Aluminium inventories at warehouses monitored by the Shanghai Futures Exchange plunged more than 25 percent this week, with copper stocks down nearly 5 percent, as Chinese traders sold to overseas.
Aluminium inventories fell 25.4 percent, or 23,139 tonnes, to 67,794 tonnes in the week ended on Thursday, the exchange said on Friday after the market closed.
"Some traders are buying aluminium in China and selling to overseas markets to make money amid higher international than domestic prices," an analyst in Shanghai said, adding that mounting prices of copper this year had spurred increasing consumption of aluminium as a substitute.
"Some traders are also anxious to export aluminium products ahead of schedule as Beijing is expected to lower the value-added export tax rebate on such products."
Similarly, weak domestic prices have encouraged some copper traders to export. Weekly copper stocks fell by 4.3 percent, or 2,626 tonnes to 58,494 tonnes, the exchange said.
Spot demand was dampened further this week as the state body responsible for managing China's copper stocks was selling as much as 40,000 tonnes in Shanghai.
"Copper inventories will stabilise ... once there is an indication that the State Reserve Bureau has stopped its selling or rotation," said Li Rong, analyst at Shanghai-based Great Wall Futures Co.
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