Copper:
Overnight, both domestic and international copper prices moved higher in volatile trading. The spot import window for refined copper in China remains open, while the SHFE copper VIX index rose slightly to around 18.2. Markets have entered a quiet period ahead of the Federal Reserve's interest rate meeting, with focus shifting to US-Iran conflict developments. Iran announced yesterday it received a Qatar-led ceasefire proposal suggesting a 10-day truce, but US forces have attacked Iran for ten consecutive days, with President Trump hinting at a strong military retaliation. Additionally, the Strait of Hormuz faces renewed navigation risks. On the inventory front, LME stocks fell by 1,350 tonnes to 295,275 tonnes; Comex stocks increased by 3,500 tonnes to 633,799 tonnes; SHFE copper warehouse receipts decreased by 4,561 tonnes to 35,091 tonnes, and BC copper warehouse receipts dropped by 496 tonnes to 6,130 tonnes. Regarding demand, downstream buyers continue purchasing based on immediate needs, with weak willingness to stock up at high prices. Recent copper price strength appears to overlook geopolitical risks, with the analyst noting that coordinated inventory drawdowns domestically and internationally have boosted investor confidence in copper demand. However, it is important to note that the current rebound remains weak, and overseas financial market risks have not fully subsided, warranting caution regarding the potential upside of this rally.
Nickel & Stainless Steel:
Overnight, LME nickel fell 0.79% to $16,910 per tonne, while SHFE nickel declined 0.35% to 129,790 yuan per tonne. Inventory data shows LME stocks decreased by 1,062 tonnes to 273,222 tonnes, while SHFE warehouse receipts increased by 67 tonnes to 99,383 tonnes. Looking at premiums/discounts, the LME 0-3 month spread remains in negative territory, and the import nickel premium/discount holds at -350 yuan per tonne. On the policy front, on July 10, Tri Winarno, Director General of Minerals and Coal at Indonesia's Ministry of Energy and Mineral Resources, clearly stated that nickel ore RKAB quotas for 2026 will not see a significant increase, with adjustments focused solely on meeting the needs of smelting facilities currently lacking ore supply. Fundamentally, concerns over costs and supply in the hydrometallurgical sector due to sulfur supply disruptions, coupled with changes in inventory levels last week, provided multiple catalysts that pushed nickel prices back above 130,000 yuan per tonne. However, inventory pressure has also emerged. In the short term, nickel prices are expected to remain range-bound, supported by costs on the downside and capped by inventory on the upside. Market attention will be on subsequent quota releases and whether demand can further drive inventory drawdowns, potentially providing a new catalyst for nickel prices.
Alumina, Primary Aluminium & Aluminium Alloy:
Overnight, alumina prices moved higher in volatile trading, with the AO2609 contract settling at 2,723 yuan per tonne, up 0.63%. Open interest decreased by 10,310 lots to 321,000 lots. Aluminium prices weakened, with LME aluminium closing down 0.33% at $3,140 per tonne overnight, as stocks fell by 325 tonnes to 279,800 tonnes. The AL2609 contract settled at 23,030 yuan per tonne, down 0.78%, with open interest increasing by 5,504 lots to 267,000 lots. Aluminium alloy prices also weakened, with the main AD2609 contract closing down 0.8% at 22,840 yuan per tonne overnight. Open interest decreased by 178 lots to 19,296 lots. On the spot market, SMM's alumina price fell to 2,724 yuan per tonne. Aluminium ingot spot prices are at a 10 yuan per tonne discount. Foshan A00 aluminium was quoted lower at 23,200 yuan per tonne, at a 20 yuan per tonne discount to Wuxi A00. Aluminium billet processing fees were mostly stable across regions, up 20 yuan/tonne in Xinjiang and Guangdong but down 20 yuan/tonne in Wuxi. Aluminium rod 1A60 series processing fees fell by 50 yuan/tonne, while 6/8 series fees were steady, with low-carbon 6/8 series down 31 yuan/tonne. Increased supply both domestically and internationally is weighing on market sentiment. The continuous northward flow of southern cargoes has increased volumes, leading to weaker spot quotations across the board, with the rebound in futures prices facing pressure from increased short positions. Given current prices are in a low valuation range, there is some support at the bottom, leading to expectations of continued low-level consolidation in the short term. Macro sentiment has heated up further, with Strait transit disruptions, expectations of Middle East restarts, and the release of accumulated aluminium ingot shipments weakening again. Exports combined with downstream bargain-hunting are jointly digesting inventory, with the resilience of social inventory drawdowns remaining intact. In the short term, aluminium prices are expected to continue their recovery path, driven by the dual catalysts of a return of macro premiums and accelerated destocking.
Industrial Silicon & Polysilicon:
On the 20th, industrial silicon prices weakened in volatile trading. The main 2609 contract settled at 8,270 yuan per tonne, down 1.37% on the day, with open interest increasing by 10,278 lots to 256,000 lots. Baichuan's spot reference price for industrial silicon was 9,100 yuan per tonne, down 11 yuan from the previous session. The price for the lowest deliverable grade fell to 8,550 yuan per tonne, widening the spot premium to 325 yuan per tonne. Polysilicon prices also weakened, with the main 2609 contract settling at 33,360 yuan per tonne, down 3.28% on the day, as open interest decreased by 1,029 lots to 123,000 lots. The price for the lowest deliverable grade fell to 34,090 yuan per tonne, widening the spot premium to 825 yuan per tonne. Resumption of production during the Southwest's wet season is largely complete. Temporary shutdowns in Yili, Xinjiang due to power issues, alongside news of production cuts in Inner Mongolia following electricity price hikes, could have a gradually stronger impact if northern shutdowns persist. For polysilicon, policy expectations continue to develop, with inspections of actual corporate energy consumption levels ongoing under the new three photovoltaic energy consumption limit standards. Spot market weakness persists, with industry inventories accumulating marginally for several consecutive weeks, leading to bottom adjustments in polysilicon.
Lithium Carbonate:
Yesterday, the lithium carbonate futures 2609 contract fell 5.61% to 143,900 yuan per tonne, with daily open interest decreasing by 5,208 lots to 379,800 lots. Weighted open interest increased by 15,988 lots to 619,800 lots. On the spot price front, the average price for battery-grade lithium carbonate fell by 500 yuan/tonne to 151,500 yuan/tonne, industrial-grade lithium carbonate fell by 500 yuan/tonne to 147,500 yuan/tonne, and battery-grade lithium hydroxide (coarse particle) fell by 500 yuan/tonne to 138,500 yuan/tonne. Regarding warehouse receipts, inventory increased by 1,014 tonnes yesterday to 41,359 tonnes. On the supply side, weekly production fell by 307 tonnes week-on-week to 24,548 tonnes. July production is estimated to increase by 90 tonnes month-on-month to 115,410 tonnes, with spodumene-based production down 4,500 tonnes month-on-month, lepidolite-based production up 2,700 tonnes, salt lake-based production up 1,390 tonnes, and recycled lithium production up 500 tonnes. On the demand side, July ternary cathode material production is scheduled to increase 3% month-on-month to 89,690 tonnes, lithium iron phosphate (LFP) cathode material up 7% to 536,850 tonnes, lithium cobalt oxide up 3% to 7,740 tonnes, and lithium manganese oxide production scheduled down 1% to 10,770 tonnes. Lithium battery production is scheduled to increase 7% month-on-month, with domestic production up 7% and overseas production up 4%. Domestically, ternary power battery production is scheduled up 7% month-on-month, LFP power battery production up 9%, and LFP energy storage battery production up 4%. On the inventory side, large-sample weekly inventories fell by 4,714 tonnes week-on-week to 119,667 tonnes, while small-sample inventories decreased by 2,599 tonnes to 89,637 tonnes. Using the large-sample data, inventory in other segments fell by 6,875 tonnes to 54,752 tonnes, smelter inventory increased by 858 tonnes to 13,273 tonnes, and downstream inventory rose by 1,303 tonnes to 51,642 tonnes. Amid bearish sentiment regarding the future supply-demand balance, both lithium carbonate futures prices and the term structure have weakened, with the September-January spread around -6,000 yuan per tonne. With weak expectations difficult to disprove, short-term prices may continue to decline until sentiment subsides. Market focus will be on spot price support and the potential for a mismatch in expectations due to marginal supply increases.
Disclaimer
All information in this report is sourced from publicly available materials. The company makes no guarantee regarding the accuracy, reliability, or completeness of this information, nor does it guarantee that the included information and recommendations will not change. While efforts have been made to ensure the report's objectivity and fairness, the views, conclusions, and suggestions are for reference only and do not constitute recommendations or operational advice for any specific products, businesses, or related instruments. Investment decisions based on this report are made at the investor's own risk, and the company and authors bear no responsibility.
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