Copper: (Zhan Dapeng, Practitioner ID: F3013795; Trading Advisory ID: Z0013582) Overnight, copper prices both domestically and internationally surged before retreating, while the spot import loss for domestic refined copper narrowed. On the macroeconomic front, the U.S. ISM Services PMI for January came in at 53.8, unchanged from December and matching the highest level since October 2024, beating market expectations; however, the new orders sub-index showed a slowdown. U.S. ADP employment increased by 22,000 jobs in January, significantly lower than the market forecast of 45,000, indicating a potential loss of momentum in the labor market. Regarding inventory, LME stocks rose by 2,525 tonnes to 178,650 tonnes; Comex inventory increased by 1,716 tonnes to 529,968 tonnes; SHFE copper warrant stocks grew by 751 tonnes to 159,772 tonnes, while BC copper warrants remained at 10,615 tonnes. In terms of news, Duan Shaofu, Deputy Secretary-General of the China Nonferrous Metals Industry Association, suggested improving the copper resource reserve system. Besides expanding the scale of national strategic copper reserves, he proposed studying the inclusion of copper concentrate, which has large trading volumes and is easily liquidated, into the reserve scope. After gradually digesting the impact from the adjustment in precious metals, copper prices rebounded on the back of news-driven stimulus. However, the copper market still faces challenges from weak spot fundamentals, continuously accumulating inventories, and a demand vacuum around the Spring Festival holiday. Prices are likely to remain volatile around the holiday period, warranting caution against chasing the rally. Nevertheless, the rigid constraints on the copper concentrate supply side and the certainty of long-term demand mean that any significant price decline is expected to attract long-term allocation capital and industrial buying interest. This suggests that adjustments around the Spring Festival could lay a more solid foundation for medium- to long-term copper price appreciation.
Nickel & Stainless Steel: (Zhu Xi, Practitioner ID: F03109968; Trading Advisory ID: Z0021609) Overnight, LME nickel fell 0.37% to $17,330 per tonne, while SHFE nickel declined 0.25% to 135,600 yuan per tonne. Inventory-wise, LME stocks increased by 786 tonnes to 286,314 tonnes, whereas SHFE warrant stocks decreased by 108 tonnes to 48,072 tonnes. Looking at spreads, the LME 0-3 month spread remained in negative territory; the import nickel spread dropped by 50 yuan/tonne to -100 yuan/tonne. Fundamentally, prices for nickel ore and nickel pig iron (NPI) have strengthened on transactions, potentially reflecting concerns over tight resource supply, thereby pushing up cost support from the boundary. For stainless steel, weekly inventories accumulated due to the influence of the February Spring Festival holiday, although supply-side maintenance activities were prevalent. In the new energy sector, MHP prices remained firm, providing relatively strong cost support for nickel sulfate; however, spot purchasing and sales were relatively sluggish, and production of ternary materials is also expected to weaken month-on-month. Overall, while phased demand has weakened sequentially, cost support remains robust and is expected to provide strong underpinning for prices. Market sentiment has shown some improvement, and news from Indonesia continues to cause disturbances. Opportunities to cautiously test long positions near the cost line may be considered, but vigilance is needed against potential market sentiment resonance.
Alumina, Primary Aluminium & Aluminium Alloy: (Wang Heng, Practitioner ID: F3080733; Trading Advisory ID: Z0020715) Overnight, alumina prices weakened slightly. The AO2605 contract closed at 2,788 yuan/tonne, down 0.85%, with open interest increasing by 7,776 lots to 383,000 lots. Primary aluminium prices on the SHFE also weakened overnight; the AL2603 contract settled at 23,690 yuan/tonne, a decrease of 0.92%, with open interest dropping by 7,603 lots to 217,000 lots. Aluminium alloy prices trended weaker; the main AD2603 contract finished at 22,215 yuan/tonne, down 0.58%, with open interest reduced by 113 lots to 4,417 lots. On the spot side, SMM's alumina price fell to 2,619 yuan/tonne. The spot discount for aluminium ingots narrowed to 210 yuan/tonne. Foshan A00 aluminium was quoted higher at 23,770 yuan/tonne, trading at parity with Wuxi A00. Aluminium billet processing fees held steady in most regions but declined by 50-100 yuan/tonne in Xinjiang, Nanchang, Wuxi, and Guangdong. Processing fees for aluminium rod (1A60 series) and 6/8 series rods remained stable, while low-carbon aluminium rod processing fees increased by 460 yuan/tonne. Recent increases in maintenance shutdowns across regions have led to supply disruptions, supporting a narrow recovery in alumina prices. However, as pre-holiday restocking by downstream users concludes and logistics stall, alumina inventories are gradually building up, causing prices to retreat as sentiment fades. The proportion of aluminium liquid production in China has weakened. High prices are acting as a deterrent, coupled with repeated environmental control measures in central China, leading downstream players to generally scale back or cancel planned concentrated pre-holiday restocking. With the holiday buffer period, pre-holiday funding sentiment is expected to gradually ease. Attention should be paid to whether developments in the U.S.-Iran situation trigger new macro pricing and whether downstream restocking sentiment improves after the recent aluminium price correction.
Industrial Silicon & Polysilicon: (Wang Heng, Practitioner ID: F3080733; Trading Advisory ID: Z0020715) On the 4th, industrial silicon prices weakened slightly. The main 2605 contract closed at 8,850 yuan/tonne, down 0.17% for the day, with open interest rising by 6,216 lots to 241,000 lots. The Baichuan spot reference price for industrial silicon held steady at 9,628 yuan/tonne compared to the previous trading day. The price for the lowest deliverable grade remained stable at 8,850 yuan/tonne, with the spot premium narrowing to parity from 35 yuan/tonne. Polysilicon prices trended stronger. The main 2605 contract closed at 51,195 yuan/tonne, up 4.25% for the day, with open interest increasing by 681 lots to 39,092 lots. Baichuan's price for N-type recycled polysilicon material dropped to 52,500 yuan/tonne. The price for the lowest deliverable polysilicon grade was 52,500 yuan/tonne, with the spot premium narrowing to 2,305 yuan/tonne. Silica rock enterprises have officially entered the winter maintenance period, leading to an overall contraction in ore supply. Downstream sectors are also undergoing comprehensive maintenance due to the Spring Festival holiday. With both supply and demand for industrial silicon decreasing, the price center finds cost support, but whether there is upward momentum depends on whether major producers implement larger-than-expected production cuts. The Ministry of Industry and Information Technology held a meeting reiterating topics related to anti-monopoly. New order bookings by wafer manufacturers are largely stagnant, pessimistic sentiment persists in the crystalline silicon market, and polysilicon still faces downward price pressure. Monitoring industry inventory levels for any reduction and whether polysilicon plants plan to expand production cuts in response will be key.
Lithium Carbonate: (Zhu Xi, Practitioner ID: F03109968; Trading Advisory ID: Z0021609) Yesterday, the lithium carbonate futures contract 2605 rose 1.32% to 147,220 yuan/tonne. Regarding spot prices, the average price for battery-grade lithium carbonate fell by 500 yuan/tonne to 153,000 yuan/tonne, while the average for industrial-grade lithium carbonate decreased by 500 yuan/tonne to 149,500 yuan/tonne. The price for battery-grade lithium hydroxide (coarse particle) dropped by 3,000 yuan/tonne to 146,500 yuan/tonne. For warrants, warrant inventory increased by 1,030 tonnes yesterday to 34,114 tonnes. The China Passenger Car Association (CPCA) stated that the estimated wholesale sales of new energy passenger vehicles by manufacturers in January 2026 were 900,000 units, a year-on-year increase of 1%. Based on Beidou operational certificate registration data for heavy-duty trucks, approximately 20,600 new energy heavy-duty trucks were added nationally in January 2026 (not final registration data), surging 184% year-on-year but falling 40% month-on-month. On the supply side, weekly production decreased by 648 tonnes week-on-week to 21,569 tonnes. Production via spodumene processing fell by 670 tonnes to 13,244 tonnes, lepidolite-based output decreased by 50 tonnes to 2,832 tonnes, salt lake extraction increased by 90 tonnes to 3,205 tonnes, and production from recycled materials dropped by 18 tonnes to 2,288 tonnes. According to SMM, scheduled production for battery-grade lithium carbonate in February is projected to decrease by 17.6% month-on-month to 58,835 tonnes, while industrial-grade lithium carbonate output is expected to fall 12.7% to 23,095 tonnes. On the demand side, weekly production of ternary materials decreased by 203 tonnes to 18,053 tonnes, with inventories down 177 tonnes to 18,691 tonnes. Weekly production of lithium iron phosphate (LFP) increased by 904 tonnes to 88,223 tonnes, while LFP inventories rose by 229 tonnes to 96,819 tonnes. According to SMM, scheduled production for ternary materials in February is forecast to drop 14.6% month-on-month to 69,250 tonnes, and LFP output is expected to decrease 10.7% to 354,000 tonnes. Production of ternary power batteries is projected to fall 14.3% to 24.84 GWh, LFP power battery output is expected to decline 10.8% to 79.71 GWh, and LFP energy storage battery production is anticipated to decrease 8.8% to 57.46 GWh. Regarding inventory, weekly social inventory of lithium carbonate decreased by 1,414 tonnes to 107,482 tonnes. Inventories at downstream users increased by 3,007 tonnes to 40,599 tonnes, inventories in other segments decreased by 3,590 tonnes to 47,880 tonnes, and upstream producer inventories fell by 831 tonnes to 19,903 tonnes. Market sentiment has shown some recovery. Against the backdrop of destocking in the first quarter, lithium carbonate prices are undergoing an upward correction. However, it is important to note that following significant price declines last week and on Monday, spot transaction volumes increased noticeably, and pre-holiday restocking is largely complete, leaving fundamental support relatively weak before the holiday. Additionally, potential disruptions from the U.S. Strategic Critical Minerals Reserve Program warrant attention.
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