More damaging to the bear case was the most recent reading on Chinese imports. At 358,000 tonnes, May imports were 21% above April and at the highest level in seven months (Chart 2). They were down 14% year-over-year, but the strong showing “messed up” the chart, which has shown a definitive downtrend in Chinese imports. Analysts provided a caveat, however, explaining that the strong showing was on account of backed-up Chilean deliveries that finally showed up.
In any case, the market did not react to the catchy headline that the Chinese data provided and actually sold off sharply on the day the data were released.
Chart 3 shows the combined stocks held in LME, COMEX, and Shanghai exchange warehouses. They’ve come off a bit over the past few weeks, but remain very close to multi-year highs. And that’s not to mention the estimated 500,000-tonne stockpile held in bonded warehouses in China.