J.P. Morgan: European Metals, Mining & Steel — China Metals Activity Tracker: Assessing Early 2026 Copper, Aluminium & Zinc Inventories
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J.P. Morgan's latest China metals activity tracker highlights significant restocking across major base metals heading into 2026. As of January 16, visible copper inventories (SHFE plus bonded zones) reached 293 kt, the highest level for this period since 2021. Aluminium and zinc similarly opened the year at the upper bounds of historical ranges, with zinc at 110 kt. This restocking cycle is expected to persist through the Lunar New Year, keeping spot markets from tightening in the near term.
The underlying demand narrative remains somewhat bifurcated. On the macro front, China's December M2 grew 8.5% year-over-year, accompanied by a 25-basis-point rate cut on structural policy tools. This monetary expansion, alongside a 40% increase in grid investment to RMB 4 trillion under the 15th Five-Year Plan, underpins a constructive medium-term outlook for copper demand and mining equities. The bank reiterates that copper substitutes are unlikely to bridge the supply gap before 2030.
Conversely, the steel and iron ore complex presents a weaker fundamental picture. Despite a 23% sequential rebound in early January daily output, production remains down 5% year-over-year, and steelmakers are still operating at a loss. Iron ore prices exceeding $105/ton threaten to further squeeze profitability. Steel inventories are elevated, and port iron ore stockpiles sit near 150 Mt, at the top of the five-year range.