Copper prices on both domestic and international exchanges showed a firm tone overnight. Domestic spot refined copper imports remained in a loss, though the deficit has narrowed significantly. The price spread between COMEX and LME copper widened to around $336 per tonne. On the macro front, US August ADP private payrolls increased by 37,000, below the previous reading of 46,000, marking the lowest monthly gain since January. The Federal Reserve's Beige Book released yesterday indicated modest economic expansion, slight employment growth, and moderate price increases, with data center demand emerging as a key growth driver. The New York Fed President struck a cautious tone, offering no clear signals on rate moves and stating the need to "just keep watching" the data flow. Geopolitically, tensions in the Middle East escalated sharply, with both parties announcing military actions on the same day.
In inventories, LME stocks increased by 350 tonnes to 233,850 tonnes, while COMEX inventories rose by 1,959 tonnes to 693,637 tonnes. SHFE copper warrants declined by 249 tonnes to 29,517 tonnes, and BC copper warrants fell by 25 tonnes to 9,050 tonnes. On the demand side, enterprises remain cautious about restocking at high prices, but market supplies are tight, with spot premiums persisting. The current macro headwinds and fundamental support coexist, complicating directional calls. Market focus remains on the arbitrage between US and London copper. If the arbitrage trend holds, non-US copper supplies are likely to stay tight, making a sharp price decline unlikely. However, volatility could increase as the US government nears a decision on refined copper tariff policies.
LME nickel rose 1.32% overnight to $16,895 per tonne, while SHFE nickel climbed 1.47% to 128,470 yuan per tonne. In inventories, LME stocks added 312 tonnes to 268,848 tonnes, while SHFE warrants decreased by 161 tonnes to 99,935 tonnes. The LME 0-3 month spread remained negative, and imported nickel premiums stayed at -50 yuan per tonne. According to Bloomberg, drought linked to El Ni帽o has reduced water supplies to smelters, potentially forcing a 40% production cut at Indonesia's largest nickel mining complex. Additionally, sources indicated late last month that several Indonesian nickel smelters controlled by Chinese firms are considering coordinated output reductions due to mounting profitability pressures.
On the policy front, Indonesia's Ministry of Energy and Mineral Resources (ESDM) confirmed that the preparation system for the 2027 mining and coal sector work plans and budgets (RKAB) will remain unchanged, keeping the annual reporting mechanism rather than reverting to a three-year plan. The ministry noted that reduced rainfall due to El Ni帽o threatens power supplies for nickel smelters relying on hydroelectric plants. It will closely monitor integrated smelters, while independent industrial permits fall under the Industry Ministry's oversight. Previously, PT BMS experienced output declines due to water shortages at its hydro facility and planned to temporarily lay off around 570 workers. The ESDM will continue verifying technical conditions on-site and hopes for improved weather to alleviate operational impacts. Supply-side production cuts could provide short-term price support, though quota pressures and lower theoretical cost supports remain, alongside macro-related uncertainties.
Alumina prices trended slightly weaker overnight, with AO2610 closing at 2,695 yuan per tonne, down 0.77%, as open interest fell by 1,961 lots to 134,000 lots. AL2610 finished at 24,235 yuan per tonne, up 0.73%, with open interest gaining 6,478 lots to 249,000 lots. Aluminum alloys edged higher, with the main AD2610 contract closing at 23,595 yuan per tonne, up 0.81%, and open interest rising by 807 lots to 15,383 lots. In spot markets, SMM alumina prices recovered to 2,676 yuan per tonne. Aluminum ingot spot moved from parity to a premium of 10 yuan per tonne. Foshan A00 quotes rebounded to 24,300 yuan per tonne, while Wuxi A00 showed a discount of 220 yuan per tonne. Aluminum rod processing fees were steady in Henan, Linyi, and Nanchang, with Baotou and Wuxi seeing increases of 10-80 yuan per tonne, while Xinjiang and Guangdong saw decreases of 30 yuan per tonne. Aluminum rod 1A60 series processing fees held steady, while 6/8 series fees were unchanged, and low-carbon 6/8 series fees rose by 11 yuan per tonne.
Short-term overseas strength provides some sentiment support for domestic markets. With loss pressures intensifying expectations for production cuts, the market shows signs of bottoming after deep declines, potentially allowing for a modest recovery within a cost-supported range. Southern grid tenders are about to be rolled out in batches, and pre-holiday restocking demand ahead of the National Day break should gradually improve downstream pickup and resumption of operations. Domestic and international destocking paces have clearly slowed, and attention remains on whether seasonal demand materializes as expected.
Industrial silicon trended slightly weaker on the 2nd, with the main 2611 contract closing at 8,650 yuan per tonne, down 1.93% intraday, while open interest decreased by 2,691 lots to 325,000 lots. The Bai Chuan industrial silicon spot reference price held steady at 9,232 yuan per tonne. The lowest deliverable grade price recovered to 8,750 yuan per tonne, widening the spot premium to 230 yuan per tonne. Polysilicon moved slightly higher, with the main 2611 contract closing at 36,900 yuan per tonne, down 1.85% intraday, as open interest fell by 1,932 lots to 115,000 lots. The lowest deliverable grade price edged up to 40,030 yuan per tonne, with the spot premium expanding to 2,520 yuan per tonne. With the production cuts at major Xinjiang plants now a reality, the market has shifted from trading expectations to trading actuals. Futures-spot traders show limited willingness to accumulate, and downstream buying interest remains weak, pushing industrial silicon back into a weak, rangebound pattern. Futures-spot trading is relatively active, with significant price differentials between cargo prices and major producers' higher-priced orders. Downstream players are not keen on proactive restocking, especially as actual transaction prices for cells and modules have already moved lower. If negative feedback transmits upstream to polysilicon, it could test the current price support efforts. With a mix of real and false news swirling in the polysilicon sector recently, caution is warranted regarding price swings.
Carbonate lithium futures saw the 2701 contract drop 3.24% to 154,780 yuan per tonne yesterday, with open interest falling by 9,123 lots to 395,800 lots. In spot pricing, battery-grade lithium carbonate averaged down 3,500 yuan per tonne to 156,500 yuan per tonne, while industrial-grade lithium carbonate fell 3,500 yuan per tonne to 151,500 yuan per tonne. Battery-grade lithium hydroxide (coarse particle) declined 3,000 yuan per tonne to 145,000 yuan per tonne. Warrant inventories decreased by 450 tonnes to 45,389 tonnes yesterday. On the news front, Albemarle completed its latest auction of Wodgina spodumene concentrate, offering 15,840 dry tonnes with a 卤10% flexibility. The final settlement price was $2,307 per dry tonne, CIF China, based on 6% Li2O grade. The transaction terms were CIF China Zhenjiang port, with pricing based on 6% Li2O, in US dollars per dry tonne, excluding VAT. Payment was cash in advance, due by September 8th.
On the supply side, weekly output increased by 801 tonnes to 23,808 tonnes, and September lithium carbonate production is expected to rise 10% month-on-month to 124,000 tonnes. On the demand side, September ternary material output is forecast to decline 5% to 86,450 tonnes, while lithium iron phosphate is expected to rise 6% to 612,000 tonnes. In inventories, large-sample weekly stocks fell by 7,590 tonnes to 78,802 tonnes, with other segment inventories dropping 1,815 tonnes to 37,577 tonnes, smelter inventories down 1,358 tonnes to 10,128 tonnes, and downstream inventories decreasing 4,417 tonnes to 31,098 tonnes. The spot basis continues to strengthen modestly, and earlier warrants have kept flowing in, though yesterday saw the first small decline. The September supply-demand gap is estimated at around 25,000 tonnes, maintaining a relatively fast destocking pace, albeit with some slowdown in the marginal rate. Supply-side disruptions effectively lower second-half supply expectations, but recent downward revisions to cathode material production schedules have weighed on market sentiment, posing short-term correction risks. For September, it is advisable to monitor whether the spot market can demonstrate a genuine shortage against the backdrop of destocking, which would provide strong support and positive feedback for futures prices. If spot signals remain weak, the upside for prices may be limited. Additionally, beyond September, watch for potential supply increases from concentrated port arrivals, where a slowdown in marginal destocking could affect market sentiment.
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