Copper cathode inventories at China's Shanghai Futures Stock Exchange warehouses rose for the eight straight week to 207,320 mt as of March 7, up 4.6% week on week, according to SHFE data released late Friday.
SHFE copper cathode stocks have been rising steadily since January 10, surging 70% from 122,189 mt at the time.
The SHFE warehouses are located in Zhejiang, Jiangsu, Shanghai and Guangdong. They have a combined capacity to store 1.13 million mt of copper cathode, according to information on the SHFE website.
Chinese industry analysts attributed the growing stockpiles to weak domestic consumption, pointing out that product from warehouses in the US and Europe were being shipped to China.
"Copper inventories at overseas warehouses have been falling as they have been sent to China," Yang Jinjian, a commodity analyst with Northern Futures, said Monday.
"Current copper consumption in China isn't good. We expect that by end March or early April, market players in the domestic downstream copper processing will start buying. But their purchase volume would be limited as they set their buying plans based on their products output, which is not so good," he said.
March-June is the peak buying season for copper cathode in China, during which the downstream copper processing sector typically replenishes stock.
Jack Yeung, a business professor at Hong Kong's City University, said: "Copper inventories at both Comex and London Metal Exchange warehouses have been falling in the past weeks, so contributing to the growing SHFE stocks."
Chinese industry observers also pointed to a slowdown in Chinese economic growth, and tighter monetary policy which has spurred some state-owned enterprises to turn to collateralized borrowing, using copper as collateral.
"Some of the loans are granted by non-bank financial companies, owing to the government's tightening on banks' lending. If this kind of shadow banking collapses in future, we don't rule out that copper inventories in China could keep growing," he said.
In a commodity report issued Friday, Chinese metals consultancy Beijing Antaike said that copper trading companies were apathetic in trading, with consumption by the downstream copper processing sector remaining lackluster for the whole week.
