Copper: Constrained in Both Directions, Trading in a High Range
The market for copper is expected to continue trading within a wide range at elevated levels. Support from the supply side is being provided by expectations of tightening mine output, while upside potential is being capped by dual macro drivers: the progress of US-Iran negotiations and the upcoming Federal Reserve's June FOMC decision. A cautious, range-trading approach is advised, with positioning to be considered only after macro risks have been more fully digested.
On the macro front, overseas headwinds continue to weigh on risk assets. US May CPI and PPI both exceeded expectations, with the PPI annual rate rising to 6.5% and core CPI inflation accelerating to 2.9%. This hotter-than-expected inflation data has reinforced the Federal Reserve's hawkish stance. The probability of the Fed holding rates steady in June has risen to 98.2%, while expectations for a rate cut this year have faded and the likelihood of further hikes has increased. Markets are also awaiting guidance from Chair Powell's upcoming FOMC press conference. Geopolitically, US-Iran negotiations saw some back-and-forth but ultimately moved towards de-escalation. Some media reports indicated the two sides have agreed on a final text for a peace agreement, with former President Trump stating a signing date of June 14 and the subsequent opening of the Strait of Hormuz. However, statements from Iran have been mixed, and substantive implementation of any memorandum will take time. Geopolitical risk premium is being unwound but has not been fully eliminated.
Fundamentally, spot treatment charges (TC) for copper concentrate have declined again, reaching historically extreme lows. This indicates that tightness in the concentrate market remains unresolved and continues to be a key supportive factor. Estimated refined copper production for June is 1.1684 million tonnes, down 0.09% month-on-month but up 2.95% year-on-year. China's net imports of refined copper in April increased 30.44% year-on-year to 290,200 tonnes, though the cumulative total for Jan-Apr is down 25.63%. April scrap copper imports fell 6.96% month-on-month to 211,700 metal tonnes, up 3.41% year-on-year, with the cumulative total up 8.05%. Global visible copper inventories as of June 12 fell by 19,000 tonnes from the previous week (June 5) to 1.228 million tonnes. LME stocks fell by 15,125 tonnes to 364,100 tonnes, while Comex stocks rose by 5,321 tonnes to 590,044 tonnes. Weekly social inventories of refined copper in China decreased by 16,500 tonnes to 217,800 tonnes, while bonded area inventories increased by 7,800 tonnes to 56,100 tonnes. On the demand side, downstream operating rates are reliant on existing orders rather than new demand, with high prices significantly dampening purchasing sentiment.
From a macro perspective, the focus has shifted from "whether there will be a rate cut" to "whether there will be a hike this year" ahead of the June FOMC meeting, given Chair Powell's upcoming remarks and the hotter inflation prints. If the FOMC signals a more hawkish-than-expected stance, the US dollar could strengthen further, pressuring copper prices. Regarding US-Iran relations, commodities that previously priced in a geopolitical premium may face further pressure as that premium unwinds. Additionally, with the June 30 deadline for the US copper tariff assessment report approaching, traders may have an incentive to stockpile before any policy changes, providing short-term support for overseas prices via high Comex inventories and inter-market spreads. Domestically in China, the market is gradually entering a seasonal demand lull, leading to some weakening in fundamental support.
Nickel & Stainless Steel: Inventory Pressure Remains Significant; Monitor Macro Co-Movement
Nickel prices broke below key support levels on a weekly basis, influenced by quota concerns and macro factors. Indonesia's Mining Minister indicated the country might ease mineral production quotas if prices are favorable. While supply is actively tightening in some areas—with one Indonesian mine entering maintenance due to quota issues and some projects suspending or reducing operations due to factors like nickel ore pricing and sulfur supply—overall production schedules for June show reductions primarily in nickel pig iron (NPI) and a small amount in refined nickel, with increases in other areas. On the demand side, ternary cathode material production is expected to be flat month-on-month in June, while stainless steel's nickel consumption is projected to decline slightly. Overall, although supply is tightening in a sustained and segmented manner, pressure from rising primary nickel inventories remains the core issue, as the production cuts have not yet been reflected in inventory data. The fundamental backdrop remains weak in the near term, with attention on macro factors, progress on nickel ore quotas, and sulfur supply issues.
On the supply side, weekly nickel ore premiums and the delivered price for 1.6% nickel ore were flat week-on-week. Estimated refined nickel production for June is expected to decrease 1.2% month-on-month to 33,200 tonnes. Domestic NPI production is forecast to fall 1% month-on-month to 29,000 nickel tonnes, while Indonesian NPI output is projected to drop 2% month-on-month to 127,000 nickel tonnes. MHP production is expected to increase month-on-month due to project restarts, and high-grade matte nickel output may also rise due to production shifts. Estimated nickel sulfate production is expected to increase 1% month-on-month to 36,869 nickel tonnes.
Demand-wise, weekly ternary cathode material production increased by 617 tonnes to 20,249 tonnes, while weekly inventories decreased by 106 tonnes to 20,176 tonnes. According to the China Passenger Car Association, retail sales for new energy passenger vehicles in China from June 1-7 were 152,000 units, down 14% year-on-year but up 8% from the previous month. Year-to-date cumulative retail sales stand at 3.85 million units, down 15% year-on-year. Wholesale figures for the same period were 137,000 units, down 6% year-on-year but up 17% from the previous month, with a year-to-date cumulative total of 5.444 million units, up 2% year-on-year. For stainless steel, weekly futures prices edged lower, with the monthly spread narrowing to -90 yuan/tonne. Premiums for deliverable grades weakened, and weekly profit margins continued to deteriorate. Nationwide social inventories of stainless steel across major markets (89 warehouse caliber) totaled 1.126 million tonnes, down 0.6% week-on-week. Inventories of the 300 series decreased by 6,951 tonnes to 695,600 tonnes. On the supply side, China's crude stainless steel production in June is estimated to decline 4.2% month-on-month, with a larger drop in the 200 series, while overseas crude stainless steel production is expected to be flat.
Inventory data shows LME nickel stocks increased by 702 tonnes to 274,938 tonnes. SHFE nickel inventories rose by 6,704 tonnes to 94,375 tonnes, while social inventories increased by 6,163 tonnes to 126,622 tonnes. Inventories in bonded zones remained steady at 1,700 tonnes.
Aluminum: Awaiting Catalysts, Building Momentum
Alumina futures rose during the week, with the main contract closing at 2,923 yuan/tonne on June 12, up 5.7% for the week. SHFE aluminum prices weakened slightly, with the main contract closing at 24,165 yuan/tonne, down 0.6% weekly. Aluminum alloy prices were firmer, with the main contract closing at 23,285 yuan/tonne, up 0.74% for the week.
Market sentiment was boosted by reports that Guinea's Ministry of Mines plans to release detailed documents on bauxite quota issues next week, coupled with production restriction pressure facing Shanxi producers due to environmental controls on red mud. Alumina inventories have accumulated by nearly 300,000 tonnes over the past three weeks, as the restocking pace by aluminum smelters has been far slower than the rate of production and import inflows. It is worth noting that Guinea has entered its rainy season. Following the implementation of the new mining policy, potential declines in shipments and rising costs could lead to a sentiment-driven premium for alumina. However, if the policy measures are less stringent than expected and subsequent shipments are not substantially tightened, price action may revert to fundamental drivers. For primary aluminum, the market has grown weary and desensitized to the back-and-forth in US-Iran tensions, with the associated geopolitical risk premium fading. A tug-of-war exists between the supply gap and low LME inventories overseas and the seasonally weak demand in China. In the short term, primary aluminum is in a consolidative phase, building momentum while awaiting whether domestic social inventories can accelerate their drawdown. Additionally, attention is on the June FOMC meeting for signals on the monetary policy path.
On the supply side, according to SMM data, the weekly operating rate for alumina increased by 2.1 percentage points to 74.76%, as northern plants resumed operations after maintenance and new capacity in Guangxi ramped up. For primary aluminum, large-scale production halts and cuts totaling nearly 2.5 million tonnes have occurred at a Middle Eastern smelter due to regional instability and facility damage. The 50,000-tonne idle capacity at the Mt. Holly smelter resumed in April and is expected to reach full production by the end of Q2. An Icelandic smelter that restarted at the end of April is expected to reach full production by the end of July. SMM estimates China's operating capacity for metallurgical-grade alumina will rise to 87.6 million tonnes in June, with output of 7.251 million tonnes, down 0.3% month-on-month and 0.1% year-on-year. Estimated operating capacity for primary aluminum in June is expected to hold steady at 44.3 million tonnes, with output of 3.688 million tonnes, down 3.1% month-on-month but up 2.2% year-on-year. The proportion of liquid aluminum is expected to rebound to 76.6%.
Demand is softening further due to seasonal effects, with operating rates continuing to adjust lower. The average operating rate for processing enterprises fell by 0.4 percentage points weekly to 63.6%. By segment: aluminum sheet & plate operating rates fell 0.4 ppts to 71.6%; aluminum cable operating rates rose 0.6 ppts to 68.6%; aluminum extrusion operating rates fell 1.8 ppts to 55.8%; aluminum foil operating rates fell 0.4 ppts to 72.9%. Operating rates for secondary aluminum alloys fell 0.5 ppts to 53.4%. Aluminum billet processing fees fell by 20 yuan/tonne in Xinjiang and Guangdong but rose by 30-250 yuan/tonne in other regions. Aluminum rod processing fees were stable in Guangdong but rose by 50-100 yuan/tonne in other regions.
Exchange inventory data shows alumina stocks decreased by 4,220 tonnes weekly to 248,300 tonnes. SHFE aluminum inventories increased by 4,394 tonnes to 528,900 tonnes. LME aluminum inventories decreased by 11,000 tonnes to 319,900 tonnes. Social inventory data shows alumina stocks increased by 118,000 tonnes to 768,000 tonnes. Aluminum ingot social inventories decreased by 63,000 tonnes to 131,200 tonnes. Aluminum billet social inventories decreased by 8,000 tonnes to 154,500 tonnes.
Industrial Silicon & Polysilicon: Divergence Between Macro Sentiment and Micro Fundamentals; Awaiting Confirmation
Industrial silicon futures were firmer during the week, with the main September 2026 contract closing at 8,745 yuan/tonne on June 12, up 0.52% weekly. Polysilicon futures rose significantly, once hitting the daily limit-up, with the main September 2026 contract closing at 37,265 yuan/tonne, up 4.19% weekly. Spot prices were stable across the board, with 553 grade (non-oxygenated) holding at 8,950 yuan/tonne, 553 grade (oxygenated) at 9,200 yuan/tonne, and 421 grade at 9,550 yuan/tonne.
Sentiment was initially boosted by an industry conference in Xinjiang and positive solar sector news. However, as cost premiums from earlier coking coal price increases are being unwound, industrial silicon may face some corrective pressure once the positive sentiment subsides. The pace of restarts by producers in southwestern China has recently slowed, suggesting the volume of material available for the open market (outside of captive use) may gradually decline. For polysilicon, a divergence emerged during the week between macro-driven sentiment and micro fundamentals, widening the futures-spot spread. Market rumors about "the official release of an energy consumption control document next week" have not been officially confirmed, but market sentiment has already priced in significant positive expectations. Polysilicon may be entering a phase of policy verification, awaiting clarity on the timing and details of any announcements. If policies are implemented as rumored, prices could maintain their high-range consolidation; otherwise, they may face a rapid unwinding of the recent limit-up premium. Caution is warranted against potential sharp volatility.
On the supply side, according to BaiChuan data, weekly industrial silicon production increased by 1,880 tonnes to 79,100 tonnes. The weekly furnace operating rate rose by 0.88 percentage points to 29.15%, with 7 additional furnaces coming online, bringing the total to 232. In the Northwest region, Xinjiang held steady with 126 silicon furnaces in operation, totaling 165 furnaces across the region. In the Southwest, Sichuan brought 5 new furnaces online, and Yunnan brought 2 online, totaling 41 furnaces in operation across the region. Other regions saw no changes during the week.
Demand-wise, polysilicon prices for P-type held steady at 30,000 yuan/tonne, while N-type prices fell by 1,000 yuan to 33,000 yuan/tonne. Polysilicon producers' price-supporting strategy is becoming difficult to sustain, as traders are increasing volumes of low-priced offerings, leading to further softening in blended material prices. Downstream wafer-to-module procurement for bulk inventory remains insufficient, with the industry awaiting potential policy developments. Weekly organic silicon prices were stable in the range of 14,800-15,100 yuan/tonne. The Quzhou conference proposed a 40% production cut and price limitation mechanism for the organic silicon industry. Monomer producers have presale orders booked through mid-June, but signs of weakening follow-through for new orders are emerging, with low-priced transactions for spot material reappearing. Weekly polysilicon production fell by 830 tonnes to 19,900 tonnes. Weekly DMC production decreased by 3,300 tonnes to 40,600 tonnes.
Exchange inventory data shows industrial silicon stocks increased by 360 tonnes to 152,300 tonnes. Polysilicon exchange inventories increased by 10,700 tonnes to 35,300 tonnes. Social inventory data shows industrial silicon stocks rose by 10,800 tonnes to 437,000 tonnes. Within this, plant inventories increased by 800 tonnes to 242,000 tonnes. Inventories at Huangpu Port rose by 120 tonnes to 60,700 tonnes; Tianjin Port inventories increased by 160 tonnes to 79,800 tonnes; Kunming Port inventories held steady at 54,500 tonnes. Polysilicon plant inventories decreased by 7,000 tonnes to 288,000 tonnes.
Lithium Carbonate: Sentiment Stabilizes, Prices Recover
Market sentiment showed signs of recovery on a weekly basis, with a synchronized move between equities and commodities and a slight reduction in warrant inventories, leading to a period of price stabilization. However, the basis remains weak. If further positive feedback is seen in the basis and warrant data, prices could see additional upward recovery. It is important to note that downstream inventory stocking coefficients have expanded again. If a one-sided market trend emerges, it could lead to a situation of "high prices without actual demand," potentially limiting the near-term upside. Attention should be paid to whether new variables emerge to impact market expectations, such as: potential shortfalls in shipments from Zimbabwe, the possible restart of the Jianxiawo mine, or changes in demand growth rates.
On the supply side, weekly production increased by 85 tonnes to 26,429 tonnes. Production from spodumene increased by 230 tonnes to 15,445 tonnes; production from lepidolite increased by 90 tonnes to 3,140 tonnes; production from salt lake brine decreased by 315 tonnes to 4,630 tonnes; and production from recycling sources increased by 80 tonnes to 3,214 tonnes.
Demand-wise, weekly ternary cathode material production increased by 617 tonnes to 20,249 tonnes, while weekly inventories decreased by 106 tonnes to 20,176 tonnes. Weekly lithium iron phosphate (LFP) cathode production increased by 2,584 tonnes to 117,000 tonnes, with weekly inventories rising by 2,645 tonnes to 140,685 tonnes. According to the China Passenger Car Association, retail sales for new energy passenger vehicles in China from June 1-7 were 152,000 units, down 14% year-on-year but up 8% from the previous month. Year-to-date cumulative retail sales stand at 3.85 million units, down 15% year-on-year. Wholesale figures for the same period were 137,000 units, down 6% year-on-year but up 17% from the previous month, with a year-to-date cumulative total of 5.444 million units, up 2% year-on-year. According to DDTimes, winning bid prices for battery cells in energy storage projects this week ranged from 0.38 to 0.42 yuan/Wh. The lowest price was up 2.7% from the previous week, while the highest price was down. For complete energy storage systems, winning bid prices ranged from 0.5417 to 0.6380 yuan/Wh, with the lowest price up 9.0% and the highest price up 3.3% from the prior week. For energy storage EPC (including PC) projects, winning bid prices ranged from 0.8652 to 1.2974 yuan/Wh, with the lowest price down 8.4% and the highest price up 10.4% from the previous week.
Inventory data based on a large sample size shows a weekly decrease of 1,412 tonnes to 132,991 tonnes. A smaller sample size shows a weekly decrease of 957 tonnes to 97,829 tonnes. Breaking down the large sample data: inventories in other segments fell by 1,485 tonnes to 69,874 tonnes; smelter inventories decreased by 121 tonnes to 16,494 tonnes; downstream inventories increased by 194 tonnes to 46,623 tonnes.
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