Copper: Supply Concerns Narrative Persists, Copper Prices Surge Then Retreat (Author: Zhan Dapeng, Practicing Qualification No.: F3013795; Trading Advisory Qualification No.: Z0013582) 1. Macroeconomic Overview. Internationally, U.S. seasonally adjusted non-farm payrolls increased by 50,000 in December 2025, falling short of the expected 60,000 and the previous figure of 64,000; the unemployment rate was 4.4%, compared to an expectation of 4.5% and a prior rate of 4.6%. Furthermore, October's non-farm payroll additions were revised down from -105,000 to -173,000; November's additions were revised down from 64,000 to 56,000. The decline in the unemployment rate temporarily alleviated the most severe concerns about labor market deterioration. Additionally, a Federal Reserve report indicated consumers expect prices to rise by 3.4% over the next year, up from 3.2% in November. Significant divergence persists among Fed officials, with some more concerned about inflation and others viewing rising unemployment as the greater risk, leading to continued uncertainty regarding rate cut expectations for the upcoming Fed meeting. Domestically, the Ministry of Finance and the State Taxation Administration announced that, effective April 1, 2026, the VAT export tax rebate for products including photovoltaic modules will be canceled. From April 1, 2026, to December 31, 2026, the VAT export rebate rate for battery products will be reduced from 9% to 6%; starting January 1, 2027, the VAT export rebate for battery products will be canceled. For products subject to consumption tax within the aforementioned categories, the export consumption tax policy remains unchanged, continuing to apply the consumption tax rebate (exemption) policy.
2. Fundamentals. On the copper concentrate front, domestic TC (Treatment Charges) quotes remain at historically low levels, sustaining concerns about concentrate tightness and providing strong fundamental support. News regarding the failed negotiations at Chile's Mantoverde copper mine, with strikes continuing, exacerbates market worries about supply constraints. For refined copper production, January's estimated electrolytic copper output is 1.1636 million tonnes, down 1.2% month-on-month but up 14.7% year-on-year, as some smelters commenced maintenance early due to concentrate tightness, leading to a slight production decrease. Regarding imports, China's net refined copper imports in November fell 58.16% year-on-year to 161,700 tonnes, with the cumulative total down 11.14% year-on-year; November's scrap copper imports increased 5.87% month-on-month to 208,100 metal tonnes, up 19.94% year-on-year, with a cumulative increase of 3.51%. Inventory-wise, as of January 9, global visible copper stocks increased by 48,000 tonnes from the last count (December 31) to 961,000 tonnes. Specifically, LME inventory decreased by 8,450 tonnes to 138,975 tonnes; Comex inventory increased by 18,087 tonnes to 469,921 tonnes; domestic refined copper social inventories rose by 34,900 tonnes weekly to 273,800 tonnes, while bonded area inventories increased by 3,300 tonnes to 78,800 tonnes. On the demand side, as copper prices climbed again, downstream procurement turned cautious, with transactions primarily driven by rigid demand.
3. Viewpoint. The movement of precious metals during the week significantly influenced nonferrous metals, shifting from optimism to increased divergence, leading copper prices to surge and then retreat. Geopolitical events involving the U.S. and Venezuela also amplified market concerns about supply security. However, the current issue remains the onset of the domestic consumption off-season, with copper demand weakening and inventory accumulation stronger than in recent years, intensifying industry divergence. The Friday announcement from the Ministry of Finance and the State Taxation Administration, stating the complete cancellation of the VAT export rebate for all PV modules and related products (249 items total) effective April 1, 2026, eliminating the rebate benefit for exporters, and the reduction of the rebate rate for battery products, has led to expectations of a "rush to export" in the first quarter. This could potentially stimulate or even透支 (overdraw) short-term demand for some commodities, making sustained price declines difficult. Before the Spring Festival, the overall market is still viewed as震荡偏多 (oscillating with a bullish bias), with attention on market feedback regarding this policy. Strategically, maintaining a逢低买入 (buy on dips) approach is recommended, but excessive chasing of highs should be avoided.
Nickel & Stainless Steel: Sentiment Resonance, Awaiting Policy (Author: Zhu Xi, Practicing Qualification No.: F03109968; Trading Advisory Qualification No.: Z0021609) 1. Supply: Weekly Indonesian domestic laterite nickel ore (1.2% Ni) price fell by $1/wet tonne to $21.5/wet tonne, while the 1.6% grade held steady at $51.9/wet tonne; Indonesian nickel ore premium/discount remained at $25.5/wet tonne; Philippine nickel ore (1.5% Ni) premium fell by $1/wet tonne to $8.0/wet tonne. January refined nickel output is预计 (estimated) to increase 18.5% month-on-month to 37,200 tonnes. Weekly raw material prices were relatively stronger than finished products, leading to weakened profits for external procurement. China's NPI (Nickel Pig Iron) production is预计 to decrease 1% month-on-month to 21,000 nickel tonnes, while Indonesian NPI production is预计 to decrease 2% month-on-month to 139,100 nickel tonnes. Nickel sulfate production is预计 to decrease 1% month-on-month to 34,550 nickel tonnes. The strengthening LME nickel price drove up nickel sulfate prices, leading to a recovery in immediate profits.
2. Demand: In the new energy sector, January production of ternary precursor is预计 to decrease 2% month-on-month to 83,260 tonnes; January ternary material production is预计 to decrease 4.43% month-on-month to 78,180 tonnes. Weekly ternary material production decreased by 237 tonnes to 18,053 tonnes, with inventory down 149 tonnes to 18,432 tonnes. According to the CPCA, from December 1-31, national passenger vehicle NEV retail sales reached 1.387 million units, up 7% year-on-year and 5% month-on-month; cumulative retail sales for the year reached 12.859 million units, up 18% year-on-year. National passenger vehicle manufacturer NEV wholesale volume was 1.554 million units, up 3% year-on-year but down 9% month-on-month; cumulative wholesale volume for the year reached 15.31 million units, up 25% year-on-year. The NEV retail penetration rate in the national passenger vehicle market was 60.4%, while the manufacturer NEV wholesale penetration rate was 56.3%. For stainless steel, prices rose across the board during the week. Total social inventories in national mainstream markets (89 warehouse caliber) were 948,000 tonnes, down 3% week-on-week, with the 300 series decreasing by 14,700 tonnes to 608,000 tonnes. The January 2026 production schedule is 3.4065 million tonnes, up 4.48% month-on-month, comprising: 200 series at 1.0331 million tonnes, up 9.85% month-on-month and 34.08% year-on-year; 300 series at 1.7632 million tonnes, up 0.92% month-on-month and 12.58% year-on-year; 400 series at 610,200 tonnes, up 6.53% month-on-month and 16.27% year-on-year. January Indonesian crude steel production was 440,000 tonnes, up 2.3% month-on-month. Finished product prices strengthened, leading to stronger theoretical profits.
3. Inventory: Weekly LME inventory increased by 29,508 tonnes to 284,790 tonnes; SHFE nickel inventory decreased by 474 tonnes to 38,856 tonnes; social inventories increased by 2,126 tonnes to 61,046 tonnes; bonded area inventory remained at 2,200 tonnes.
4. Viewpoint: News-wise, during the week, Indonesian Minister of Energy and Mineral Resources, Bahlil Lahadalia, stated that Indonesia would adjust its nickel quota based on industry demand, with reductions aimed at supporting Indonesian mineral prices, and would implement similar measures to support nickel prices. However, he did not disclose the 2026 quota level, only reiterating that adjustments would be made to meet local smelter demand. Fundamentally, with prices rising rapidly, product prices across the产业链 (industrial chain) have strengthened. Class-1 nickel production scheduled for January increased significantly by 18.5% month-on-month to 37,200 tonnes, suggesting short-term hedging demand might exert some pressure on futures prices. Indonesian policy stimulus has driven nickel prices higher, but the actual quota implementation still requires time. It is advised to monitor market sentiment and look for逢低做多 (buy on dips) opportunities near the cost line.
Alumina, Electrolytic Aluminum & Aluminum Alloy: Sentiment Converges, Rational Correction (Author: Wang Heng, Practicing Qualification No.: F3080733; Trading Advisory Qualification No.: Z0020715) Alumina futures traded with震荡偏强 (oscillating strength), with the main contract closing at 2,843 yuan/tonne as of the 9th, up 2.3% for the week. SHFE aluminum also showed震荡偏强, with the main contract closing at 24,330 yuan/tonne for the week, up 6.1%. Aluminum alloy followed suit, with the main contract closing at 22,985 yuan/tonne, up 5.17% weekly.
1. Supply: According to SMM, the weekly operating rate for alumina held steady at 88.7%. Maintenance in Shanxi concluded, leading to a recovery in operations, while operations in Guizhou were reduced. For electrolytic aluminum, production ramped up in Indonesia, and domestic technical renovation projects in Xinjiang and Inner Mongolia gradually started pot operations and production by year-end, keeping daily electrolytic aluminum output at elevated levels. SMM estimates January domestic metallurgical-grade alumina operating capacity at 88.82 million tonnes, with production at 7.49 million tonnes, down 0.4% month-on-month and 1.2% year-on-year. January domestic electrolytic aluminum operating capacity is expected to rise to 44.1 million tonnes, with production at 3.98 million tonnes, up 3.1% month-on-month and 7.7% year-on-year; the proportion of liquid aluminum declined to 75.1%.
2. Demand: With environmental control pressures easing in many regions, the average operating rate of processing enterprises increased by 0.2% weekly to 60.1%. By sector: the operating rate for aluminum cable increased by 2% to 59.6%; aluminum plate/sheet increased by 2% to 65%; aluminum foil increased by 1.1% to 70.7%; aluminum profiles decreased by 1.9% to 48.8%. The operating rate for secondary aluminum alloy decreased by 2% to 58%. Aluminum billet processing fees held steady in Baotou and Linyi, but decreased by 50-330 yuan/tonne in Xinjiang, Henan, Wuxi, and Guangdong. Aluminum rod processing fees remained stable across the board.
3. Inventory: For exchange inventories, alumina stocks accumulated by 4,814 tonnes weekly to 123,700 tonnes; SHFE aluminum stocks accumulated by 14,000 tonnes weekly to 143,800 tonnes; LME stocks decreased by 12,000 tonnes weekly to 499,800 tonnes. For social inventories, alumina stocks accumulated by 88,000 tonnes weekly to 230,000 tonnes; aluminum ingot stocks accumulated by 54,000 tonnes weekly to 714,000 tonnes; aluminum billet stocks accumulated by 30,500 tonnes weekly to 169,500 tonnes.
4. Viewpoint: Alumina plants maintain high ore reserves, leading to low willingness for premium purchases in the short term, continuing cost pressure. With environmental controls ending, production continues to be released, supplemented by imports, leading to further inventory accumulation at both producer and downstream levels; the logic of现货向期货收敛 (spot prices converging towards futures) persists. Simultaneously, as profitability for delivery in Xinjiang reappears, warehouse receipts may exert renewed pressure on futures. The Venezuela incident has subsided, and backlogged goods from Xinjiang are arriving at ports, increasing aluminum ingot inventory accumulation pressure. Macro-micro divergences are gradually converging, with overheated boosts turning into rational corrections. Aluminum prices continue their high震荡 (oscillation) trend, with spot discounts narrowing; further significant near-month gains face pressure.
Industrial Silicon & Polysilicon: News Pressure, Sentiment Cools (Author: Wang Heng, Practicing Qualification No.: F3080733; Trading Advisory Qualification No.: Z0020715) Industrial silicon futures traded震荡偏弱 (oscillating weakly) during the week, with the main contract 2605 closing at 8,715 yuan/tonne on the 9th, down 1.64% weekly. Polysilicon also weakened, with the main contract 2605 closing at 51,300 yuan/tonne, down 11.4% weekly. Spot prices held steady across the board: 553 (non-oxidized) held at 8,950 yuan/tonne, 553 (oxidized) held at 9,400 yuan/tonne, and 421 held at 9,900 yuan/tonne.
1. Supply: According to Baichuan, weekly industrial silicon production decreased by 620 tonnes to 80,300 tonnes. The weekly furnace operating rate decreased by 0.38% to 28.64%, with the number of operating furnaces down by 3 to 228. In the Northwest region, 3 submerged arc furnaces were shut down in Xinjiang during the week, with 177 silicon furnaces operating in total in the Northwest. In the Southwest, there were no operational changes in Yunnan and Sichuan during the week, with 19 silicon furnaces operating in total in the Southwest. Other regions saw no changes.
2. Demand: Polysilicon P-type prices increased by 5,000 yuan/tonne to 49,000 yuan/tonne, while N-type increased by 7,200 yuan/tonne to 59,500 yuan/tonne. Driven by policy and industry self-discipline requirements, spot quotations continued to rise. However, due to shrinking downstream orders and resistance to high prices, polysilicon plants are primarily fulfilling previous orders; January orders are still under negotiation with no large-scale agreements yet. Wafer and cell manufacturers face sustained pressure from production halts, with some planning holidays extending past New Year's Day. Weekly organic silicon prices held steady at 13,500-14,000 yuan/tonne. Major organic silicon producers reached an agreement for staggered production cuts, are about to end their sales suspension, and plan coordinated price hikes. Some downstream players are choosing to stock up early to hedge against future procurement cost increases, but most are hesitant to follow high prices due to limited willingness. Organic silicon inventory pressure is not significant, leading to a price standoff with downstream users. Weekly polysilicon production decreased by 980 tonnes to 25,400 tonnes. Weekly DMC production decreased by 400 tonnes to 44,000 tonnes.
3. Inventory: For exchange inventories, industrial silicon stocks accumulated by 3,285 tonnes weekly to 54,400 tonnes; polysilicon stocks accumulated by 12,000 tonnes weekly to 132,900 tonnes. For social inventories, industrial silicon stocks held steady at 457,900 tonnes weekly, with plant inventory decreasing by 1,000 tonnes to 266,900 tonnes. Huangpu port inventory accumulated by 1,000 tonnes to 59,000 tonnes; Tianjin port held steady at 80,000 tonnes; Kunming port held steady at 52,000 tonnes. Polysilicon social inventory accumulated by 3,500 tonnes weekly to 311,800 tonnes.
4. Viewpoint: A major Xinjiang plant entered maintenance during the New Year holiday. Silicon plants are engaging in high-level hedging and actively selling to spot-futures traders. Producer inventories are gradually shifting to intermediate links, increasing hidden inventories. Recent costs are generally stable with minor fluctuations, maintaining a震荡 (oscillating) trend under the dual supply-demand reduction. Frequent news regarding anti-internal competition and industry self-discipline, coupled with delays in the announced capacity platform stockpiling action, raises market concerns about potential changes. Additionally, with pre-Spring Festival logistics shutdown pressures in Xinjiang, production areas are rushing shipments before the holiday, leading to concentrated warehouse receipt registrations, which has significantly alleviated squeeze pressure and cooled overheated speculative sentiment. The market is revisiting discussions on profit distribution within the industrial chain and downstream production cuts, limiting the premium space above polysilicon. Given the high market volatility, light positions and观望 (watchful waiting) are advisable. Key focuses include the implementation of the January industry self-discipline joint production cuts, downstream purchasing sentiment, and inventory dynamics across the industrial chain.
Lithium Carbonate: Strong Expectations Provide Support (Author: Zhu Xi, Practicing Qualification No.: F03109968; Trading Advisory Qualification No.: Z0021609) 1. Supply: Weekly production increased by 115 tonnes to 22,535 tonnes. Specifically, spodumene-based production increased by 35 tonnes to 13,959 tonnes; lepidolite-based production increased by 20 tonnes to 2,956 tonnes; salt lake-based production increased by 40 tonnes to 3,185 tonnes; and recycled material-based production increased by 20 tonnes to 2,435 tonnes.
2. Demand: Weekly ternary material production decreased by 237 tonnes to 18,053 tonnes, with inventory down 149 tonnes to 18,432 tonnes. Weekly lithium iron phosphate (LFP) production decreased by 2,958 tonnes to 87,094 tonnes, with inventory down 3,800 tonnes to 96,094 tonnes. On the terminal side, according to the CPCA, from December 1-31, national passenger vehicle NEV retail sales reached 1.387 million units, up 7% year-on-year and 5% month-on-month; cumulative retail sales for the year reached 12.859 million units, up 18% year-on-year. National passenger vehicle manufacturer NEV wholesale volume was 1.554 million units, up 3% year-on-year but down 9% month-on-month; cumulative wholesale volume for the year reached 15.31 million units, up 25% year-on-year. The NEV retail penetration rate was 60.4%, and the manufacturer NEV wholesale penetration rate was 56.3%.
3. Inventory: Weekly total inventory increased by 337 tonnes to 109,942 tonnes. Specifically, downstream inventory decreased by 2,458 tonnes to 36,540 tonnes; inventory in other segments increased by 2,080 tonnes to 55,020 tonnes; and upstream inventory increased by 715 tonnes to 18,382 tonnes.
4. Viewpoint: Prices strengthened during the week and then oscillated at high levels, primarily influenced by geopolitical events, policy documents, and industry mechanisms, but have yet to break through the 150,000 yuan/tonne mark. In reality, fundamentals are marginally weakening, with the destocking rhythm turning into inventory accumulation, and lithium hexafluorophosphate (LiPF6) prices retreating 10% from their highs. However, if the industry pricing mechanism adjusts smoothly, price increases could be transmitted effectively to the battery side. Furthermore, based on third-party production schedule data, several entities have upwardly revised their January LFP production schedules. Concurrently, the second battery industry anti-internal competition meeting highlighted issues like盲目建设 (blind construction) and低价竞争 (low-price competition), which disrupt normal market order and weaken sustainable development capacity, necessitating regulation. We believe subsequent attention should be paid to battery cell prices. For NEVs, with the purchase tax halved and subsidy policies微调但基本延续 (fine-tuned but largely continued), and several automakers disclosing their 2026 sales targets (traditional automakers generally cautious, new automakers more optimistic), along with the January 9th announcement from the Ministry of Finance adjusting export rebate policies for PV products (reducing the VAT rebate for batteries from 9% to 6% from April 1, 2026, to Dec 31, 2026, and canceling it from Jan 1, 2027, affecting cathode materials, LiPF6, lithium batteries, etc.), the first quarter might see a淡季不淡 (non-slack season). Considering the export rebate adjustments, strong terminal expectations, battery plant anti-internal competition efforts, and upward revisions to cathode material production schedules, even if current sharp raw material price increases might suppress terminal demand, this may be difficult to disprove in the short term. Furthermore, underpinned by strong market expectations, low downstream inventories, and a medium-to-long-term bullish trading logic for lithium prices, we believe that even if prices fall, restocking demand and speculative capital demand will likely emerge. Therefore, as long as demand is not disproven, prices are generally易涨难跌 (easier to rise than fall). Short-term marginal fundamental weakening might bring some pressure, with focus on the 150,000 yuan/tonne level. Medium-term, if prices can be further transmitted downstream, further breakthroughs are possible.
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