Copper: Overnight, both domestic and international copper prices experienced volatile weakness, while the import window for domestic spot refined copper opened. Macro-wise, the US-Iran conflict remains deadlocked. Former US President Trump stated that most NATO allies have expressed reluctance to be drawn into US military action against Iran, adding that the US "does not need anyone's help." Israel claimed that two senior Iranian officials were "eliminated." The Federal Reserve is scheduled to release its March interest rate decision and dot plot early tomorrow morning. Markets widely anticipate no change in rates, but the focus will be on how Chair Powell assesses the "two-way risks" to inflation and growth posed by the oil price surge triggered by Middle East conflicts. Inventory-wise, LME stocks increased by 18,775 tonnes to 330,375 tonnes; Comex stocks decreased by 1,268 tonnes to 533,760 tonnes; SHFE copper warehouse receipts rose by 1,291 tonnes to 324,289 tonnes; BC copper remained at 15,870 tonnes. Market concerns persist over an escalation of the US-Iran conflict, with overseas financial markets also showing instability. Under dual pressures from worries about economic growth and liquidity, copper prices are trending weaker. In the short term, monitor the support level within the range of 90,000 to 100,000 yuan per tonne. If the pace of inventory accumulation slows both domestically and internationally and the spot discount narrows, consider light long positions to bet on a seasonal rebound. However, if geopolitical conflicts continue to escalate, the market may continue pricing in macro risks, warranting a continued wait-and-see approach for copper prices.
Nickel & Stainless Steel: Overnight, LME nickel fell 1.32% to $17,255 per tonne, while SHFE nickel dropped 0.95% to 135,850 yuan per tonne. On inventories, LME stocks decreased by 174 tonnes to 283,740 tonnes, while SHFE warehouse receipts fell by 60 tonnes to 57,247 tonnes. In terms of premiums/discounts, the LME 0-3 month spread remained in negative territory; the import nickel premium/discount rose by 100 to a discount of 50 yuan per tonne. Tight nickel ore supply and rising sea freight costs continue to push nickel ore prices higher. Weekly nickel iron offers and transaction prices also increased. However, weekly social inventories of primary nickel rose significantly, indicating considerable pressure. With Indonesia tightening nickel ore quotas, supply-side disruptions have re-emerged. It is worth noting that there are expectations for additional quotas in July, and primary nickel inventories remain high. Nevertheless, given the ongoing strength in cost-side support, short-term long opportunities near the cost line may still be considered, while remaining cautious of macro headwinds.
Alumina, Primary Aluminum & Aluminum Alloy: Overnight, alumina prices moved higher with volatility. The AO2605 contract closed at 3,076 yuan per tonne, up 1.59%, with open interest increasing by 14,070 lots to 295,000 lots. SHFE aluminum weakened slightly, with the AL2604 contract closing at 24,915 yuan per tonne, down 0.52%, and open interest rising by 209 lots to 311,000 lots. Aluminum alloy prices also softened, with the AD2604 contract closing at 23,635 yuan per tonne, down 0.44%, and open interest up 6 lots to 5,304 lots. On the spot market, the SMM alumina price rose to 2,697 yuan per tonne. The spot discount for aluminum ingots widened to 210 yuan per tonne. Foshan A00 aluminum was quoted at 24,910 yuan per tonne, at parity with Wuxi A00. Aluminum billet processing fees held steady in Baotou, Henan, and Linyi, but fell by 50-100 yuan per tonne in Xinjiang, Nanchang, Guangdong, and Wuxi. Processing fees for aluminum rod (1A60 series) held steady, as did those for 6/8 series rods, while low-carbon aluminum rod fees increased by 151 yuan per tonne. Guinea plans to tighten ore supply, and mines are struggling to secure vessels at suitable freight rates, leading to continued delays in overall shipping schedules. Alumina raw materials originally destined for the Middle East are being diverted to other regions at lower prices due to blocked straits, narrowing the price gap between domestic and international markets and restoring import profitability. Rising freight costs for ore are providing upward support for alumina. Raw material inventories in the Middle East are reportedly bottoming out, and potential production cuts could affect Emirates Global Aluminium, intensifying supply disruption risks. Overseas markets are experiencing a risk-averse "aluminum rush." LME squeeze risks are boosting overseas prices, while domestic inventory accumulation and a slow demand recovery are limiting gains. In this context of stronger external and weaker internal markets, domestic funds await a turning point signal to build momentum. Note that aluminum billets have begun destocking ahead of ingots, suggesting potential for domestic prices to follow the overseas rally.
Industrial Silicon & Polysilicon: On the 17th, industrial silicon prices weakened with volatility. The main 2605 contract closed at 8,560 yuan per tonne, down 1.72% on the day, with open interest increasing by 4,057 lots to 241,000 lots. The Baichuan spot reference price for industrial silicon was 9,313 yuan per tonne, unchanged from the previous day. The price for the lowest deliverable grade rebounded to 8,800 yuan per tonne, with the spot premium widening to 240 yuan per tonne. Polysilicon prices also weakened. The main 2605 contract closed at 41,670 yuan per tonne, down 0.9% on the day, with open interest decreasing by 549 lots to 34,098 lots. The Baichuan price for N-type polysilicon (recycled material) fell to 45,500 yuan per tonne. The price for the lowest deliverable polysilicon grade also dropped to 45,500 yuan per tonne, with the spot premium narrowing to 3,830 yuan per tonne. Obstacles to production resumption in Xinjiang's industrial silicon sector are being offset by limited restarts in Southwest China, creating a structural balance. Rising costs for petroleum coke feedstock and grid electricity tariffs in Xinjiang are providing cost support. Downstream demand consists of essential restocking with little willingness for incremental purchases. Industrial silicon futures are trading in a narrow range, while spot prices have stabilized at lower levels. Actual polysilicon transactions continue to gravitate towards lower prices. Some major plants have scheduled production starts for March, indicating an end to the supply contraction trend. New inventory is increasingly being transferred to warehouse receipts to alleviate pressure at plant warehouses. Downstream wafer procurement remains sluggish, suggesting polysilicon prices will likely continue bottoming out with adjustments in the short term. The market awaits specific post-NPC policy signals regarding anti-internal competition in the光伏 (photovoltaic) sector, which could potentially trigger positive sentiment.
Lithium Carbonate: Yesterday, the lithium carbonate futures 2605 contract rose 0.39% to 155,320 yuan per tonne. Spot price-wise, the average price for battery-grade lithium carbonate increased by 1,500 yuan per tonne to 158,000 yuan per tonne. The average price for industrial-grade lithium carbonate rose by 1,500 yuan per tonne to 154,500 yuan per tonne. The price for battery-grade lithium hydroxide (coarse particle) increased by 500 yuan per tonne to 150,000 yuan per tonne. Regarding warehouse receipts, inventory increased by 72 tonnes yesterday to 36,465 tonnes. On the supply side, weekly production increased by 836 tonnes to 23,426 tonnes. This included a 620-tonne increase from spodumene-based production to 14,534 tonnes, a 105-tonne increase from lepidolite-based production to 2,937 tonnes, a 20-tonne increase from salt lake-based production to 3,495 tonnes, and a 91-tonne increase from recycling-based production to 3,460 tonnes. March production is forecast to increase 28% month-on-month to 106,390 tonnes. On the demand side, weekly production of ternary materials increased by 406 tonnes to 16,924 tonnes, with inventories up 208 tonnes to 18,019 tonnes. Weekly production of lithium iron phosphate (LFP) increased by 5,050 tonnes to 101,725 tonnes, with inventories up 5,251 tonnes to 105,780 tonnes. March production of ternary materials is forecast to increase 19% month-on-month to 84,360 tonnes, while LFP production is forecast to rise 24% to 430,000 tonnes. Regarding inventories, weekly social inventories of lithium carbonate decreased by 414 tonnes to 98,959 tonnes. Inventories at downstream users increased by 1,890 tonnes to 45,647 tonnes, inventories in other segments decreased by 1,120 tonnes to 37,020 tonnes, and upstream inventories decreased by 1,184 tonnes to 16,292 tonnes. Based on production schedules, the pace of inventory drawdown is in line with expectations, with the total inventory turnover days dropping to 27.8 days. The absolute decline in inventory levels and the increasing restocking coefficient downstream are providing clear support for prices. However, it is important to note that there are no significant market contradictions currently. Monitor the concentrated shipping situation following the resumption of exports from Zimbabwe. Breaking previous highs would require more definitive positive catalysts, but considering long positions on dips remains a viable strategy.
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