Global View - China's Commodity Pile-Up Could Crush Prices

Steel inventories at a record; fuel stockpiles near capacity

China’s accumulating a vast stack of commodities that’s threatening markets already hammered by the coronavirus.

As the government compels the country to get back to work, oil refineries are churning out diesel and gasoline while smelters and other industrial plants continue to process raw materials into finished products such as steel and copper.

But they’re not being used quickly enough. Consumption has shrunk as people stay at home and travel less, and as logistical constraints stop output from reaching end-users.

So the commodities are piling up outside plants, in warehouses and storage tanks. Inventories of steel products last week surged to a record, while copper and zinc supplies at warehouses tracked by the Shanghai Futures Exchange expanded to the highest in nearly three years.

Gasoline and diesel stockpiles are expected to get close to their theoretical capacity this month.