Copper: Overnight, domestic and international copper prices experienced a volatile retreat, with domestic refined copper imports remaining at a loss. On the macroeconomic front, the number of initial jobless claims in the U.S. was 208,000. Although this figure showed a slight increase from the previous 199,000, it still came in below the market expectation of 212,000, indicating the underlying resilience of the labor market. A Federal Reserve report revealed that consumers now expect prices to rise by 3.4% over the next year, up from 3.2% in November. Significant divergence persists among Fed officials, with some more concerned about inflation and others viewing rising unemployment as the greater risk, keeping expectations for a rate cut at the end-of-month Fed meeting highly uncertain. Regarding inventories, LME stocks decreased by 2,150 tonnes to 141,075 tonnes; Comex inventories increased by 2,255 tonnes to 467,165 tonnes; SHFE copper warehouse receipts rose by 12,211 tonnes to 108,685 tonnes, while BC copper holdings remained at 1,053 tonnes. On the demand side, persistently high copper prices have led to some slowdown in end-user orders, with the market maintaining rigid procurement demand. As the off-season approaches, domestic inventories are beginning to accumulate, and market divergence is widening. The author believes an orderly adjustment would be beneficial for subsequent market trends, and the sustainability of this dynamic warrants close attention.
Nickel & Stainless Steel: Overnight, LME nickel fell 3.34% to $17,065 per tonne, while SHFE nickel dropped 4.48% to 136,510 yuan per tonne. Inventory-wise, LME stocks increased by 666 tonnes to 276,300 tonnes, and SHFE warehouse receipts rose by 554 tonnes to 39,330 tonnes. Looking at spreads, the LME 0-3 month spread remained in negative territory; the import nickel premium held steady at 600 yuan per tonne. On the news front, Indonesia's Minister of Energy and Mineral Resources, Bahlil Lahadalia, stated yesterday that Indonesia will adjust its nickel quotas based on industry demand. Reducing quotas is intended to support the price of Indonesian mineral products, and similar measures will be implemented to bolster nickel prices, though he did not disclose the quota level for 2026, only reiterating that adjustments will be made to meet the needs of local smelters. Fundamentally, as prices rose rapidly, product prices across the industry chain strengthened. Primary nickel production schedules surged 18.5% month-on-month to 37,200 tonnes, and hedging demand may exert some pressure on futures prices. Indonesian policy is stimulating nickel price strength, but the actual implementation of quotas will take time. It is advisable to monitor market sentiment and watch for buying-on-dips opportunities near the cost line.
Alumina, Primary Aluminium & Aluminium Alloy: Overnight, alumina prices weakened. The AO2605 contract closed at 2,797 yuan per tonne, down 2.95%, with open interest increasing by 6,336 lots to 562,000 lots. SHFE aluminium also trended weaker, with the AL2602 contract closing at 23,710 yuan per tonne, down 1.17%, and open interest decreasing by 9,237 lots to 191,000 lots. Aluminium alloy prices weakened as well; the main AD2603 contract closed at 22,495 yuan per tonne, down 1.42%, with open interest slightly down by 56 lots to 20,952 lots. In the spot market, the SMM alumina price retreated to 2,676 yuan pertonne. The spot discount for aluminium ingots narrowed to 150 yuan per tonne. Foshan A00 aluminium was quoted lower at 24,030 yuan per tonne, at a 30 yuan per tonne discount to Wuxi A00. Aluminium billet processing fees held steady in Baotou and Linyi but decreased by 10-100 yuan per tonne in Xinjiang, Guangdong, Nanchang, and Wuxi. Processing fees for aluminium rod 1A60 series and 6/8 series remained stable, while low-carbon aluminium rod processing fees fell by 65 yuan per tonne. With bauxite reserves relatively high, alumina plants currently show little enthusiasm for premium purchases. Recent maintenance of calcination furnaces in southern regions, coupled with the completion of long-term contract signings with primary aluminium smelters and a significant drop in new quarterly bauxite agreement prices, suggests a low probability of large-scale maintenance shutdowns at alumina plants in the near term. News of encouragement for industry consolidation and restructuring from the National Development and Reform Commission (NDRC) has tempered bearish momentum in the futures market, with far-month contracts expected to maintain a premium and spot prices converging towards futures. After a significant rebound, bullish confidence has waned somewhat, and upward pressure has reemerged, making chasing the rally inadvisable. Overheated sentiment in precious metals has cooled, and combined with increased shipments of aluminium ingots from Xinjiang and reduced outflows from major consumption areas, this creates some inventory accumulation pressure. As the Spring Festival falls later this year, the downstream restocking period is expected to be prolonged, potentially extending the inventory build-up rhythm. This poses a new challenge for further significant gains in aluminium prices. Key factors to watch include the pace of U.S. interest rate cuts and the rhythm of downstream stockpiling.
Industrial Silicon & Polysilicon: On the 8th, industrial silicon prices weakened. The main 2605 contract closed at 8,535 yuan per tonne, down 4.53% for the day, with open interest increasing by 15,797 lots to 261,000 lots. The Baichuan spot reference price for industrial silicon held steady at 9,628 yuan per tonne compared to the previous session. The price for the lowest deliverable grade remained stable at 8,850 yuan per tonne, with the spot market shifting from a discount to a 315 yuan per tonne premium to the futures price. Multiple polysilicon contracts hit downside limits. The main 2605 contract closed at 53,610 yuan per tonne, down the maximum allowed 9% for the day, with open interest decreasing by 9,751 lots to 58,000 lots. The Baichuan price for N-type polysilicon for redoping rose to 55,500 yuan per tonne, while the price for the lowest deliverable polysilicon grade was 53,500 yuan per tonne, shifting the spot market from a discount to a 1,890 yuan per tonne premium to the main futures contract. The production focus for industrial silicon continues to shift northward. Although environmental production controls have led to some output reductions, this is insufficient to offset the magnitude of the demand decline. Polysilicon faces production caps, the organosilicon sector is implementing coordinated output cuts, and aluminium alloy production is being curtailed for environmental reasons. While industrial silicon has cost support, it lacks sustained upward momentum, and the strategy of selling into strength at high levels remains appropriate. The core trading logic for polysilicon revolves around the establishment of production capacity platforms and supply-side control through measures resembling state purchasing and storage. However, with such storage actions迟迟不落地, market concerns about potential changes are growing. Furthermore, several rounds of margin hikes and position limits by the exchange, combined with a significant alleviation of the previously low warehouse receipt pressure, have dissipated the overheated speculative sentiment. As the market re-evaluates profit distribution within the industry chain and downstream production cuts, the potential for further premium expansion in polysilicon prices appears limited. Given the high current market volatility, a light-position, wait-and-see approach is recommended.
Lithium Carbonate: Yesterday, the lithium carbonate futures 2605 contract rose 2.46% to 145,000 yuan per tonne. In the spot market, the average price for battery-grade lithium carbonate increased by 5,000 yuan per tonne to 138,500 yuan per tonne, while the average price for industrial-grade lithium carbonate also rose by 5,000 yuan per tonne to 135,000 yuan per tonne. The price for battery-grade lithium hydroxide (coarse particle) increased by 4,500 yuan per tonne to 128,500 yuan per tonne. Regarding warehouse receipts, inventory increased by 590 tonnes yesterday to 25,770 tonnes. On the news front, the Ministry of Industry and Information Technology (MIIT), the National Development and Reform Commission (NDRC), the State Administration for Market Regulation (SAMR), and the National Energy Administration (NEA) recently held a joint symposium on the power and energy storage battery industry to study and deploy measures for further standardizing competition order within the sector. On the supply side, weekly production increased by 115 tonnes week-on-week to 22,535 tonnes. This included a 35-tonne increase from spodumene-based production to 13,959 tonnes, a 20-tonne increase from lepidolite-based production to 2,956 tonnes, a 40-tonne increase from salt lake-based production to 3,185 tonnes, and a 20-tonne increase from recycled material-based production to 2,435 tonnes. Lithium carbonate production for January 2026 is forecast to decrease by 1.2% month-on-month to 97,970 tonnes. On the demand side, ternary material production for January 2026 is projected to fall by 5% month-on-month to 78,180 tonnes; lithium iron phosphate (LFP) cathode material production is expected to drop by 10% month-on-month to 363,400 tonnes. Ternary power battery production for January 2026 is forecast to decline by 6.15% month-on-month to 28.7 GWh, while LFP power battery production is expected to decrease by 9.77% month-on-month to 90.01 GWh. Conversely, LFP energy storage battery production is projected to increase by 0.99% month-on-month to 63.15 GWh. Regarding inventories, weekly social inventories of lithium carbonate increased by 337 tonnes week-on-week to 109,942 tonnes. Inventories at downstream players decreased by 2,458 tonnes to 36,540 tonnes, inventories in other segments of the chain increased by 2,080 tonnes to 55,020 tonnes, and inventories at upstream producers increased by 715 tonnes to 18,382 tonnes. Amidst disruptions from geopolitics and policy factors, there are market concerns about the actual supply of lithium resources. Concurrently, if progress is made in adjusting industry pricing mechanisms, cathode production schedules might need upward revision, and price increases could be transmitted more smoothly downstream. The key consideration would then become the acceptance of higher prices by downstream/end-users, although this is difficult to disprove in the short term. Furthermore, given the current inventory structure and the medium-to-long-term trading logic that is bullish on lithium prices, we believe that restocking demand will likely emerge even if prices dip. As long as demand concerns are not substantiated, prices are generally prone to rise rather than fall. In the short term, fundamentals are marginally weakening or likely to lead to high volatility. The 150,000 yuan per tonne level is a key level to watch, along with developments from the battery industry symposium.
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