Copper prices experienced a slight overnight decline amid consolidation. The Shanghai copper VIX index hovered around 17.6, while the spot import window for refined copper in China remained open. On the macroeconomic front, U.S. retail sales for June increased by 0.2% month-on-month, aligning with market expectations. The previous month's figure was revised upward to a 1% gain, indicating resilient consumer spending that alleviated concerns about an economic slowdown. Additionally, the Philadelphia Fed Manufacturing Index for July surged to 41.4, significantly exceeding the forecast of 12.5 and the prior reading of 10.3, with the new orders component rising to 37 from 27.3. Geopolitical tensions persisted, with reports indicating continued talks between the U.S. and Iran alongside new U.S. airstrikes, marking the fifth consecutive night of military action. Inventory data showed LME copper stocks decreased by 1,675 tonnes to 300,600 tonnes, while Comex inventories rose by 8,083 tonnes to 626,742 tonnes. On the Shanghai Futures Exchange, copper warehouse receipts fell by 1,050 tonnes to 42,894 tonnes, and BC receipts dropped by 25 tonnes to 8,182 tonnes. Demand-side dynamics remain subdued, with downstream consumers purchasing only for immediate needs and showing little willingness to stock up at elevated prices. Robust U.S. economic and employment data overnight reinforced hawkish rhetoric from Federal Reserve officials, preventing market concerns over further rate hikes from easing. This led to a rebound in the U.S. dollar, exerting downward pressure on copper. Nevertheless, copper prices continue to trade near elevated levels, supported by supply-side disruption risks and consistent inventory drawdowns both domestically and internationally. The current macroeconomic volatility and potential liquidity risks remain underlying market concerns, casting doubt on copper's ability to break free from its current range. A cautious outlook is warranted.
Nickel & Stainless Steel
LME nickel rose 1.66% overnight to $17,110 per tonne, while Shanghai nickel gained 0.61% to 131,740 yuan per tonne. LME inventories increased by 300 tonnes to 274,848 tonnes, and SHFE warehouse receipts rose by 375 tonnes to 98,451 tonnes. The LME cash-to-3-month spread remained in contango, and the import premium for nickel held steady at -50 yuan per tonne. Regarding news flow, Indonesia's Eramet disclosed that PT Weda Bay Nickel is actively coordinating with the country's Ministry of Energy and Mineral Resources to adjust its 2026 work plan and production quota budget in accordance with official guidance. On July 10, Tri Winarno, Director General of Minerals and Coal at the ministry, stated that there would be no comprehensive increase in nickel ore quotas, with only limited additional allocations for domestic smelters facing raw material shortages, and the increment would not be substantial. LME data shows that as of June 30, nickel stocks of Chinese origin totaled 186,384 tonnes, up 738 tonnes from the previous month, while stocks of Indonesian origin reached 19,338 tonnes, an increase of 894 tonnes. Macro sentiment, along with export and quota-related policies, are driving a price recovery for nickel. Improved demand for primary nickel and weekly inventory drawdowns provide support, leading to modest short-term price strength. However, from an industry chain perspective, high inventory levels remain the core issue. Concurrently, nickel ore prices are likely to continue softening, potentially weakening cost support.
Alumina, Primary Aluminium & Aluminium Alloy
Alumina prices weakened slightly overnight, with the AO2609 contract closing at 2,691 yuan per tonne, down 0.59%, and open interest increasing by 8,623 lots to 376,000 lots. Aluminium prices firmed, with LME aluminium closing at $3,185 per tonne, up 1.11%, while stocks decreased by 1,500 tonnes to 281,600 tonnes. The SHFE AL2608 contract closed at 23,255 yuan per tonne, gaining 0.39%, with open interest down 3,433 lots to 169,000 lots. Aluminium alloy prices also edged higher, with the main AD2608 contract closing at 23,065 yuan per tonne, up 0.52%, and open interest rising by 63 lots to 19,473 lots. Spot alumina prices, as per SMM, retreated to 2,730 yuan per tonne. The spot premium for aluminium ingots turned into a discount of 10 yuan per tonne. Foshan A00 aluminium was quoted at 23,160 yuan per tonne, at a 10 yuan discount to Wuxi A00. Processing fees for aluminium rods held steady in Henan and Linyi, fell by 10 yuan/tonne in Xinjiang, Nanchang, and Guangdong, but rose by 60-80 yuan/tonne in Baotou and Wuxi. Processing fees for 1A60 aluminium rod declined by 50 yuan/tonne, held steady for the 6-series, dropped by 100 yuan/tonne for the 8-series, and increased by 20 yuan/tonne for low-carbon 6/8 series. The return of idled capacity in Shanxi and Guizhou, coupled with pressure from cancelled warrants and in-transit inventory, is significantly weighing on the spot market. Market premiums related to Guinea mining policy concerns have largely been priced out. With alumina prices approaching the breakeven level for low-cost capacity, the downside appears limited, suggesting a period of consolidation. Renewed geopolitical risk premiums from U.S.-Iran tensions have returned, shifting market drivers and providing fresh support for aluminium prices. Simultaneously, LME inventories hit a new low, and the pace of domestic social inventory drawdowns following the price pullback has far exceeded expectations, creating a temporary alignment with macro-driven fluctuations. However, with overseas restarts and weak seasonal demand leading to softer terminal orders, the upside potential appears constrained for now, and aluminium prices are expected to continue a narrow-range recovery.
Industrial Silicon & Polysilicon
Industrial silicon prices firmed on the 16th, with the main 2609 contract closing at 8,435 yuan per tonne, up 0.06% on the day, while open interest fell by 6,785 lots to 248,000 lots. The Baichuan spot reference price was 9,111 yuan per tonne, up 37 yuan from the previous session. The price for the lowest deliverable grade fell to 8,550 yuan/tonne, narrowing the spot premium to 165 yuan/tonne. Polysilicon prices weakened, with the main 2609 contract closing at 35,140 yuan per tonne, down 1.01%, and open interest increasing by 588 lots to 119,900 lots. The price for the lowest deliverable polysilicon grade fell to 35,270 yuan/tonne, with the spot premium at 265 yuan/tonne. Market support came from news of a major northern producer holding back sales, some capacity switching, and concentrated maintenance in Yili, Xinjiang. However, overall high operating rates in the north limit the actual impact. Restarts during the Southwest's wet season are largely complete, while new production controls in the organic silicon sector are expanding, causing the supply-demand gap to widen. A trend reversal for industrial silicon appears unlikely in the short term. Recent rumors about inspections targeting the actual energy consumption levels of polysilicon enterprises are providing ongoing policy-driven sentiment support. Fundamentally, high inventory pressure persists, and post-July production ramp-ups by leading players are introducing new marginal supply. A market inflection point has not yet emerged. Attention should be paid to merger & acquisition news and the pace of terminal project developments, awaiting a genuine convergence of fundamental and policy factors. Be cautious of continued price volatility.
Lithium Carbonate
The lithium carbonate futures 2609 contract rose 0.07% yesterday to 151,660 yuan per tonne, with intraday open interest down 14,512 lots to 404,200 lots. Weighted open interest decreased by 2,862 lots to 618,300 lots. Spot prices declined, with battery-grade lithium carbonate averaging 151,000 yuan/tonne, down 3,000 yuan, and industrial-grade lithium carbonate averaging 147,000 yuan/tonne. Battery-grade lithium hydroxide (coarse particle) fell by 2,650 yuan to 137,850 yuan/tonne. Warehouse receipt inventory decreased by 1,189 tonnes to 41,231 tonnes. On the news front, according to Custeel, as of July 14, congestion at two major Zimbabwean lithium export ports has led to slightly slower-than-expected shipment recoveries. The Shanghai Securities News reported uncertainty remains over whether the purported "restart" of the world's largest single lepidolite mine is genuine or merely nominal, pending the public release of its environmental impact assessment approval. On the supply side, weekly production fell by 307 tonnes week-on-week to 24,548 tonnes. July production is estimated at 115,410 tonnes, up 90 tonnes month-on-month, with spodumene-sourced output down 4,500 tonnes, lepidolite-sourced output up 2,700 tonnes, brine-sourced output up 1,390 tonnes, and recycled output up 500 tonnes. Demand-wise, July production schedules show ternary cathode material output up 3% month-on-month to 89,690 tonnes, lithium iron phosphate (LFP) cathode up 7% to 536,850 tonnes, lithium cobalt oxide up 3% to 7,740 tonnes, and lithium manganese oxide down 1% to 10,770 tonnes. Lithium battery production is scheduled to increase by 7% month-on-month, with domestic output up 7% and overseas output up 4%. Domestically, ternary power battery output is slated to rise 7%, LFP power battery output 9%, and LFP energy storage battery output 4%. Inventory data shows large-sample weekly stocks down 4,714 tonnes to 119,667 tonnes, while small-sample stocks fell 2,599 tonnes to 89,637 tonnes. Under the large-sample classification, inventories in other sectors decreased by 6,875 tonnes to 54,752 tonnes, smelter inventories rose by 858 tonnes to 13,273 tonnes, and downstream inventories increased by 1,303 tonnes to 51,642 tonnes. Futures prices weakened in early trading yesterday, but spot trading volume picked up. The basis has recently strengthened, and there are signs of price support and reluctance to sell. Concurrently, recent market news suggests the anticipated scale of supply shocks from Q3 mine restarts and Zimbabwean imports may be revised downward. This discrepancy in expectations could lead to short-term price recovery. Subsequent focus should be on whether the spot market provides further positive feedback.
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