Copper: Overnight, both domestic and international copper prices experienced a volatile decline. Macroeconomic factors were influenced by sudden U.S.-Iran tensions, causing market turbulence related to Middle East instability and the strategic Strait of Hormuz. This sparked parallel movements in market panic and inflation expectations, simultaneously impacting global financial markets. On the inventory front, LME stocks increased by 3,975 tonnes to 257,675 tonnes, while SHFE copper warehouse receipts rose by 5,287 tonnes to 295,881 tonnes. Demand-side attention remains focused on post-holiday resumption of downstream operations. In the short term, macroeconomic risks coexist with fundamental pressures. The larger-than-expected accumulation of inventories both domestically and internationally may trigger a market reassessment of prior supply-demand expectations. With downstream purchasing sentiment still weak, upward price momentum faces significant challenges, suggesting continued risk of a secondary correction in copper prices. However, opportunities may emerge from risks. Once financial markets have largely priced in these risks and inventory builds begin to taper, against a macroeconomic backdrop of positive signals from both China and the U.S., the market could re-enter a phase of rising risk appetite. Strategically, maintaining a buy-on-dips approach is advised.
Nickel & Stainless Steel: Overnight, LME nickel fell 2.77% to $17,205 per tonne, while SHFE nickel declined 2.55% to 136,300 yuan per tonne. LME inventories held steady at 287,976 tonnes, while SHFE warehouse receipts increased by 590 tonnes to 53,721 tonnes. In terms of premiums, the LME 0-3 month backwardation remained negative; import nickel premiums rose by 50 yuan per tonne to 150 yuan per tonne. Tightening quotas for nickel ore, combined with current and anticipated supply shortages, have pushed nickel ore premiums gradually higher to $35-40 per wet tonne. Nickel pig iron prices have also strengthened, elevating the pyrometallurgical cost support for nickel prices. Stainless steel inventories accumulated seasonally after the holiday, with March crude steel production schedules showing a month-on-month increase, providing relatively firm cost support. In the new energy sector, third-party data indicates ternary material production in March is also expected to rise month-on-month. Fundamentally, cost remains the core support. Current weekly data still shows significant inventory pressure for Class I nickel. Opportunities for light long positions near the cost line warrant continued attention, alongside monitoring Class I nickel inventory levels. A significant drawdown in visible inventories could provide further positive feedback to prices. Caution is advised regarding overseas macroeconomic risks.
Alumina, Primary Aluminum & Aluminum Alloy: Overnight, alumina prices showed strength. The AO2605 contract closed at 2,764 yuan per tonne, up 0.22%, with open interest decreasing by 4,083 lots to 340,000 lots. Primary aluminum prices also firmed, with the AL2604 contract closing at 24,195 yuan per tonne, up 0.62%, and open interest falling by 5,239 lots to 273,000 lots. Aluminum alloy prices strengthened, with the main AD2604 contract closing at 23,015 yuan per tonne, up 0.55%, and open interest decreasing by 37 lots to 6,838 lots. On the spot market, SMM's alumina price halted its decline and rose to 2,627 yuan per tonne. The spot discount for aluminum ingots held steady at 170 yuan per tonne. Foshan A00 aluminum prices recovered to 23,620 yuan per tonne, trading flat against Wuxi A00. Aluminum billet processing fees held steady in Henan, Linyi, and Wuxi, while increasing by 20-80 yuan per tonne in Xinjiang, Baotou, Nanchang, and Guangdong. Aluminum rod processing fees for the 1A60 series remained stable, as did fees for the 6/8 series, while low-carbon aluminum rod fees increased by 195 yuan per tonne. Production cuts at major northern alumina refineries, coupled with seasonal consumption of raw material inventories at aluminum smelters, have led to a slight drawdown in alumina stocks, prompting the spot price recovery. However, the accumulation of futures warehouse receipts and the post-holiday restart of some idled capacity continue to cap upside potential. Inventories are expected to continue declining slightly, with alumina prices trending weakly stable. Post-holiday concentrated arrivals and manpower shortages at stations are temporarily limiting logistics turnover efficiency. Aluminum ingot inventory accumulation is expected to continue, potentially peaking in mid-to-late March. Short-term supply and demand remain mismatched, with the tug-of-war between post-holiday work resumption and inventory builds restricting upside movement. The key focus is the timing of any improvement in the efficiency of aluminum ingot inventory accumulation.
Industrial Silicon & Polysilicon: On March 2, industrial silicon prices showed modest strength. The main SI2605 contract closed at 8,325 yuan per tonne, up 0.24% for the day, with open interest increasing by 5,876 lots to 334,000 lots. The Baichuan spot reference price for industrial silicon was 9,458 yuan per tonne, unchanged from the previous day. The price for the lowest deliverable grade fell to 8,800 yuan per tonne, widening the spot premium to 475 yuan per tonne. Polysilicon prices weakened. The main SI2605 contract closed at 44,930 yuan per tonne, down 2.12% for the day, with open interest rising by 556 lots to 40,753 lots. The Baichuan price for N-type polysilicon dropped to 51,900 yuan per tonne, with the lowest deliverable grade also at 51,900 yuan per tonne, widening the spot premium to 6,970 yuan per tonne. Minor production restarts occurred in northwest China's industrial silicon sector, while downstream stockpiling remained sluggish. The industrial silicon market is beginning to price in post-holiday pessimism and high inventory pressure, capping upside potential. New polysilicon order finalizations have stalled. As the final window for March export rush ends, despite some residual demand momentum from end-users, high spot inventory pressure and weak procurement are making it difficult for polysilicon producers to maintain firm pricing, limiting upstream demand transmission. Coupled with poor spot sales leading to continued registration of warehouse receipts, downward pressure on futures prices persists. Polysilicon continues to face pressure in its search for a bottom, with the market awaiting clearer policy signals and a post-holiday pickup in end-user demand.
Lithium Carbonate: Yesterday, the lithium carbonate futures contract LC2605 fell 0.96% to 172,020 yuan per tonne. Spot prices saw battery-grade lithium carbonate average prices increase by 500 yuan per tonne to 172,500 yuan per tonne, while industrial-grade average prices also rose by 500 yuan per tonne to 169,000 yuan per tonne. Battery-grade lithium hydroxide (coarse particle) prices held steady at 162,600 yuan per tonne. Warehouse receipt inventory decreased by 265 tonnes to 38,196 tonnes. On the supply side, the latest production data showed a week-on-week increase of 1,638 tonnes to 21,822 tonnes. This included a 1,460-tonne increase from spodumene-based production to 13,484 tonnes, a 150-tonne decrease from lepidolite-based production to 2,812 tonnes, a 250-tonne increase from salt lake-based production to 3,290 tonnes, and a 78-tonne increase from recycling-based production to 2,236 tonnes. Domestic production in March is forecast to increase 28% month-on-month to 106,390 tonnes. On the demand side, March production of ternary materials is projected to rise 19% month-on-month to 84,360 tonnes, while lithium iron phosphate (LFP) production is expected to increase 24% month-on-month to 430,000 tonnes. Social inventories of lithium carbonate fell by 2,839 tonnes week-on-week to 100,093 tonnes. Inventories at downstream users decreased by 4,471 tonnes to 40,021 tonnes, rose by 170 tonnes in other segments to 41,690 tonnes, and increased by 1,462 tonnes at the upstream level to 18,382 tonnes. Zimbabwe's suspension of lithium concentrate exports has raised supply concerns. Zimbabwe was previously expected to supply around 200,000 tonnes LCE by 2026, accounting for approximately 10% of global supply. The specifics and duration of the policy impact remain uncertain but could affect actual supply from mid-to-late April or May onwards. If the suspension is prolonged, the possibility of compensatory shipments upon resumption also warrants caution. From a supply-demand balance perspective, March is expected to see further inventory drawdowns. With total inventory covering less than one month of consumption, restocking demand is anticipated to provide strong support against price declines. However, it is important to note that the transmission of lower raw material costs takes time. Considering the immediate profitability of LFP battery cells, maintaining prices above 200,000 yuan per tonne could potentially trigger negative feedback from end-users.
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