Base metals traded with a narrow range overnight. In macro news, US durable goods orders rose 1.1% month-on-month in July, significantly beating the 0.5% forecast and accelerating from June's 0.5% pace, indicating continued support for manufacturing demand. Meanwhile, the US PCE price index rose 0.2% month-on-month against a 0.1% expectation, with the year-on-year increase holding at 3.7%, still above the Fed's target. Notably, this inflation gauge has remained unchanged for four consecutive months, warranting vigilance. On the geopolitical front, Iran and Oman have reached an agreement on revenue sharing for the Strait of Hormuz.
LME copper inventories fell 1,250 tonnes to 237,475 tonnes, while SHFE copper warrants declined 4,028 tonnes to 34,591 tonnes, and BC copper warrants dropped 199 tonnes to 7,948 tonnes. Downstream players continue to purchase only for immediate needs, showing weak willingness to build inventories at elevated prices. Market sentiment turned cautious as traders worry that Warsh's debut at the global central bank symposium on Friday could reinforce a hawkish tone, potentially reviving expectations of Fed rate hikes. However, LME inventories have returned to a declining trend with rising tom-next spreads, keeping the potential for a squeeze risk alive in the market, which may sustain a relatively firm copper price trajectory. Still, close vigilance is needed regarding potential abnormal market fluctuations surrounding the implementation of Section 232 tariff policies.
Nickel and stainless steel saw LME nickel fall 0.76% to $16,920 per tonne overnight, while SHFE nickel dropped 0.73% to 128,570 yuan per tonne. LME inventories decreased by 54 tonnes to 268,554 tonnes, and SHFE warrants declined by 252 tonnes to 101,548 tonnes. The LME 3-month cash spread remained negative, while imported nickel premiums rose 50 yuan per tonne to parity. On the news front, Indonesia's Coordinating Minister for Economic Affairs Airlangga stated that no export taxes or windfall taxes on coal and nickel will be imposed this year, with next year's policies yet to be discussed in detail. On August 19, ESDM Director General Tri Winarno said approvals have begun for multiple proposed revisions to 2026 work plans and budgets (RKAB) for coal and nickel commodities, with roughly a dozen nickel companies and dozens of coal companies already receiving approval for the 2026 RKAB revisions. Previously, on August 13, the Indonesian Nickel Miners Association APNI indicated that the Ministry of Energy and Mineral Resources has officially confirmed that 2026 nickel ore RKAB quotas will not be increased, with the government only selectively approving additional ore production quotas for smelters with low raw material inventories as a strategic buffer. Weekly inventory performance diverged, with overseas destocking pressure remaining elevated while domestic inventories declined at a faster pace. With concerns over potential quota increases above and cost support below, nickel prices are likely to remain range-bound in the near term, with attention focused on quota release pace and macro sentiment alignment.
Alumina traded weaker overnight, with the AO2610 contract closing at 2,632 yuan per tonne, down 0.87%, while open interest increased by 8,389 lots to 273,000 lots. LME alumina closed at $3,225 per tonne, down 0.4%, with inventories holding steady at 246,800 tonnes. Aluminum contract AL2610 settled at 23,830 yuan per tonne, down 0.17%, with open interest declining 7,634 lots to 255,000 lots. Aluminum alloys traded slightly firmer, with the main AD2610 contract closing at 23,220 yuan per tonne, up 0.02%, and open interest down 1,225 lots to 13,225 lots. On the spot front, SMM alumina prices retreated to 2,679 yuan per tonne. Aluminum ingot spot prices ranged from parity to a 10 yuan per tonne discount. Foshan A00 quotes recovered to 24,100 yuan per tonne, while Wuxi A00 traded at a 240 yuan per tonne discount. Aluminum rod processing fees held steady in Henan and Linyi, while other regions saw declines of 50-100 yuan per tonne. Processing fees for 1A60 aluminum rod remained stable, 6/8 series held steady, and low-carbon 6/8 series increased by 166-216 yuan per tonne. Alumina exhibits strength overseas and weakness domestically, with domestic maintenance capacity resuming production, Indonesian policy restricting output expansion, and Middle East shipping issues generating premium demand for bagged alumina. Short-term overseas strength provides some sentiment support for domestic prices, but the overall oversupply pattern remains unchanged. Divergence between mining quotes and accepted prices persists, with the market yet to break out of its low range. For aluminum, UAE's Emirates Global Aluminium announced its smelter has been restored to 25% capacity. Continued arrivals in East China are putting discount pressure on spot prices, with holders controlling sales volumes while downstream maintains modest restocking. No seasonal peak inflection point has yet emerged, and continued destocking provides support for aluminum prices. However, accelerated overseas restart and subdued consumption seasonality cap upside potential, with key focus on destocking sustainability and downstream restocking signals ahead of the peak season.
Industrial silicon traded modestly firmer on August 26, with the main 2611 contract closing at 8,775 yuan per tonne, up 0.46% intraday, while open interest increased by 4,539 lots to 309,000 lots. The Bai Chuan industrial silicon spot reference price rose 21 yuan per tonne to 9,200 yuan per tonne. The lowest deliverable grade rebounded to 8,700 yuan per tonne, with the spot premium widening to 20 yuan per tonne. Polysilicon also traded firmer, with the main 2611 contract closing at 37,645 yuan per tonne, up 0.44% intraday. Open interest rose by 68 lots to 113,700 lots, while the lowest deliverable grade ticked up to 40,030 yuan per tonne, narrowing the spot premium to 2,395 yuan per tonne. A major Xinjiang producer has begun deploying production cuts for industrial silicon, but this news has circulated for nearly two weeks with the market having largely priced it in. Combined with hedging pressure above, sustained upside appears challenging. As downstream wafer producers have consumed their raw material inventories, silicon material plants have seen small actual transactions, with futures-market-linked traders becoming the preferred channel due to pricing advantages. This round of purchasing represents small-batch replenishment, still far from the industry's anticipated large-scale recovery. Battery cell and module segments have limited capacity to absorb high-priced raw materials, creating a stalemate where prices are quoted but no deals occur, making price hike transmission difficult. In the near term, polysilicon lacks clear directional movement during the early stage of price restructuring, with attention on whether actual transaction volumes can sustain and develop into scale inventory building.
Carbonate lithium futures saw the 2701 contract decline 1.17% to 152,160 yuan per tonne yesterday, with open interest increasing 4,552 lots to 358,800 lots. On the spot front, average battery-grade lithium carbonate prices fell 4,250 yuan per tonne to 152,750 yuan per tonne, while industrial-grade lithium carbonate dropped 4,250 yuan per tonne to 147,750 yuan per tonne. Battery-grade lithium hydroxide (coarse particle) declined 3,000 yuan per tonne to 141,000 yuan per tonne. Warrant inventories increased by 1,160 tonnes to 43,100 tonnes yesterday. On the news front, on August 26, the Yichun City Ecological Environment Bureau issued a statement regarding the lithium mining project environmental impact report by Yichun Times New Energy Mining Co., Ltd. for the Zhenkouli-Jianxiawo deposit in Jiangxi Province. During the public comment period for the proposed acceptance, the public raised questions about the website previously published by the construction unit. The bureau has withdrawn the proposed acceptance notice and will re-announce it after subsequent verification meets requirements. On the supply side, weekly production declined 145 tonnes to 23,007 tonnes, with August lithium carbonate production expected to increase 7% month-on-month to 113,000 tonnes. On the demand side, ternary material production is expected to rise 5% to 93,840 tonnes, lithium iron phosphate production up 5% to 565,100 tonnes, lithium cobalt oxide up 4% to 7,380 tonnes, and lithium manganese oxide up 11% to 11,920 tonnes. Lithium battery production is expected to grow 7% to 288.9 GWh. On the inventory front, large-sample weekly inventories fell 7,516 tonnes to 86,392 tonnes, with other segment inventories down 2,598 tonnes to 39,392 tonnes, smelter inventories down 2,936 tonnes to 11,486 tonnes, and downstream inventories down 1,981 tonnes to 35,515 tonnes. The current fundamental picture remains one of rapid destocking, with market sentiment and news flow causing repeated disruptions and amplified futures price volatility. Spot basis and warrant data remain contradictory, with attention on whether Zimbabwe supply increases materialize in September and vigilance regarding market sentiment impacts.
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