Here is the analysis for various nonferrous metals as of June 18, covering overnight price movements, inventory data, and market outlooks.
Copper
Overnight, both domestic and international copper prices showed a firming trend, while the import window for physical refined copper in China was closed. On the macroeconomic front, market focus was on the Federal Reserve's policy meeting. The Fed, as widely anticipated, held interest rates steady for the fourth consecutive meeting. For the first time in nine months, the FOMC vote was unanimous, though the first meeting chaired by Vice Chair for Supervision Michael S. Barr maintained a hawkish tilt. The dot plot indicated half of the officials see one rate hike this year. The policy statement removed previous interest rate guidance, stating a commitment to price stability, while downgrading GDP growth and unemployment forecasts for the year and raising the 2024 PCE and core PCE inflation projections to 3.6% and 3.3%, respectively. Geopolitically, U.S. officials stated a memorandum of understanding aimed at ending conflict and opening the Strait of Hormuz has been signed remotely with Iran and is now in effect. Inventory-wise, LME stocks rose by 525 tonnes to 357,525 tonnes; Comex stocks fell by 197 tonnes to 590,052 tonnes; SHFE copper warehouse receipts dropped by 8,320 tonnes to 88,114 tonnes, while BC copper warehouse receipts decreased by 49 tonnes to 13,838 tonnes. With the June 30 deadline for the U.S. copper tariff review report approaching, traders still have an incentive to stockpile ahead of the policy decision, supporting offshore prices in the short term via high COMEX inventories and inter-market spreads. Domestically, the market is gradually entering a seasonal demand lull, leading to a marginal weakening of fundamental support. The copper market's reaction was relatively muted to both the Fed's hawkish stance and the U.S.-Iran MOU, indicating a balanced equilibrium at current price levels. Overall, a cautious approach within a range-bound framework is advised, awaiting a clearer release of macroeconomic risks before making significant moves.
Nickel & Stainless Steel
Overnight, LME nickel rose 0.72% to $18,085 per tonne, while SHFE nickel increased 0.6% to 136,620 yuan per tonne. On the inventory front, LME stocks increased by 528 tonnes to 276,402 tonnes, and SHFE warehouse receipts rose by 53 tonnes to 93,416 tonnes. The LME 0-3 month backwardation remained in negative territory, while the import nickel premium held at -300 yuan per tonne. Supply is showing signs of proactive tightening. On one hand, an Indonesian mine has entered a maintenance phase due to quota issues, with attention on the second-half quota situation. On the other hand, following earlier policy adjustments to HPM, nickel ore and sulfur prices have led to reduced operating rates at some Indonesian projects, though a potential easing of sulfur supply could later improve capacity utilization. While supply is tightening across certain segments, overall June production schedules indicate reductions primarily in nickel pig iron and minor cuts in refined nickel, with increases in other areas. Concurrently, primary nickel inventory pressure continues to build. On the demand side, June production schedules suggest ternary cathode material output will remain flat month-on-month, while stainless steel's nickel consumption is expected to dip slightly. The core issue in the nickel supply chain remains high inventory pressure. In the short term, monitor the impact of macroeconomic factors, while industry focus should be on Indonesian quota developments.
Alumina, Electrolytic Aluminum & Aluminum Alloy
Overnight, alumina prices firmed. The AO2609 contract closed at 2,922 yuan per tonne, up 0.52%, with open interest increasing by 18,138 lots to 298,000 lots. Aluminum prices also edged higher. LME aluminum closed at $3,410 per tonne, up 0.65%, with stocks down 1,475 tonnes to 316,500 tonnes. The domestic AL2607 contract closed at 23,940 yuan per tonne, up 0.21%, with open interest down 3,364 lots to 216,000 lots. Aluminum alloy prices were firm. The main AD2608 contract closed at 23,370 yuan per tonne, up 0.17%, with open interest up 64 lots to 17,252 lots. Spot-wise, SMM's alumina price rose to 2,715 yuan per tonne. The spot discount for aluminum ingots widened to 80 yuan per tonne. Foshan A00 aluminum was quoted at 23,790 yuan per tonne, at a 20 yuan per tonne discount to Wuxi A00. Aluminum billet processing fees were stable in Henan and Linyi but rose by 90-180 yuan per tonne in other regions. Processing fees for 1A60 aluminum rod were steady, as were those for 6/8 series alloys, while fees for low-carbon 6/8 series alloys fell by 350 yuan per tonne. Market rumors suggest Guinea's mining ministry plans to release detailed documents on bauxite quotas this week. Additionally, producers in Shanxi face potential production curbs due to environmental controls on red mud. Alumina inventories have accumulated nearly 300,000 tonnes over the past three weeks, with restocking by aluminum smelters lagging far behind the pace of finished product output and import inflows. There is a risk of pressure from June warehouse receipt cancellations. The market shows fatigue and desensitization to news of a potential U.S.-Iran deal, with Middle East geopolitical premium volatility fading. A tug-of-war exists between the overseas supply deficit and low LME stocks on one side and weak seasonal demand in China on the other. Electrolytic aluminum is in a consolidative phase in the short term, awaiting whether domestic social inventories can accelerate their drawdown. Also, monitor the Fed's policy meeting for signals on the monetary policy path.
Industrial Silicon & Polysilicon
On the 17th, industrial silicon prices weakened. The main 2609 contract closed at 8,600 yuan per tonne, down 0.52% on the day, with open interest up 4,901 lots to 253,000 lots. Baichuan's spot reference price was 9,161 yuan per tonne, unchanged from the previous session. The price for the lowest deliverable grade fell to 8,600 yuan per tonne, widening the spot premium to 115 yuan per tonne. Polysilicon prices firmed. The main 2609 contract closed at 36,525 yuan per tonne, up 0.47% on the day, with open interest down 1,027 lots to 102,000 lots. The standard for the lowest deliverable grade was lowered to 35,985 yuan per tonne, narrowing the spot premium to 165 yuan per tonne. The cost premium from earlier coking coal price increases is being eroded. The pace of production resumption in southwest China has recently slowed, suggesting the volume of circulating material outside of captive supply may gradually decline, leading to narrow adjustments for industrial silicon above the cost line. Market rumors regarding energy consumption controls have not been officially confirmed. Speculative fervor in polysilicon has cooled, and with a concentrated influx of hedging positions and a significant increase in warehouse receipts, the market is retracing the premium from previous limit-up moves, with futures prices rationally converging towards spot levels.
Lithium Carbonate
Yesterday, the lithium carbonate futures 2609 contract rose 0.59% to 171,300 yuan per tonne, with open interest down 30 lots to 455,800 lots. Spot prices saw battery-grade lithium carbonate average up 500 yuan per tonne to 169,500 yuan per tonne, industrial-grade up 500 yuan to 165,500 yuan per tonne, and battery-grade lithium hydroxide (coarse particle) up 500 yuan to 154,500 yuan per tonne. Warehouse receipts decreased by 600 tonnes to 52,685 tonnes. On the supply side, weekly output increased by 85 tonnes week-on-week to 26,429 tonnes; June production is estimated to rise 2.6% month-on-month to 116,275 tonnes. Demand-wise, according to SMM data, June output for ternary cathode material is forecast flat month-on-month at 88,990 tonnes, lithium iron phosphate (LFP) up 3% to 504,150 tonnes, lithium cobalt oxide up 3% to 8,250 tonnes, and lithium manganate down 2% to 10,780 tonnes. Other institutions project cathode material output to increase 6.5% month-on-month in June, with battery cell output up 6.2%. Broader market estimates suggest global lithium-ion battery production could rise 8.9% month-on-month. Inventory data shows large-sample stocks down 1,412 tonnes week-on-week to 132,991 tonnes, and small-sample stocks down 957 tonnes to 97,829 tonnes. Using the large-sample口径, inventory in other segments fell 1,485 tonnes to 69,874 tonnes, smelter stocks dropped 121 tonnes to 16,494 tonnes, while downstream inventory rose 194 tonnes to 46,623 tonnes. Prices are expected to move within a range in the short term. While warehouse receipts showed some drawdown, the overall inventory level remains elevated, and the basis remains relatively weak. The continued weakening of the July-September spread yesterday was a drag. Monitor for new variables that could impact market expectations, such as shipment conditions from Zimbabwe, potential resumption of the Jianxiawo mine, and the performance of demand growth.
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