Market activity for copper was subdued overnight, with prices trending lower both domestically and internationally. The profitability for importing physical refined copper into China saw a slight increase.
On the macroeconomic front, U.S. Treasury Secretary Yellen's comments regarding negotiations aimed at reintegrating nations like Iran, Venezuela, and Russia into the dollar-based settlement system, to bolster the dollar's global dominance, contributed to a stronger U.S. dollar index. This strength has exerted pressure on precious metals and the broader base metals complex. Concurrently, former President Trump's remarks urging oil companies to lower prices faster or face potential Department of Justice investigations added to market uncertainty.
On the demand side, the approach of the traditional low season has resulted in weaker restocking intentions among downstream consumers. The hawkish stance from the Federal Reserve, coupled with the U.S. government's efforts to strengthen the dollar's position, has fueled expectations of a tightening in global dollar liquidity. This sentiment is spilling over into overseas financial markets, elevating risk-off sentiment and weighing on copper prices. Given the current seasonal weakness in China, there is a possibility of another sharp price decline in the near term, making a cautious, wait-and-see approach prudent for the short term. Additionally, the price differential between Comex and LME copper has narrowed to around $0 per tonne, reducing the incentive for traders to hold inventory. Market participants are now awaiting the U.S. decision on copper tariffs scheduled for June 30th.
Nickel and Stainless Steel
Overnight, LME nickel prices fell 2.52% to $16,795 per tonne, while SHFE nickel declined 1.72% to 128,920 yuan per tonne. On the inventory front, LME stocks decreased by 690 tonnes to 275,448 tonnes, whereas SHFE warehouse receipts increased by 258 tonnes to 95,026 tonnes.
In terms of premiums and discounts, the LME cash-to-three-months spread remained in contango. The import premium for nickel rose by 100 yuan per tonne to -200 yuan per tonne.
Regarding news, industry sources indicate that by the end of June, the total volume of approved RKAB (Work Plan and Budget) mining permits for 2026 in Indonesia has already reached the upper limit initially planned by the country's Ministry of Energy and Mineral Resources for the year. As the period for applying for supplementary mid-year quotas, as mentioned by the Ministry, approaches, there are numerous market predictions about the total quota volume. The final approved total quota and its release schedule require close monitoring of actual market developments.
On the supply side, there are signs of proactive tightening. This is partly due to an Indonesian mine entering a maintenance phase related to quota issues, with attention focused on the quota situation for the second half of the year. Additionally, following previous policy adjustments to the HPM (Harga Patokan Mineral, or Mineral Reference Price), prices for nickel ore and sulfur have led to reduced operating rates at some Indonesian projects. However, a potential easing in sulfur supply later could improve the utilization rates of related production capacity.
While supply is tightening in a sustained and segmented manner, based on overall production schedules, the reductions in June are more pronounced in nickel pig iron and a small amount of refined nickel, while other products have seen increases. Simultaneously, inventory pressure for primary nickel continues to build.
On the demand side, production schedules for June suggest ternary cathode material output is expected to remain flat month-on-month, while nickel consumption in stainless steel is projected to decline slightly.
From the perspective of the nickel industry chain, inventory pressure remains the core issue. During yesterday's day session, prices were influenced by news regarding Indonesian quotas, but as this remains unconfirmed, the risk of chasing the market lower in the short term is significant. It is important to note that if quotas continue to be issued in the second half of the year, price pressure may persist.
Alumina, Primary Aluminum, and Aluminum Alloy
Alumina prices were weaker overnight, with the AO2609 contract closing at 2,840 yuan per tonne, down 0.84%. Open interest decreased by 3,390 lots to 278,000 lots. LME aluminum gained 0.45% overnight to close at $3,129 per tonne, with inventories dropping by 1,500 tonnes to 310,200 tonnes. The SHFE AL2607 contract fell 2.13% to 22,970 yuan per tonne, with open interest increasing by 13,303 lots to 303,000 lots.
Aluminum alloy prices showed relative strength, with the main AD2608 contract closing at 22,720 yuan per tonne overnight, down 1.69%. Open interest increased by 72 lots to 16,478 lots.
In the spot market, SMM's alumina price rose to 2,754 yuan per tonne. The discount for aluminum ingot spot prices narrowed to 40 yuan per tonne. Foshan A00 aluminum was quoted lower at 23,450 yuan per tonne, at a 20 yuan per tonne discount to Wuxi A00. Aluminum billet processing fees remained steady in Baotou and Linyi but increased by 30-130 yuan per tonne in other regions. Processing fees for 1A60 series aluminum rod increased by 100 yuan per tonne, as did fees for 6/8 series, while fees for low-carbon 6/8 series decreased by 266 yuan per tonne.
Prices were influenced by news of delays in bauxite mining policies, coupled with actual supply disruptions in China's domestic alumina market due to environmental inspections. This has led to mixed marginal pricing for alumina, though it retains some underlying support.
For primary aluminum, the Federal Reserve's decision to hold rates steady, combined with the fading of geopolitical risk premiums, has shifted market expectations. While a supply deficit persists overseas, and the broader base metals complex remains pressured by macro sentiment, aluminum has shown some resilience against declines due to its stronger-than-expected inventory drawdown. There is potential for upward momentum going forward. Focus will be on downstream purchasing enthusiasm if aluminum prices experience a pullback.
Industrial Silicon and Polysilicon
On the 24th, industrial silicon prices were weaker, with the main 2609 contract closing at 8,495 yuan per tonne, down 0.06% for the day. Open interest decreased by 702 lots to 272,200 lots. The Baichuan reference price for industrial silicon was 9,143 yuan per tonne, unchanged from the previous trading day. The price for the lowest deliverable grade fell to 8,600 yuan per tonne, widening the spot premium to 210 yuan per tonne.
Polysilicon prices were firmer, with the main 2609 contract closing at 36,485 yuan per tonne, up 1.59% for the day. Open interest increased by 1,965 lots to 107,800 lots. The standard for the lowest deliverable grade was adjusted to 35,985 yuan per tonne, with a spot premium of 120 yuan per tonne.
Following the holiday, industrial silicon producers in Sichuan are gradually resuming operations at a faster pace, primarily for oxygenated 551 and 421 grades, leading to a narrowing price gap between high and low-quality material. Downstream sectors have yet to engage in concentrated restocking. With marginal pressure building on industrial silicon inventories and the overall base metals complex acting as a drag, significant upside appears limited. After the conclusion of the photovoltaic inspection meetings and the fading of production restriction expectations, the market has returned to a pattern of weak consolidation. It is worth noting that news-driven volatility may recur, warranting caution against sharp price swings. Market participants are focusing on news from polysilicon industry meetings this week.
Lithium Carbonate
Yesterday, the lithium carbonate futures 2609 contract rose 3.93% to 162,740 yuan per tonne, with daily open interest increasing by 2,311 lots to 452,000 lots.
In the spot market, the average price for battery-grade lithium carbonate fell by 1,000 yuan per tonne to 157,500 yuan per tonne. The average price for industrial-grade lithium carbonate also decreased by 1,000 yuan per tonne to 153,500 yuan per tonne. The price for battery-grade lithium hydroxide (coarse particles) dropped by 750 yuan per tonne to 144,000 yuan per tonne.
Warehouse receipt inventory decreased by 1,345 tonnes yesterday to 49,115 tonnes.
On the supply side, weekly production increased by 85 tonnes week-on-week to 26,429 tonnes. June production is estimated to reach 116,275 tonnes, up 2.6% month-on-month.
Regarding demand, according to SMM data, June production for ternary cathode material is forecast to remain flat month-on-month at 88,990 tonnes. Lithium iron phosphate (LFP) cathode output is expected to grow 3% month-on-month to 504,150 tonnes. Cobalt acid lithium output is projected to increase 3% to 8,250 tonnes, while lithium manganate output is anticipated to decline 2% to 10,780 tonnes. Based on production schedules from other institutions, cathode material output in June is expected to rise 6.5% month-on-month, with battery cell production forecast to increase 6.2%. According to broader market production schedule statistics, global lithium-ion battery production is projected to grow 8.9% month-on-month.
On the inventory front, large-sample inventories decreased by 1,412 tonnes week-on-week to 132,991 tonnes, while small-sample inventories fell by 957 tonnes to 97,829 tonnes. Using the large-sample口径, inventories in other segments decreased by 1,485 tonnes week-on-week to 69,874 tonnes. Smelter inventories dropped by 121 tonnes to 16,494 tonnes, while downstream inventories increased by 194 tonnes to 46,623 tonnes.
Setting aside the potential impact of the resumption of operations at the Ganfeng Lithium mine, an analysis of the supply-demand balance suggests the short-term pace of inventory drawdown may exhibit a pattern of initially faster then slower movement, influenced by shipping cycles for lithium ore from Zimbabwe. Market attention is on near-term support levels and the interaction between equity and commodity markets.
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