Copper: Increased Macro Volatility Leads to Range-Bound Trading
Macroeconomic factors are creating significant volatility. The US Labor Department reported that June's CPI rose 3.5% year-on-year, significantly lower than the expected 3.8% and the previous reading of 4.2%. On a monthly basis, it fell 0.4%. Core CPI decelerated to 2.6% year-on-year, also below the forecast of 2.8%. June PPI fell 0.3% month-on-month (against an expectation of flat), marking its first decline since last year. The year-on-year growth rate slowed sharply from 5.5% in May to 5.5%, with core PPI easing to 4.7% year-on-year. Following the data release, markets quickly scaled back and pushed out expectations for the timing of the next Federal Reserve rate hike. However, the new Fed Chair's inaugural Congressional testimony maintained a hawkish tone. While he gave no hints about the future rate path, he emphasized the Fed's "zero tolerance" for persistently high inflation. His subsequent remarks to the Senate maintained this hawkish stance, indicating a re-evaluation of policy tools including interest rates and the balance sheet. Geopolitically, the US-Iran understanding has entered a "crisis phase," with mutual attacks continuing. Both sides have indicated the potential for renewed blockades of the Strait, causing oil prices to surge again and briefly refocusing market attention on sticky inflation and the prospect of higher rates.
On the fundamentals side, spot treatment and refining charges for copper concentrate have declined again, reaching historically extreme lows. This indicates that tightness in copper concentrate supply remains unrelieved and continues to be a key supportive factor for the fundamental picture. For refined copper production, July's estimated electrolytic copper output is 1.1661 million tonnes, up 1.8% month-on-month but down 0.7% year-on-year. Regarding imports, China's net refined copper imports in May rose 14.4% year-on-year to 296,200 tonnes, but the cumulative figure is still down 17.81% year-on-year. May scrap copper imports fell 9.78% month-on-month to 191,000 metal tonnes, up 3.14% year-on-year, with a cumulative increase of 7.11%. Inventory data as of July 10th shows global visible copper stocks fell by 45,000 tonnes to 1.121 million tonnes compared to the previous count on the 3rd. Specifically, LME stocks decreased by 12,400 tonnes to 306,500 tonnes; Comex stocks rose by 7,115 tonnes to 613,741 tonnes; Chinese refined copper social inventories fell by 34,900 tonnes weekly to 165,000 tonnes, while bonded area stocks dropped by 4,400 tonnes to 35,300 tonnes. On the demand side, downstream users continue to purchase based on immediate needs, showing little willingness to stock up at high prices.
Current market view: Recent trading has seen a mix of macro volatility and fundamental support. The gradual decline in TC charges and accelerated domestic destocking provide solid support for copper prices. However, hawkish Fed expectations and frequent geopolitical disruptions in the Middle East create macro headwinds. Additionally, looking at the week of the 13th, despite heightened liquidity risks in overseas financial markets, copper prices remained relatively stable. Caution is still warranted at this juncture. While implied volatility suggests a "calm surface," this also implies that once the market breaks out of its current range-bound pattern, divergence is likely to intensify. A strategy of observation over action is advised.
Nickel & Stainless Steel: Focus on Quotas and Monitor Demand
Supply: Weekly premiums for 1.6% nickel ore were flat week-on-week. The delivered price for 1.2% nickel ore was also flat week-on-week, while the delivered price for 1.6% nickel ore fell by $3.5 per wet tonne to $66.1 per wet tonne. Based on the second HPM price assessment for July, prices for 1.2% and 1.6% nickel ore fell by $2.15/tonne and $3.58/tonne, respectively.
Demand: In the new energy sector, weekly ternary cathode material production increased by 169 tonnes to 19,925 tonnes, with weekly inventories up 390 tonnes to 20,456 tonnes. In June, new energy passenger vehicle production reached 1.439 million units, up 21.4% year-on-year and 3.0% month-on-month. Wholesale sales reached 1.481 million units, up 19.2% year-on-year and 9.6% month-on-month. Retail sales were 1.007 million units, down 9.4% year-on-year but up 6.0% month-on-month. Exports were 499,000 units, surging 152.7% year-on-year and up 17.6% month-on-month. For July, ternary precursor production is forecast to increase 2% month-on-month to 95,870 tonnes, and ternary cathode material production is expected to rise 3% month-on-month to 89,690 tonnes. For stainless steel, total social inventories across mainstream markets (89 warehouse caliber) stood at 1.089 million tonnes, down 3.09% week-on-week. Inventories of the 300 series fell by 27,344 tonnes to 668,000 tonnes. July stainless steel crude steel production is projected to fall 2% month-on-month, with the 200 series up 9%, the 300 series down 9%, and the 400 series down 3%.
Inventory: LME nickel stocks decreased by 300 tonnes over the week to 274,284 tonnes. SHFE nickel inventories rose by 11,098 tonnes to 110,175 tonnes. Social inventories increased by 1,598 tonnes to 128,004 tonnes, while bonded area inventories held steady at 1,700 tonnes.
Market view: On the macro front, following the pullback in rate hike expectations, nonferrous metals have shown a synchronized recovery. On the policy front, on July 10th, Tri Winarno, Director General of Minerals and Coal at Indonesia's Ministry of Energy and Mineral Resources, stated that the nickel ore RKAB quota for 2026 will not increase significantly. Any quota adjustments will focus solely on meeting the needs of smelting facilities currently lacking nickel ore supply. Fundamentally, concerns over costs and supply in the hydrometallurgical segment have emerged due to sulfur supply disruptions. Inventory dynamics also shifted last week, with multiple positive factors briefly pushing nickel prices back above the 130,000 yuan/tonne level, though inventory accumulation soon followed. In the near term, nickel prices are expected to remain range-bound, supported by costs below and capped by inventories above. Attention should be paid to the subsequent release of quotas and whether demand can further drive destocking, potentially generating a new catalyst for nickel prices.
Aluminum: Destocking Provides Support, Premiums Strengthen
Alumina futures traded weaker within a range over the week. As of the 17th, the main contract settled at 2,656 yuan/tonne, down 2.2% for the week. SHFE aluminum traded stronger within a range, with the main contract settling at 23,185 yuan/tonne, up 0.6% weekly. Aluminum alloy futures also traded firmer, with the main contract settling at 23,025 yuan/tonne, a weekly gain of 0.26%.
Supply: According to SMM data, the weekly operating rate for alumina rose 0.66% to 75.04%, with weekly output increasing by 15,000 tonnes to 1.704 million tonnes. Maintenance shutdowns in Guizhou and Henan have concluded, with production gradually resuming. Overseas, EGA's Al Taweelah alumina refinery has officially announced its restart, with capacity restored to 50% and a return to full production imminent. For primary aluminum, the weekly operating rate dipped 0.04% to 98.59%, with weekly output down 400 tonnes to 875,200 tonnes. The proportion of molten aluminum output increased 0.37% to 78.13%.
Demand: The seasonal demand lull is deepening, with operating rates at processing plants continuing to adjust downward. The average operating rate for processing enterprises fell 0.6% weekly to 61.3%. By segment: the operating rate for aluminum sheet/plate held steady at 69.4%; for aluminum cable/wire, it fell 3% to 63.6%; for aluminum profiles, it rose 0.2% to 51.1%; for aluminum foil, it fell 0.5% to 70.9%. The operating rate for secondary aluminum alloy fell 0.3% to 51.4%. Processing fees for aluminum billet were stable in Henan and Linyi, up 70-100 yuan/tonne in Baotou and Wuxi, and down 60 yuan/tonne in Xinjiang and Guangdong. Processing fees for aluminum rod were stable in Guangdong but down 50-150 yuan/tonne in other regions.
Inventory: For exchange-registered stocks, alumina inventories rose by 19,500 tonnes weekly to 177,300 tonnes; SHFE aluminum inventories fell by 5,401 tonnes to 476,300 tonnes; LME aluminum stocks decreased by 6,125 tonnes to 280,100 tonnes. For social inventories, alumina stocks fell by 134,000 tonnes to 779,000 tonnes; aluminum ingot inventories dropped by 54,000 tonnes to 1.024 million tonnes; aluminum billet inventories decreased by 2,000 tonnes to 114,500 tonnes.
Market view: The faster-than-expected restart of EGA's capacity, coupled with ongoing output releases in Guangxi, has created a dual-supply increase domestically and internationally, weighing on market sentiment. Increased shipments from south to north have continued, leading to a broad weakening in spot premiums and capping the rebound in futures prices as short positions increased. However, with prices currently in a low valuation range, there is some underlying support. Alumina is caught in a tug-of-war between cost support below and supply pressure above, likely to continue consolidating at low levels in the short term. For primary aluminum, renewed geopolitical tensions in the Middle East and easing concerns over Fed rate hikes have further boosted macro sentiment. Expectations for Middle Eastern restarts and the outflow of accumulated aluminum ingots have weakened again due to disruptions in Strait transit. Exports combined with downstream bargain-hunting have jointly digested inventories, maintaining the resilience of social destocking. In the near term, aluminum prices are expected to continue their recovery, driven by both the return of macro risk premiums and accelerating destocking, though caution is warranted as upside may be limited by seasonal demand weakness.
Industrial Silicon & Polysilicon: Weakness Persists, Awaiting Catalysts
Industrial silicon futures traded weaker within a range over the week. On the 17th, the main contract 2609 settled at 8,320 yuan/tonne, down 1.3% weekly. Polysilicon futures also traded weaker, with the main contract 2609 settling at 33,985 yuan/tonne, a weekly decline of 6.51%. Spot prices were mostly stable with some increases. Specifically, non-oxygenated 553 grade rose 50 yuan/tonne to 8,900 yuan/tonne, oxygenated 553 grade held steady at 9,050 yuan/tonne, and 421 grade was unchanged at 9,450 yuan/tonne.
Supply: According to BaiChuan data, weekly industrial silicon production increased by 670 tonnes to 87,200 tonnes. The weekly furnace operating rate fell 0.26% to 32.95%, with the number of operating furnaces decreasing by 2 to 255. In the northwest region, Xinjiang idled 2 furnaces, leaving 156 furnaces in operation. The southwest region held steady with 71 furnaces operating. Other regions were stable with 28 furnaces in operation.
Demand: The weekly price for polysilicon N-type material was stable at 31,500 yuan/tonne, while N-type mixed-grade material fell 250 yuan/tonne weekly to 29,750 yuan/tonne. New order volumes have not shown significant growth, with transactions continuing on a case-by-case basis. Downstream wafer inventories are low, and spot prices are near cost support levels, leading to a stalemate. The weekly price for organosilicon fell by 1,200 yuan/tonne to 12,234 yuan/tonne. At the end of June, producers sold to recoup funds, but new order intake was scant. The July industry meeting issued new production restriction guidance, raising the previous 40% curtailment target to 60%. These cuts have not yet been implemented, but marginal reductions are expected to accelerate. Weekly polysilicon output increased by 900 tonnes to 23,900 tonnes, while DMC output fell by 700 tonnes to 37,200 tonnes.
Inventory: For exchange-registered stocks, industrial silicon inventories rose by 360 tonnes weekly to 160,500 tonnes, and polysilicon stocks increased by 3,000 tonnes to 54,800 tonnes. For social inventories, industrial silicon stocks rose by 8,500 tonnes to 477,500 tonnes, with plant inventories up 8,500 tonnes to 277,000 tonnes. Inventories at Huangpu Port held steady at 63,000 tonnes, Tianjin Port at 81,500 tonnes, and Kunming Port at 56,000 tonnes. Polysilicon plant inventories increased by 4,300 tonnes weekly to 293,000 tonnes.
Market view: Industrial silicon prices recovered somewhat after a recent pullback, but this triggered renewed hedging activity, capping further upside in futures. Restarts during the southwest wet season are largely complete. Temporary shutdowns in Yili, Xinjiang due to power issues, and news of potential production cuts in Inner Mongolia due to electricity price hikes have emerged. If northern shutdowns persist, their impact could gradually intensify. For polysilicon, policy expectations continue to evolve. Under the new three photovoltaic energy consumption limit standards, verification of actual enterprise energy consumption levels is ongoing. Spot market weakness persists, with increased output from leading polysilicon plants restarting exceeding reductions from some maintenance shutdowns. Downstream wafer production schedules are declining, and procurement remains slow, leading to several consecutive weeks of marginal inventory accumulation in the industry. In the short term, polysilicon is adjusting at the bottom, struggling to break out of the pattern of weak spot fundamentals versus strong future expectations.
Lithium Carbonate: Range-Bound Trading Awaits Catalyst
Supply: Weekly production decreased by 307 tonnes to 24,548 tonnes. Production from spodumene-based sources fell 497 tonnes to 13,504 tonnes; from lepidolite-based sources, it rose 140 tonnes to 2,545 tonnes; from salt lake-based sources, it increased 40 tonnes to 5,119 tonnes; and from recycling sources, it rose 10 tonnes to 3,380 tonnes.
Demand: Weekly ternary cathode material production increased by 169 tonnes to 19,925 tonnes, with weekly inventories up 390 tonnes to 20,456 tonnes. Weekly lithium iron phosphate (LFP) cathode production rose by 1,290 tonnes to 120,000 tonnes, with weekly inventories down 2,046 tonnes to 136,800 tonnes. According to the China Passenger Car Association, June new energy passenger vehicle production reached 1.439 million units, up 21.4% year-on-year and 3.0% month-on-month. Wholesale sales reached 1.481 million units, up 19.2% year-on-year and 9.6% month-on-month. Retail sales were 1.007 million units, down 9.4% year-on-year but up 6.0% month-on-month. Exports were 499,000 units, surging 152.7% year-on-year and up 17.6% month-on-month. In June, the average battery capacity per new energy vehicle in China was 71.3 kWh, up 1.9% month-on-month and 32.0% year-on-year. For energy storage, in June 2026, bidding volume for energy storage systems reached 6.1 GW/48.3 GWh, down 58.5% year-on-year in power terms but up 37.4% in energy terms, and down 12.7% month-on-month in power terms but up 118.1% in energy terms. Bidding for EPC (including PC) projects reached 19.3 GW/56.4 GWh, up 111.7% year-on-year in power terms and 154.4% in energy terms, and up 41.8% month-on-month in power terms and 43.2% in energy terms. Awarded volume for energy storage systems in June 2026 was 4.7 GW/13.8 GWh, up 364.9% year-on-year in power terms and 341.1% in energy terms, and up 53.5% month-on-month in power terms and 9.1% in energy terms. Awarded volume for EPC (including PC) projects was 12.5 GW/32.3 GWh, up 54.3% year-on-year in power terms and 87.4% in energy terms, and up 23.9% month-on-month in power terms and 55.1% in energy terms.
Inventory: Large-sample weekly inventories fell by 4,714 tonnes to 119,667 tonnes, while small-sample inventories decreased by 2,599 tonnes to 89,637 tonnes. Using the large-sample breakdown, inventories in other segments fell 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.
Market view: Weekly prices have been trading in a range around 150,000 yuan/tonne, showing a pattern of near-month strength and deferred-month weakness. The near-month strength stems from: 1) The spot basis showing a gradual strengthening trend with indications of price support and reluctance to sell; 2) Potential downward revisions to supply increments from restarts and Zimbabwean sources; 3) The supply-demand balance for the second half of the year still pointing to destocking, with the peak season still holding promise. The deferred-month weakness reflects relatively pessimistic demand views for next year and beyond, with the long-term bullish logic for lithium prices quietly changing—a trend more evident in equity market performance. However, from a current fundamental perspective, short-term commodity prices should not be overly discounted based on equity valuations. Prices are likely to remain range-bound in the near term, awaiting market adjustments to short-term supply increments, positive feedback from the spot market, and progress on cathode material capacity commissioning in the third quarter.
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