demand signal in isolation.

China Metals Dashboard

Source: Shanghai Metals Market. The tin figure is an index level in points, not yuan per tonne. The zinc October figure is SMM's forecast, published 7 October ahead of the market reopening.

Copper: Inventories Build, Premiums Retreat

Copper gives the clearest evidence of changed physical conditions. SMM reported national mainstream copper inventories at around 100,000t on 8 October, up 27,300t from pre-holiday levels, with the total more than 60,000t below the same period last year, when stocks stood above 160,000t. SMM's own summary is expressed in those rounded terms, and the exact national total and 2025 comparable are not disclosed in the accessible release.

Regional spot data show Shanghai at 54,700t, up 5,500t, and Jiangsu at 22,400t, up 9,700t, with Guangdong rising a further 11,100t. Those three moves sum to 26,300t against the 27,300t national figure. The two should not be conflated: they are drawn from different SMM reporting sets with different regional coverage, and the gap reflects survey scope rather than an error in either.

The premium adjustment is the more informative half. Shanghai #1 cathode premiums were assessed across a ¥600–820/t range, averaging ¥710/t, down ¥265/t. That spread is itself worth noting — a ¥220/t band on the first session back indicates price discovery still in progress rather than a settled market. In Guangdong the picture was starker and more uniform: high-quality cathode fell ¥500/t to ¥400/t, standard-grade fell ¥500/t to ¥100/t, and SX-EW fell ¥500/t to ¥40/t. Three grades moving by an identical amount points to a single mechanical cause rather than grade-specific demand, and SMM attributes it to a post-holiday arrival surge of more than 10,000t into the region, which it says widened the Shanghai–Guangdong spot price spread sharply.

This resolves an apparent contradiction in the Guangdong data. The average #1 copper cathode price rose ¥760/t to ¥111,890/t over the same period in which every premium fell. The outright price tracks the SHFE contract; the premium measures what buyers will pay above it for immediate physical metal. Rising stocks indicate greater availability, while falling premiums indicate buyers were not competing for it — fabricators returned gradually and high outright prices discouraged restocking. SMM expects premiums to remain under pressure.

The year-on-year position argues against calling the market structurally oversupplied. Stocks sit well below last year's level despite the build. The test is whether accumulation continues once downstream operations normalise.

Copper assessment: the immediate market has loosened, but the holiday build has not eliminated a historically low year-on-year inventory position.

Aluminium: The Seasonal Rebuild Arrives

Last week's edition identified aluminium ingot stocks at their lowest level of 2026 heading into the holiday. The rebuild has duly arrived. SMM reported domestic primary ingot social inventories of 686,000t on 8 October, up 48,000t from 638,000t on 30 September, an increase of roughly 7.5% on the pre-holiday base. Regional readings included Wuxi at 224,000t, Gongyi at 170,000t and Guangdong at 132,000t, together accounting for 526,000t of the national total.

Billets moved the same way, with domestic 6063 stocks up 38,000t to 187,500t and Guangdong and Wuxi together holding 121,500t. These categories stay separate: primary ingots and 6063 billets sit at different stages of the supply chain, and combining them into a single headline figure would obscure that.

The seasonal point matters. SMM's historical work shows aluminium ingot inventories rising during every National Day holiday from 2020 to 2025. An increase over a closed week is the expected outcome, not a new demand shock.

The wider picture is more differentiated than the domestic ingot number suggests. Bonded ingot inventories fell 3,500t to 114,600t, comprising 89,600t in Shanghai and 25,000t in Guangdong, and cast aluminium alloy stocks fell 300t to 31,000t — the latter implying a 30 September base of 31,300t, which reconciles exactly with the figure published in our 2 October edition. Availability is therefore not rising uniformly across the chain.

Two further readings carry the same eight-day caveat. Downstream processor operating rates were 60.5%, down 1.6 percentage points from the pre-holiday assessment, and domestic A00 aluminium was assessed at ¥23,760/t, down ¥270/t from 30 September. The liquid aluminium share was 78.2% in September with an October forecast of 77.9%, a prospective estimate rather than an observed outcome.

Aluminium assessment: the domestic rebuild is substantial but consistent with a recurring seasonal pattern. Lower processing utilisation is the more direct demand warning, while falling bonded and cast-alloy stocks show the build is not uniform.

Zinc: A Limited Recovery Against Persistent Smelter Losses

China's refined zinc production is expected to recover only modestly in October. SMM forecasts approximately 564,000t, up 0.6% month on month but down 8.5% year on year, following September output that fell 1.9% month on month and 6.4% year on year. September zinc alloy production rose 3,000t month on month.

The constraint is smelter economics, and the notable feature is how long they have been this poor rather than how far they have moved. Domestic Zn50 concentrate treatment charges stood at approximately −¥2,350 per metal tonne ahead of the holiday — the same level Bloodstone recorded on 25 September and again on 2 October, so the charge has been pinned deeply negative for a fortnight rather than newly deteriorating. SMM's imported concentrate index was −$135.72 per dry metric tonne. Smelter raw-material inventories had recovered to more than 18 days, but persistently negative treatment charges and weak sulphuric acid revenues continue to cap output, and SMM notes that secondary zinc smelters in particular struggled to grow production with raw material prices elevated.

The cumulative figures are necessary context, because the monthly year-on-year declines are not representative of the year. January to September cumulative production was down slightly more than 0.1% year on year, with the January to October decline forecast to exceed 1%. The sharp back-half contraction therefore follows a first half that was broadly flat. SMM forecasts full-year production approximately 60,000t below 2025 — its own estimate, which cannot be reconstructed from the accessible monthly data.

Physical conditions are less supportive than the supply figures imply. Shanghai #0 refined zinc transacted at ¥26,175–26,505/t against Tianjin at ¥26,090–26,460/t, with Tianjin pricing at a ¥25/t discount. Purchasing sentiment stood at 2.06 in Shanghai and 1.81 in Tianjin, against selling sentiment of 2.43 and 2.23. SMM described trading as moderate, with Tianjin consumers drawing on inventories built before the holiday rather than returning to spot buying. Both import and export arbitrage windows were closed.

Pre-holiday zinc ingot social inventory stood at 193,100t. SMM has indicated post-holiday stock growth but the accessible release does not disclose the 8 October seven-region total, and the pre-holiday baseline is not a substitute for it. That total is the immediate data priority for the next edition.

Zinc assessment: supply remains weaker than a year earlier while immediate consumption is subdued. Constrained supply and cautious demand can coexist.

Lead: Modest Accumulation

Five-region lead ingot social inventories reached 50,400t on 8 October, up 1,800t from 30 September — a far smaller build than copper or aluminium. SMM linked the movement to temporary interruptions in production and consumption and to transfers of material into social warehouses. The evidence supports a limited conclusion: stocks rose against the immediate pre-holiday reading, but not by enough to establish a sustained shift in the supply-demand balance.

Nickel: Indonesian Ore Pricing Weakens

Nickel's significant development is upstream rather than in Chinese warehouses. Indonesia's HMA benchmark for the first half of October was set at $16,322.67/t, down $375.33/t or 2.25% from the second half of September, which reduced the official HPM ore benchmarks across grades.

The discount to those benchmarks is the revealing part. SMM assessed 1.5% nickel ore at approximately $54.20/wmt against its $56.22 HPM benchmark, and the 1.6% grade at $59/wmt against $61. SMM attributed the softer pricing to improving ore availability and weaker purchasing interest from smelters.

Indonesian policymakers have separately discussed regulating smelter utilisation and tightening restrictions on additional semi-finished nickel capacity. These remain proposals. Potential future intervention cannot be treated as an existing supply reduction, particularly while the physical ore market is showing weakening pricing power in the opposite direction.

Nickel assessment: emerging ore discounts are a clearer near-term indicator than policy speculation, and suggest upstream sellers are under more pressure to secure purchases.

Tin: Price Strength Without an Inventory Signal

The SMM tin index rose 111.35 points to 8,966.49, with SHFE tin higher at midday. No verified new domestic tin inventory or refined production total was identified for this edition. The price movement is recorded without attribution to a supply disruption or a change in physical demand, because a stronger price does not by itself establish tighter fundamentals.

Outlook

The question for the coming week is whether the post-holiday builds begin to reverse as downstream activity normalises. Copper is the clearest test: continued accumulation alongside sustained premium weakness would strengthen the case for a more persistent loosening, while recovering premiums and a narrowing Shanghai–Guangdong spread would suggest the holiday interruption accounted for most of the adjustment. For aluminium, what follows matters more than the size of the build — the market entered October with unusually low stocks and a seasonal rebuild was expected, but further increases alongside weakening processor utilisation would be a different signal. Zinc's October recovery remains a forecast made before the market reopened, and the outstanding seven-region inventory total is needed before supply and demand can be weighed against each other. In nickel, Indonesian ore discounts and smelter purchasing remain the indicators to watch ahead of any formal policy notice.

Key Risks

Seasonal distortion. Changes spanning the National Day closure are not comparable with ordinary trading-week movements, and this applies to price and utilisation readings as well as inventories.

Inventory coverage. Domestic social inventories, bonded stocks, billets and cast alloys measure different markets at different supply-chain stages and cannot be aggregated.

Survey scope. SMM's national and regional inventory sets differ in coverage, and the 27,300t and 26,300t figures are not reconcilable to a single total.

Forecast versus outcome. October zinc production and the liquid aluminium share are projections. The zinc forecast was published before the market reopened and has not been revised in light of the build.

Policy uncertainty. Indonesian capacity and utilisation measures remain under consideration and may not translate into production changes.

Intelligence Monitoring Points

• Copper: whether inventories continue rising after the initial holiday adjustment, and whether Guangdong premiums and the Shanghai–Guangdong spread stabilise.
• Aluminium: domestic ingot and billet withdrawals, processor utilisation, and the divergence between bonded and domestic stocks.
• Zinc: the outstanding 8 October seven-region inventory total, followed by confirmation of October refined production against the 564,000t forecast.
• Nickel: Indonesian ore assessments against HPM benchmarks, and any formal policy notice on smelter utilisation.
• Lead: whether the modest build extends beyond the holiday adjustment.

FAQ

Why did Chinese copper inventories rise after the holiday? SMM attributed the increase to supply arriving during the closure, slower downstream withdrawals, and a gradual restart of manufacturing. High outright prices also discouraged restocking.

Does the aluminium build indicate oversupply? Not on this evidence. It followed unusually low stocks and occurred during a holiday in which inventory accumulation has happened every year since 2020. Sustained increases after activity normalises would be the stronger signal.

Why are copper premiums falling when inventories remain low year on year? Premiums reflect immediate local availability rather than the absolute stock level. Stocks can stay historically low while a short-term regional surge reduces what buyers will pay above the exchange price.

Is Indonesian nickel production being cut? No. Officials have discussed tighter smelter utilisation and capacity controls, but those discussions are not implemented measures and should not be read as a current supply reduction.

Data and source note: This edition uses Shanghai Metals Market physical-market reports and inventory surveys published on or referring to 8 October 2026, the first trading day after the National Day holiday, with comparisons to final pre-holiday readings of 30 September. Domestic market reporting was suspended from 1 to 7 October, so all changes span that closure. Inventory categories and comparison periods are kept distinct and are not aggregated. SMM's zinc outlook, the source for the October production forecast, pre-holiday social inventory and treatment-charge figures, was published on 7 October ahead of the market reopening. Copper national inventory figures are stated as SMM publishes them, in rounded terms; the exact national total and the 2025 comparable are not disclosed in the accessible release and are not inferred here. September's absolute refined zinc tonnage and the 8 October seven-region zinc inventory total are held in SMM's subscription datasets and are not reproduced; this is a sourcing limitation rather than a doubt about the figures. SMM's forecast of an approximately 60,000-tonne full-year zinc decline is its own estimate and cannot be reconstructed from the accessible monthly data. Treatment charges are approximate market assessments, and directional movement is not inferred between rounded observations. SMM's published Indonesian HPM benchmark series for 8 October contains an unexplained discontinuity between the 1.2% and 1.3% grades; the full grade table is therefore not reproduced, and only the 1.5% and 1.6% benchmark-versus-market comparisons are used.

Sources

• SMM — Post-holiday copper social inventory buildup, year-on-year level remains low
• SMM — Post-holiday inventory buildup and high copper prices; spot premiums expected to remain under pressure
• SMM — Copper market review and outlook after China's National Day holiday
• SMM — National aluminium ingot inventory, 8 October
• SMM — Aluminium regional inventory data
• SMM — Aluminium billet regional inventory data
• SMM — Cast aluminium alloy inventory down 300 tonnes
• SMM — October refined zinc production expected to recover, but the extent is limited
• SMM — China's zinc market review and post-holiday outlook
• SMM — Shanghai zinc spot market midday commentary
• SMM — Tianjin zinc spot market midday commentary
• SMM — Indonesia nickel prices and ore premiums come under pressure
• SMM — Base metals price indices
• Bloodstone Research — China Metals Intelligence: Aluminium Inventories Hit 2026 Low

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