Copper inventories tracked by the Shanghai Futures Exchange dropped to their lowest level of the year during the week ending June 5, signaling sustained physical demand from Chinese end-users even as trade flows are disrupted by US tariff expectations.
The drawdown is particularly notable given that Chinese refined copper imports fell 7% year-on-year in the first five months of 2026, per data from the General Administration of Customs. The divergence between falling imports and falling inventories suggests domestic consumption remains robust, consuming both import volumes and domestic production.
Trade flows have been distorted by the COMEX-LME arbitrage. US refined copper imports roughly doubled year-on-year in Q1 2026 to approximately 533,000 tonnes, pulling material away from Chinese bonded warehouses and European markets. Bonded stocks in China have been stripped as metal is redirected to the US to capture the premium ahead of the June 30 tariff decision deadline.
China's copper semis imports fell alongside refined imports, with the customs data showing a 7% decline in semis for the January-May period. Copper pipe and tube operating rates fell to 69.01% in June, down month-on-month and year-on-year, according to SMM data, suggesting some softening in downstream fabrication activity.
Despite the inventory tightness, analysts caution that the drawdown may reflect tariff-driven trade distortion rather than genuine demand strength. Goldman Sachs has noted that Chinese demand for refined copper was estimated to have fallen 8% year-on-year in Q4 2025, as the boost from stimulus policies and tariff-related front-loading faded.
Low SHFE inventories suggest near-term Chinese buying support for copper prices, but the inventory draw is partly driven by trade diversion to the US, not organic demand growth. Monitor bonded stock replenishment after the June 30 tariff decision. If inventories rebuild quickly, expect downward pressure on prices. If they stay low, price support from Chinese demand remains intact.