Copper: Inventory Drawdown Driven by Restocking Supports Stronger Copper Prices 1. Macroeconomic Factors. Market focus remains centered on developments in the Middle East situation and U.S. economic, employment, and inflation data. Aggressive rhetoric from former President Trump suggests the Strait of Hormuz navigation issue will be difficult to resolve short-term. Elevated oil prices continue to reinforce inflation expectations and dollar resilience, exerting downward pressure on copper prices. However, markets have repeatedly priced in U.S.-Iran tensions. Marginal news regarding peace talks could become a new catalyst for trading. The possibility of a shift from full confrontation to limited management between the U.S. and Iran exists. If subsequent signals of easing tensions are released, copper prices may see a sentiment-driven rebound. Additionally, the U.S. Labor Department's March non-farm payrolls data exceeded expectations across the board, with job gains of 178,000, the highest since December 2024. The unemployment rate fell from 4.4% to 4.3%, while average hourly earnings growth slowed from 0.4% to 0.2% month-on-month. The March ISM Manufacturing PMI rose to 52.7, a new high since August 2022, but the price index climbed to its highest level in nearly four years. Manufacturing expansion, resilient employment, and imported inflation pressures coexist, placing the Federal Reserve in a dilemma, leaning towards maintaining interest rates unchanged and adopting a wait-and-see stance.
2. Fundamentals. For copper concentrate, domestic TC (Treatment Charges) quotes have fallen consecutively, dropping to -$7.91 per tonne this week, highlighting exceptionally tight copper concentrate supply, which serves as a strong fundamental support. Refined copper production is estimated at 1.1731 million tonnes in April, down 2.7% month-on-month but up 4.2% year-on-year. Production shows a slight decline compared to March, with maintenance potentially exceeding expectations due to tight concentrate supply and smelting losses. Imports: Net imports of refined copper in February fell 54.98% year-on-year to 125,300 tonnes, with cumulative imports down 49.39% year-on-year. Scrap copper imports fell 27.72% month-on-month to 167,900 metal tonnes in February, down 13.14% year-on-year, but cumulative imports increased 4.64% year-on-year. Inventory: As of April 2nd, global visible copper inventories fell by 62,000 tonnes from the previous count (26th) to 1.318 million tonnes. LME inventory increased by 4,625 tonnes to 364,450 tonnes; Comex inventory decreased by 1,755 tonnes to 533,255 tonnes; Domestic social inventories of refined copper fell by 60,000 tonnes weekly to 367,400 tonnes, while bonded area inventory fell by 5,100 tonnes to 53,100 tonnes. Demand: Downstream restocking willingness increased continuously following the copper price decline, driving a rapid drawdown in social inventories.
3. View. The market remains focused on U.S.-Iran conflict risks. An escalation casts a shadow over the global economic outlook, while orderly control could lead to sentiment repair. Markets have been repeatedly pricing geopolitical factors since March. Fundamentally, resilient domestic demand is evident. The price drop triggered substantial downstream restocking, accelerating social inventory drawdown. However, the market has not excessively traded the expectation of production cuts induced by the sharp TC decline. Therefore, with macro headwinds persisting and fundamental support ongoing, copper prices are expected to continue wide fluctuations. Strategically, treat it with a range-trading mindset, buying low and selling high, but remain vigilant for macro-geopolitical risk events that could trigger a secondary downturn.
Nickel & Stainless Steel: Cost Push Upwards, Macros and Inventories Act as Drag 1. Supply: Indonesian nickel ore premiums held steady at $41 per wet tonne. Philippine 1.5% nickel ore premium fell by $1.5 to $12.5 per wet tonne. Indonesian domestic nickel ore prices remained high and stable. April refined nickel output is forecast to increase 2% month-on-month to 39,200 tonnes. Domestic NPI production is expected to fall 27% month-on-month to 28,400 nickel tonnes. Indonesian NPI output is projected to decrease 1% month-on-month to 133,800 nickel tonnes. Indonesian MHP nickel metal production is estimated at 38,000 tonnes, up 16.92% month-on-month and 21.45% year-on-year. Nickel sulfate output is expected to drop 1% month-on-month to 34,640 nickel tonnes.
2. Demand: New Energy: April ternary precursor output is forecast to decrease 3% month-on-month to 82,710 tonnes, with 5-series seeing a slight drop and high-nickel series declining more significantly. Ternary material output is expected to fall 4% month-on-month to 80,970 tonnes, with 5-series and high-nickel series seeing larger declines, while 6-series increases slightly. Lithium battery output is projected to rise 4% month-on-month to 219 GWh, with ternary batteries up 4% to 31 GWh. According to CPCA data, estimated NEV wholesale volume for March 2026 was 1.12 million units, flat year-on-year but up 55% from February. Stainless Steel: Total social inventories in mainstream markets (89 warehouse caliber) were 1.184 million tonnes, up 2.25% week-on-week. 300-series inventories fell by 6,000 tonnes to 690,000 tonnes. According to steel association production schedules, April planned output is 3.6847 million tonnes, down 0.4% month-on-month but up 5.2% year-on-year. Finished products are weaker than raw materials, leading to decreased theoretical profits.
3. Inventory: LME inventory decreased by 78 tonnes to 281,496 tonnes weekly. SHFE nickel inventory increased by 1,285 tonnes to 65,764 tonnes. Social inventory rose by 1,785 tonnes to 91,593 tonnes. Bonded area inventory remained at 1,700 tonnes.
4. View. Nickel ore prices are fluctuating at high levels, but Class 1 nickel is facing significant pressure. With tightening Indonesian nickel ore quotas and raw material disruptions, and considering persistently strong costs, short-term long opportunities near the cost line might still be referenced. However, short-term attention is needed on overseas geopolitics and market sentiment. Expectations exist for supplementary quotas in July. Substantial Class 1 nickel inventory pressure will also weigh on prices. Monitor whether changes in Class 1 nickel inventory can bring positive feedback.
Alumina, Primary Aluminum & Aluminum Alloy: High-Level Support, Stronger Overseas, Weaker Domestic Alumina futures weakened during the week, with the main contract closing at 2,741 yuan/tonne on the 3rd, down 6.5% weekly. SHFE aluminum strengthened, with the main contract closing at 24,660 yuan/tonne, up 3% weekly. Aluminum alloy prices also firmed, with the main contract closing at 23,580 yuan/tonne, up 2.7% weekly.
1. Supply: According to SMM, the alumina operating rate decreased by 0.23% weekly to 76.2%. Load reductions occurred in Shandong and Shanxi, while startup rates dropped in Guangxi due to new capacity. Primary Aluminum: Middle East conflicts persist. Iran continues preventive cuts. Qatar Aluminum halted 40% production. Bahrain Aluminum shifted from suspended supply to shutting three production lines. The attacked UAE aluminum plant added to shutdowns. Mozambique's 580,000-tonne capacity plant halted due to unresolved power contracts. Mt. Holly's 50,000-tonne idle capacity is expected to restart in April, reaching full capacity by end-Q2. An Icelandic plant restarts end-April, reaching full capacity end-July. Domestic and Indonesian projects ramping up keep daily primary aluminum output elevated. SMM estimates China's metallurgical-grade alumina operating capacity will rise to 86.63 million tonnes in April, with output of 7.14 million tonnes, down 2.2% month-on-month but up 0.6% year-on-year. Estimated domestic primary aluminum operating capacity increases to 44.3 million tonnes in April, output 3.69 million tonnes, down 2.2% month-on-month but up 2.3% year-on-year. The molten aluminum ratio recovered to 75.5%.
2. Demand: Demand improved further during the 'Silver April' period. The average operating rate for processing enterprises increased by 1.2% weekly to 65.2%. By segment: Aluminum plate/sheet operating rate up 2% to 73%; Aluminum cable operating rate up 1.6% to 67.6%; Aluminum profiles operating rate up 1.5% to 60.5%; Aluminum foil operating rate up 1.4% to 75%. Recycled aluminum alloy operating rate held steady at 59.5%. Aluminum billet processing fees were stable in Baotou and Linyi, but down 20-150 yuan/tonne in Xinjiang, Henan, Wuxi, and Guangdong. Aluminum rod processing fees decreased by 100-150 yuan/tonne across the board.
3. Inventory: Exchange inventories: Alumina accumulated 15,000 tonnes weekly to 299,000 tonnes; SHFE aluminum accumulated 15,500 tonnes weekly to 470,000 tonnes; LME aluminum drew down 8,925 tonnes weekly to 412,000 tonnes. Social inventories: Alumina accumulated 2,000 tonnes weekly to 237,000 tonnes; Aluminum ingot accumulated 38,000 tonnes weekly to 1.387 million tonnes; Aluminum billet drew down 19,500 tonnes weekly to 322,000 tonnes.
4. View. Market sentiment regarding supply reductions from several mines weakened. Primary aluminum consumption involved destocking, coupled with slower deliveries in Xinjiang, leading to a slight alumina inventory drawdown. With domestic alumina resuming production and significant imported alumina arriving, alumina faces inventory pressure and risks of futures and spot price corrections. Trump's reduction of aluminum tariff rates occurred during the week, but the convergence space for U.S. aluminum premiums is limited. Geopolitical conflict remains the core variable. Assessments of Middle East aluminum plant cuts and the Strait of Hormuz navigation situation dominate overseas markets. If cut scales exceed expectations, LME aluminum could continue rising, pulling SHFE aluminum higher. If geopolitical tensions ease marginally, overseas risk premiums may recede, allowing the SHFE/LME ratio to recover. The Qingming Festival holiday had limited impact on domestic downstream operating rates. Focus on whether aluminum ingot inventories can enter a destocking cycle as expected in mid-April. Marginal improvement in post-holiday downstream demand remains key for a domestic aluminum price breakout.
Industrial Silicon & Polysilicon: Futures-Spot Convergence, Bottom Not Confirmed Industrial silicon futures weakened during the week. The main contract 2605 closed at 8,285 yuan/tonne on the 3rd, down 3.94% weekly. Polysilicon futures also weakened, with the main contract 2605 closing at 33,770 yuan/tonne, down 5.35% weekly. Spot prices were steady to weak. 553 grade without oxygen holding at 8,800 yuan/tonne, 553 grade with oxygen holding at 9,000 yuan/tonne, while 421 grade fell 150 yuan/tonne to 9,450 yuan/tonne.
1. Supply: According to Baichuan, weekly industrial silicon output fell by 1,270 tonnes to 68,600 tonnes. The weekly operating furnace rate decreased by 1.01% to 24.62%, with 8 fewer furnaces operating, totaling 196. Northwest China: 3 furnaces closed in Xinjiang, 2 in Gansu, 1 in Ningxia; 160 silicon furnaces operating in total in the Northwest. Southwest China: 3 furnaces closed in Yunnan; 11 silicon furnaces operating in total in the Southwest. Other regions: 1 new furnace started in Northeast China; no other changes.
2. Demand: Polysilicon P-type prices fell 1,000 yuan/tonne to 32,000 yuan/tonne; N-type fell 2,750 yuan/tonne to 36,750 yuan/tonne. Due to high inventory and pricing disagreements, downstream continues to press prices upward, with only minimal procurement as needed. New polysilicon order progress stalled. The structural gap between leading companies and second/third-tier firms widened further. The industry continues降价促销 strategies. Weekly organic silicon prices held steady at 14,000-14,300 yuan/tonne. The April organic silicon Jinan conference is imminent. Many monomer producers halted new price quotes, awaiting industry agreement on new production cut plans. With recent cost increases and potential cuts materializing, organic silicon price centers are expected to rise. Weekly polysilicon output decreased by 100 tonnes to 19,300 tonnes. Weekly DMC output increased by 1,200 tonnes to 44,100 tonnes.
3. Inventory: Exchange inventories: Industrial silicon accumulated 1,180 tonnes weekly to 112,600 tonnes. Polysilicon accumulated 4,700 tonnes weekly to 34,700 tonnes. Social inventories: Industrial silicon accumulated 10,350 tonnes weekly to 443,400 tonnes, with plant inventory rising 8,850 tonnes to 258,400 tonnes. Huangpu Port held steady at 56,500 tonnes; Tianjin Port accumulated 1,500 tonnes to 74,500 tonnes; Kunming Port held steady at 54,000 tonnes. Polysilicon social inventory drew down 51,600 tonnes weekly to 330,000 tonnes.
4. View. The end-March industrial silicon industry meeting did not yield a production cut agreement. Producers' previous firm price stance loosened, and holders resumed selling at lower prices. The closure of the Strait of Hormuz hinders industrial silicon exports and raw material imports. Regional shutdowns lack upward momentum for industrial silicon. Cost support limits major downside but rebound momentum is weak. Major polysilicon producers abandoned planned capacity increases. Xinjiang and Ningxia bases halted production entirely. However, inventory built up from prior capacity releases remains high, and supply pressure hasn't substantially eased. The cancellation of PV export tax rebates and the pending start of domestic centralized projects in May, coupled with synchronized demand contraction overseas, add pressure. GFEX expanded deliverable grades for polysilicon. Post-new rules, the futures price still carries a premium relative to the industry's lowest cash cost. Social inventory may shift to warehouse receipts for relief. The current inventory digestion cycle is overly long. Spot markets see thin trading. Bearish sentiment is hard to alleviate. With continuous warehouse receipt registration, futures-spot convergence pressure exists. Monitor the implementation of industrial silicon production cuts and the actual execution of polysilicon plant shutdowns. Be cautious of risks from further industrial silicon inventory accumulation and potential超预期polysilicon price declines transmitting through the产业链.
Lithium Carbonate: Potential Risks in Resource Sector Still Evolving 1. Supply: Weekly output increased by 556 tonnes to 25,370 tonnes. Spodumene-based production rose 180 tonnes to 15,494 tonnes; Lepidolite-based increased 140 tonnes to 3,367 tonnes; Salt lake-based increased 100 tonnes to 3,815 tonnes; Recycling-based increased 136 tonnes to 2,694 tonnes. April lithium carbonate output is forecast to increase 4% month-on-month to 110,950 tonnes. Spodumene-based output expected up 1.6% to 65,100 tonnes; Lepidolite-based up 3.6% to 14,800 tonnes; Salt lake-based up 8.1% to 18,690 tonnes; Recycling-based up 12.4% to 12,360 tonnes.
2. Demand: Weekly ternary material output increased by 226 tonnes to 18,286 tonnes; inventory rose 286 tonnes to 19,278 tonnes. Weekly LFP output increased by 2,924 tonnes to 104,900 tonnes; inventory rose 5,879 tonnes to 113,613 tonnes. April ternary material output is forecast to decrease 4% month-on-month to 80,970 tonnes (5-series and high-nickel see larger declines, 6-series slight increase). LFP output is projected to increase 6% month-on-month to 450,000 tonnes. LCO output expected down 6% to 8,320 tonnes. LMO output expected up 14% to 12,160 tonnes. April lithium battery output is forecast to rise 4% month-on-month to 219 GWh (Ternary batteries up 4% to 31 GWh; LFP batteries up 4% to 179.2 GWh; Other batteries down 6% to 8.9 GWh). End-demand: According to CPCA, estimated NEV wholesale volume for March 2026 was 1.12 million units, flat year-on-year but up 55% from February. According to Energy Storage Times, lithium battery storage EPC winning bid prices for March 23-29 ranged 0.706-1.299 RMB/Wh, average 1.044 RMB/Wh (prev. 1.057). 2-hour storage EPC bids ranged 0.960-1.299 RMB/Wh, avg. 1.158 RMB/Wh (prev. 1.168). 4-hour storage EPC bids ranged 0.706-0.810 RMB/Wh, avg. 0.758 RMB/Wh (prev. 0.829).
3. Inventory: Weekly social inventory decreased by 860 tonnes to 100,349 tonnes. Downstream inventory fell 464 tonnes to 46,193 tonnes. Inventory in other links increased 520 tonnes to 36,020 tonnes. Upstream inventory increased 804 tonnes to 18,136 tonnes.
4. View. Focus this week is on supply-side disruptions. Firstly, follow-up policies regarding the suspension of Zimbabwe lithium ore exports require further observation. Reductions from late February to March may manifest in late April-May. If the suspension persists, the supply gap could widen. However, if reopening is anticipated, a scenario of tight reality versus loose expectations may arise, warranting caution against potential impact from集中发运. Secondly, potential risks exist for Australian lithium ore supply; monitor whether geopolitical situations ultimately lead to production cuts. Vehicle segment: While battery capacity per vehicle increases, demand showed gradual recovery in late March. March NEV wholesale volume was flat year-on-year. Storage segment: Storage battery production schedules remain high, but高频bid prices show slight declines. Additionally, based on current spot procurement/sales节奏and inventory节奏, if prices rise rapidly short-term, spot activity may slow, potentially causing a futures-spot divergence. For the outlook, continue to monitor opportunities for buying on dips.
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