Here is the daily market analysis for nonferrous metals.
Copper
Copper prices on both domestic and international markets showed a firming trend overnight, while the import arbitrage window for physical refined copper in China has closed. On the macroeconomic front, the Bank of Japan announced a 25 basis point increase in its benchmark rate to 1%, the highest level since 1995, and stated it would suspend its planned reduction in government bond purchases starting April 2027. Geopolitical developments include media reports suggesting the US and Iran are set to sign an agreement on the 19th, which would fully reopen the Strait of Hormuz. Former US President Trump indicated that America's focus would subsequently shift to the Russia-Ukraine conflict. Domestically, economic data for May indicates weak internal demand, requiring further stimulus. Inventory data shows LME stocks decreased by 4,600 tonnes to 357,000 tonnes; Comex stocks increased by 30 tonnes to 590,248 tonnes; SHFE copper warehouse receipts fell by 847 tonnes to 96,434 tonnes; BC copper warehouse receipts dropped by 151 tonnes to 13,887 tonnes. With the June 30 deadline for the US copper tariff assessment report approaching, traders still have an incentive to stockpile before the policy is finalized. High COMEX inventories and the inter-market spread are providing short-term support for overseas prices. China is gradually entering the seasonal demand lull, leading to a weakening of fundamental support. Although the US-Iran negotiations have reportedly made a significant breakthrough, the market reaction remains muted. The impact of US-Iran tensions on copper is twofold: the reopening of the Strait of Hormuz would benefit global economic recovery, but it would also alleviate the overseas sulfur shortage. Additionally, with the US Federal Reserve's June FOMC meeting imminent, any unexpectedly hawkish signals could strengthen the US dollar and put downward pressure on copper prices. Overall, a cautious approach within a range-bound market is recommended, with positioning best considered after macroeconomic risks have been fully digested.
Nickel & Stainless Steel
Overnight, LME nickel rose 0.79% to $17,955 per tonne, while SHFE nickel increased 1.16% to 135,850 yuan per tonne. Inventories show LME stocks rose by 942 tonnes to 275,874 tonnes, and SHFE warehouse receipts increased by 220 tonnes to 93,363 tonnes. Looking at premiums/discounts, the LME cash-to-3-months spread remains in contango, while the import nickel premium stands at -350 yuan per tonne. Supply is showing signs of proactive tightening. On one hand, an Indonesian mine has entered a maintenance phase due to quota issues, with attention on quota developments for the second half of the year. On the other hand, following a previous policy adjustment to HPM, prices for nickel ore and sulfur led to reduced operating rates at some Indonesian projects. However, a potential easing of sulfur supply could subsequently improve capacity utilization rates. Although supply is tightening in a sustained and segmented manner, primary nickel inventory pressure continues to build, and the decline in June's electrolytic nickel production schedule is not substantial. On the demand side, June production schedules indicate ternary material output is expected to be flat month-on-month, while stainless steel's nickel consumption is projected to decline slightly. Currently, inventory pressure remains the core issue in the nickel industry chain. Short-term focus should be on macro-level co-movements, while industry attention should remain on Indonesian quotas.
Alumina, Electrolytic Aluminum & Aluminum Alloy
The AO2609 contract closed at 2,914 yuan per tonne, up 0.73%, with open interest increasing by 5,543 lots to 279,000 lots. Aluminum prices firmed, with the overnight LME contract closing at $3,388 per tonne, up 0.27%, and stocks decreasing by 1,500 tonnes to 318,000 tonnes. The AL2607 contract closed at 23,895 yuan per tonne, up 0.27%, with open interest decreasing by 2,532 lots to 227,000 lots. Aluminum alloy prices also firmed, with the overnight main AD2608 contract closing at 23,240 yuan per tonne, up 0.39%, and open interest increasing by 26 lots to 16,550 lots. On the physical market, SMM's alumina price rebounded to 2,715 yuan per tonne. The discount for aluminum ingots widened to 80 yuan per tonne. Foshan A00 prices retreated to 23,790 yuan per tonne, at a 20 yuan per tonne discount to Wuxi A00. Aluminum billet processing fees held steady in Henan and Linyi, while rising by 90-180 yuan per tonne in other regions. Processing fees for 1A60 series aluminum rod were stable, as were those for 6/8 series; processing fees for low-carbon 6/8 series decreased by 350 yuan per tonne. Market rumors suggest Guinea's Ministry of Mines plans to release a detailed document on bauxite quota issues this week, coupled with production curtailment pressure on Shanxi producers due to environmental controls on red mud. Alumina inventories have accumulated nearly 300,000 tonnes over the past three weeks, with restocking by aluminum smelters lagging far behind the pace of alumina product output and import inflows. It is noted that Guinea has entered its rainy season cycle. Following the potential implementation of mining policies, a decline in shipments and rising costs could lead to a sentiment-driven premium for alumina. If the policy impact on the mining end is less than expected and subsequent shipments do not tighten substantially, price performance may revert to fundamental supply-demand dynamics. The market appears fatigued and desensitized to the news of the US and Iran nearing an agreement, with Middle Eastern geopolitical premium fluctuations diminishing. The tug-of-war between the overseas supply gap and low LME inventories versus weak domestic seasonal demand has left the electrolytic aluminum market in a consolidating phase, awaiting whether domestic social inventories can accelerate their drawdown. Additionally, attention should be paid to the upcoming US Federal Reserve meeting for signals on the monetary policy path.
Industrial Silicon & Polysilicon
On the 16th, industrial silicon prices weakened. The main 2609 contract closed at 8,620 yuan per tonne, down 1.71% on the day, with open interest decreasing by 6,866 lots to 248,000 lots. Baichuan's physical reference price for industrial silicon was 9,161 yuan per tonne, down 21 yuan from the previous session. The price for the lowest deliverable grade retreated to 8,600 yuan per tonne, with the physical discount of 25 yuan per tonne turning into a premium of 90 yuan per tonne. Polysilicon prices also weakened. The main 2609 contract closed at 35,420 yuan per tonne, down 7.25% on the day, with open interest increasing by 4,334 lots to 103,000 lots. The standard for the lowest deliverable grade dropped to 36,315 yuan per tonne, with the physical premium widening to 1,600 yuan per tonne. The cost premium formed by the previous rise in coking coal is being given back. After the positive sentiment for industrial silicon is fully released, the market may face some corrective pressure. Recently, the pace of production resumption by manufacturers in southwestern China has slowed, suggesting the volume of circulating material beyond self-supply contracts may gradually decline. Divergence in macro and micro sentiment has led to a widening gap between futures and physical prices for polysilicon. Market rumors regarding energy consumption controls have not been officially confirmed, but market sentiment has already priced in the related positive expectations. Polysilicon may be entering a phase of policy verification, awaiting confirmation of the pace following official clarification. If realized, prices could maintain a high-level consolidation; otherwise, they might face a rapid retracement of the previous surge premium, warranting caution for potential sharp volatility in the market.
Lithium Carbonate
Yesterday, the lithium carbonate futures 2609 contract fell 2.98% to 169,980 yuan per tonne, with open interest decreasing by 2 lots to 450,000 lots on the day. In the physical market, the average price for battery-grade lithium carbonate fell by 1,500 yuan per tonne to 169,000 yuan per tonne. The average price for industrial-grade lithium carbonate fell by 1,500 yuan per tonne to 165,000 yuan per tonne. The price for battery-grade lithium hydroxide (coarse particle) dropped by 1,000 yuan per tonne to 154,000 yuan per tonne. Warehouse receipt data shows inventory decreased by 600 tonnes to 53,285 tonnes. On the supply side, weekly production increased by 85 tonnes week-on-week to 26,429 tonnes. June's lithium carbonate production is projected to increase by 2.6% month-on-month to 116,275 tonnes. On the demand side, according to SMM data, June production for ternary materials is expected to be flat month-on-month at 88,990 tonnes, lithium iron phosphate is forecast to grow 3% month-on-month to 504,150 tonnes, lithium cobalt oxide is projected to increase 3% month-on-month to 8,250 tonnes, and lithium manganate production is estimated to decline 2% month-on-month to 10,780 tonnes. Based on production schedules from other institutions, June cathode material output is expected to increase 6.5% month-on-month, while battery production is forecast to rise 6.2% month-on-month. According to market statistics, global lithium battery production is projected to increase 8.9% month-on-month. Regarding inventories, large-sample inventories decreased by 1,412 tonnes week-on-week to 132,991 tonnes, while small-sample inventories fell by 957 tonnes week-on-week to 97,829 tonnes. Using the large-sample metric, inventories in other segments decreased by 1,485 tonnes week-on-week to 69,874 tonnes, smelter inventories dropped by 121 tonnes to 16,494 tonnes, while downstream inventories increased by 194 tonnes to 46,623 tonnes. Last week's price stabilization and some reduction in warehouse receipts provided a base, but the basis remains weak. If a further positive feedback loop between the basis and warehouse receipts materializes, it could support further upward price correction. However, it is noteworthy that the downstream inventory stocking coefficient has expanded again. Should a one-sided market trend emerge, it could still lead to a situation of nominal prices without actual trading, potentially limiting the short-term upside. Attention should be paid to whether new variables intervene in market expectations, such as: potential shipment shortfalls from Zimbabwe, the resumption status of the Jianxiawo mine, and the performance of demand growth rates.
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