Copper prices on both domestic and international markets advanced overnight, with London copper setting a fresh record high. Domestic spot refined copper imports continue to show a modest loss, while the price spread between Comex and LME copper stands at approximately $314 per tonne.
On the news front, the US-Canada trade conflict has escalated, with Canada planning to impose tariffs ranging from 15% to 50% on hundreds of American goods starting Tuesday. Meanwhile, President Trump has threatened to ban sales of Bombardier aircraft in the US market. Geopolitically, Saudi Aramco's oil facilities were attacked again, and shipping traffic through the Strait of Hormuz has fallen to its lowest level since May.
On the macro side, despite headwinds from the possibility of the Federal Reserve resuming rate hikes in September, the market is more focused on US copper arbitrage opportunities. The current high premium between US and London copper prices suggests that physical copper arbitrage remains active, deepening the structural imbalance of global copper resources flowing toward the US. This situation means that US copper inventories are unlikely to flow back to non-US regions, keeping supply conditions tight elsewhere.
Unless this dynamic reverses, copper prices are expected to maintain a high-level, range-bound pattern with a bullish bias. It's important to note that the implementation of tariff policies and market reactions remain the biggest sources of uncertainty.
Where to Focus: Key attention should be paid to how tariff policies unfold and the corresponding market feedback, as these will be critical in determining the near-term trajectory of copper prices.
For nickel and stainless steel, LME nickel fell 0.86% to $16,690 per tonne overnight, while SHFE nickel dropped 0.88% to 126,750 yuan per tonne. Inventory data shows LME stocks decreased by 24 tonnes to 270,744 tonnes, while SHFE warehouse receipts rose by 144 tonnes to 99,447 tonnes. The LME 0-3 month spread remains in negative territory, and imported nickel premiums are steady at -50 yuan per tonne.
According to Indonesia's meteorological agency, the El Ni帽o phenomenon is expected to persist until early Q1 2027, with peak intensity exceeding strong levels. Power generation costs in Indonesian industrial parks continue to climb, with some parks seeing costs rise to 0.45 yuan per kilowatt-hour. This increase in electricity costs directly raises production expenses for nickel pig iron smelting, although downstream pricing pressure has prevented these cost increases from being fully passed through to nickel pig iron prices.
Due to drought conditions caused by El Ni帽o reducing water supplies to smelters, Indonesia's largest nickel mining complex may need to cut output by as much as 40%. Additionally, sources indicated late last month that several Indonesian nickel smelters controlled by Chinese companies are considering coordinated production cuts due to mounting profitability pressures.
Nickel ore prices, premiums, and sulfur prices have weakened on a month-over-month basis. Meanwhile, pressure from climate and electricity costs could lead to varying degrees of production cuts across the supply chain. Domestic electric nickel, nickel pig iron, and nickel sulfate production are also showing declines. Supply-side reductions could provide short-term support for price recovery, but quota pressures and declining theoretical cost support remain concerns, and macro disruptions warrant caution.
For alumina, the market traded with a weaker bias overnight, with the October 2026 contract closing at 2,714 yuan per tonne, up 1.17%, while open interest decreased by 3,870 lots to 102,000 lots. The October 2026 aluminum contract settled at 24,450 yuan per tonne, up 0.43%, with open interest down 1,912 lots to 256,000 lots. The October 2026 aluminum alloy contract closed unchanged at 23,640 yuan per tonne, with open interest rising by 774 lots to 18,280 lots.
On the spot front, SMM alumina prices rebounded to 2,678 yuan per tonne, while aluminum ingot spot premiums widened to 20 yuan per tonne. Foshan A00 aluminum quoted prices recovered to 24,570 yuan per tonne, while Wuxi A00 showed a discount of 160 yuan per tonne. Aluminum rod processing fees remained stable across most regions, and 1A60 series aluminum rod processing fees held steady, while low-carbon 6/8 series fees increased by 42 yuan per tonne.
Alumina prices are being supported by ore supply issues, with the Guinea railway derailment combined with rebounding sea freight rates, and the US military strike on Iran causing crude oil prices to jump, pushing up expected import costs for overseas ore. However, alumina plant inventories are building again as operating rates recover, and with fundamental disagreements in the market, the upside for further price gains appears limited. Key focus should be on the recovery of Guinea ore shipments and whether substantive losses lead to production cuts or maintenance.
For electrolytic aluminum, the Federal Reserve has released dovish signals ahead of its September meeting. Domestic demand in cable, wire, and profile sectors is improving, driven by grid project implementation and construction site resumptions. Higher aluminum-to-water ratios are compressing ingot casting volumes, accelerating the pace of aluminum ingot destocking. With relatively tight circulating supply, spot premiums have re-emerged at modest levels.
In the short term, aluminum prices are expected to trade with a firm bias, supported by destocking and peak season demand. Key watch points include how the peak season demand materializes, the sustainability of destocking, and signals from the Federal Reserve's meeting.
For industrial silicon, the market traded with a firm bias on the 7th, with the November 2026 contract closing at 8,710 yuan per tonne, down 1.53% intraday, while open interest fell by 12,464 lots to 314,000 lots. The Baichuan 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, with spot premiums widening to 115 yuan per tonne.
Polysilicon traded with a weak bias, with the November 2026 contract closing at 37,065 yuan per tonne, down 1.89% intraday, while open interest rose by 2,246 lots to 116,000 lots. The lowest deliverable grade price edged lower to 40,030 yuan per tonne, with spot premiums widening to 2,930 yuan per tonne.
The shutdown of a major Xinjiang producer's eastern base furnace, combined with recent increases in silicon coal prices, has marginally improved the industrial silicon fundamentals. However, the market has already fully priced in the production cuts, and downstream purchasing willingness remains limited. As the market shifts from trading expectations to trading reality, prices are likely to return to a weak consolidation pattern, requiring new catalysts for any upward momentum.
In the polysilicon market, spot and futures prices are diverging again, with spot premiums widening. Market response to production cut meeting news has been limited, and confidence in silicon material producers' ability to hold prices remains weak. On one hand, September polysilicon production schedules and plant inventories continue to increase; on the other hand, downstream demand absorption capacity is limited, with silicon wafer and cell producers unable to support prices and suffering sustained losses. Export data for the supply chain is also declining.
Short-term market sentiment has not yet reversed, and the market awaits fresh catalysts. Key focus should be on downstream silicon wafer production schedules and whether end-user installations can show meaningful improvement.
For lithium carbonate, the January 2027 futures contract fell 3.29% to 142,200 yuan per tonne yesterday, with open interest increasing by 2,366 lots to 395,000 lots. In spot markets, average battery-grade lithium carbonate prices fell 4,500 yuan per tonne to 147,500 yuan per tonne, while industrial-grade lithium carbonate prices dropped 4,500 yuan per tonne to 143,000 yuan per tonne. Battery-grade lithium hydroxide (coarse particle) declined 4,500 yuan per tonne to 136,000 yuan per tonne. Warehouse receipt inventories increased by 790 tonnes to 47,988 tonnes.
On the supply side, weekly production increased by 1,438 tonnes to 25,246 tonnes. September lithium carbonate production is expected to rise 10% month-over-month to 128,517 tonnes, with spodumene-based lithium up 10% to 67,680 tonnes, lepidolite-based lithium up 3% to 15,250 tonnes, salt lake lithium up 18% to 26,190 tonnes, recycled lithium up 12% to 15,350 tonnes, and lithium slag-based lithium up 1% to 4,047 tonnes.
On the demand side, September ternary material production is expected to fall 5% to 86,450 tonnes, while lithium iron phosphate production is projected to rise 6% to 612,000 tonnes. Cobalt acid lithium output is expected to increase 6% to 7,420 tonnes, lithium manganate output up 7% to 11,487 tonnes, and lithium battery production up 7% to 314.5 GWh.
On inventories, weekly stocks decreased by 5,576 tonnes to 169,347 tonnes. Upstream inventories fell 1,063 tonnes to 36,644 tonnes, cathode producer inventories rose 1,303 tonnes to 39,495 tonnes, trader inventories declined 3,680 tonnes to 75,720 tonnes, and cell maker and other inventories fell 2,136 tonnes to 17,488 tonnes.
Global supply disruptions continue to accumulate. After domestic mine restarts failed, lowering supply expectations, Chile is facing escalating strike risks, and a major Brazilian lithium mine has been ordered by a court to halt all mining operations due to environmental permit issues.
From a fundamental perspective, September shows strength on both supply and demand sides, with theoretical monthly destocking of over 20,000 tonnes and weekly average destocking of around 5,000 tonnes. However, spot market performance remains a drag, and warehouse receipts continue to flow in, failing to create a shortage scenario that would positively reinforce prices.
Agency updates to production and inventory samples, against a backdrop of weak long-term expectations, have undermined the strong near-term reality the market previously saw, weakening sentiment. That said, based on warehouse receipt inventories, Steel Union (钢联) inventory data, and trader-based inventory measurements, the agency's own sample appears to have significant deviations, and the sustained destocking pattern has not yet reversed.
Short-term sentiment stabilization may still require digestion time, and attention should remain on spot market support levels.
Key Takeaways: While the destocking trend remains intact, spot weakness and warehouse receipt inflows suggest caution. Monitor spot support levels and any shifts in market sentiment.
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