Copper: (Zhan Dapeng, Practitioner ID: F3013795; Trading Advisory ID: Z0013582) Overnight, copper prices both domestically and internationally stabilized and moved higher, while the spot market for domestic refined copper maintained a state where the import arbitrage window remains closed. Macro-wise, Federal Reserve Governor Meehan, typically seen as a dove, indicated that interest rate cuts this year need to exceed 100 basis points, and he is keenly watching Warsh's upcoming performance; the US House of Representatives passed a funding agreement negotiated by President Trump with Senate Democrats, potentially ending the partial government shutdown. Inventory-wise, LME stocks increased by 1,450 tonnes to 176,125 tonnes; Comex stocks rose by 2,284 tonnes to 528,252 tonnes; SHFE copper warehouse receipts increased by 494 tonnes to 153,021 tonnes, while BC copper stocks remained at 10,615 tonnes. On the demand side, purchasing willingness has noticeably improved as copper prices adjusted. Regarding news, Duan Shaofu, Deputy Secretary-General of the China Nonferrous Metals Industry Association, suggested improving the copper resource reserve system. Beyond expanding the national strategic copper reserve scale, studying the inclusion of copper concentrate, which has large trade volumes and is easily liquidated, into the reserve scope was proposed. After gradually digesting the impact from the precious metals adjustment, copper prices experienced a significant rebound stimulated by news. However, the copper market still faces challenges from weak spot fundamentals, continuously accumulating inventories, and the demand vacuum around the Spring Festival. Prices may still fluctuate around the holiday period. Yet, the rigid constraints from the copper concentrate supply side and the certainty of long-term demand mean that any substantial price decline will attract long-term allocation funds and industrial buying interest. This also implies that adjustments around the Spring Festival will lay a more solid foundation for the medium to long-term upward trend in copper prices.
Nickel & Stainless Steel: (Zhu Xi, Practitioner ID: F03109968; Trading Advisory ID: Z0021609) Overnight, LME nickel rose 2.05% to $17,395 per tonne, while SHFE nickel increased 2.34% to 135,770 yuan per tonne. Inventory-wise, LME stocks held steady at 285,528 tonnes, while SHFE warehouse receipts increased by 1,606 tonnes to 48,180 tonnes. Looking at spreads, the LME 0-3 month spread remained in negative territory; the import nickel premium fell by 150 yuan/tonne to 50 yuan/tonne. Fundamentally, prices for nickel ore and nickel pig iron (NPI) transactions have strengthened, possibly indicating concerns about tight resource supply, with support from rising marginal costs. For stainless steel, weekly inventory is accumulating due to the Spring Festival factor in February, although there are maintenance shutdowns on the supply side. In the new energy sector, MHP prices remain firm, providing relatively strong cost support for nickel sulfate, but spot procurement and sales are relatively quiet. Production of ternary materials is also expected to weaken month-on-month. Overall, while phased demand has weakened sequentially, cost support remains solid and is expected to provide strong support for prices. Market sentiment has warmed somewhat; opportunities to cautiously test long positions near cost levels warrant attention.
Alumina, Primary Aluminum & Aluminum Alloy: (Wang Heng, Practitioner ID: F3080733; Trading Advisory ID: Z0020715) Overnight, alumina prices weakened slightly. The AO2605 contract closed at 2,806 yuan/tonne, down 0.14%, with open interest increasing by 4,170 lots to 381,000 lots. SHFE aluminum prices strengthened overnight; the AL2603 contract closed at 23,865 yuan/tonne, up 1.47%, with open interest rising by 4,669 lots to 231,000 lots. Aluminum alloy prices were strong; the main AD2603 contract closed at 22,300 yuan/tonne, up 1.29%, with open interest decreasing by 110 lots to 4,713 lots. In the spot market, the SMM alumina price retreated to 2,620 yuan/tonne. The spot discount for aluminum ingots widened to 220 yuan/tonne. Foshan A00 aluminum was quoted lower at 23,310 yuan/tonne, at a 20 yuan/tonne premium to Wuxi A00. Aluminum billet processing fees held steady in most regions, down 20 yuan/tonne in Xinjiang and Guangdong, but up 50-100 yuan/tonne in Nanchang and Wuxi. Processing fees for aluminum rod (1A60 series and 6/8 series) remained stable, while low-carbon aluminum rod processing fees decreased by 380 yuan/tonne. Recent increases in maintenance shutdowns at alumina plants across regions have led to supply disruptions, pushing alumina into a narrow range of consolidation. As downstream pre-holiday stocking concludes and logistics stall approaching the holiday, alumina inventories are gradually accumulating, and prices are retreating as sentiment fades. Trump nominated a new Fed Chair, perceived by the market as hawkish. Domestically, the proportion of aluminum liquid production has weakened. High prices are dampening demand, coupled with repeated environmental control measures in central China, leading downstream sectors to generally reduce or cancel concentrated pre-holiday stocking. With the holiday buffer, market sentiment is expected to gradually ease off before the festival. Close attention should be paid to US-Iran tensions and whether they trigger new macro pricing.
Industrial Silicon & Polysilicon: (Wang Heng, Practitioner ID: F3080733; Trading Advisory ID: Z0020715) On the 3rd, industrial silicon prices weakened slightly. The main 2605 contract closed at 8,815 yuan/tonne, down 0.62% for the day, with open interest decreasing by 1,513 lots to 235,000 lots. The Baichuan spot reference price for industrial silicon was 9,628 yuan/tonne, unchanged from the previous trading day. The price for the lowest deliverable grade held steady at 8,850 yuan/tonne, narrowing the spot premium to 35 yuan/tonne. Polysilicon prices strengthened. The main 2605 contract closed at 50,000 yuan/tonne, up 6.61% for the day, with open interest decreasing by 1,867 lots to 38,411 lots. The Baichuan price for N-type polysilicon 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 3,500 yuan/tonne. Silica rock enterprises have officially entered the winter maintenance period, leading to an overall contraction in ore supply. Downstream sectors are also entering comprehensive maintenance due to the Spring Festival holiday. With a supply-demand reduction game in industrial silicon, prices have cost support, but whether there is upward momentum depends on whether major producers implement production cuts beyond expectations. The Ministry of Industry and Information Technology held a meeting reiterating anti-monopoly topics. New order bookings for silicon wafer companies are largely stagnant. Pessimistic expectations persist in the crystalline silicon market, and polysilicon still faces downward price pressure. Key focuses include whether industry inventories can be reduced and whether polysilicon plants have plans to expand production cuts in response.
Lithium Carbonate: (Zhu Xi, Practitioner ID: F03109968; Trading Advisory ID: Z0021609) Yesterday, the lithium carbonate futures contract 2605 rose 4.63% to 148,100 yuan/tonne. Regarding spot prices, the average price for battery-grade lithium carbonate fell by 2,000 yuan/tonne to 153,500 yuan/tonne, while the average for industrial-grade fell by 2,000 yuan/tonne to 150,000 yuan/tonne. The price for battery-grade lithium hydroxide (coarse particle) decreased by 2,500 yuan/tonne to 149,500 yuan/tonne. Warehouse receipt inventory increased by 843 tonnes yesterday to 33,084 tonnes. On the supply side, weekly production decreased by 648 tonnes week-on-week to 21,569 tonnes. Specifically, production via spodumene processing decreased by 670 tonnes to 13,244 tonnes, lepidolite-based production decreased by 50 tonnes to 2,832 tonnes, salt lake-based production increased by 90 tonnes to 3,205 tonnes, and production from recycled materials decreased by 18 tonnes to 2,288 tonnes. According to SMM, scheduled production for battery-grade lithium carbonate in February dropped 17.6% month-on-month to 58,835 tonnes, while industrial-grade lithium carbonate production fell 12.7% month-on-month to 23,095 tonnes. Demand-side, weekly ternary material production decreased by 203 tonnes to 18,053 tonnes, with inventory down 177 tonnes to 18,691 tonnes. Weekly lithium iron phosphate (LFP) production increased by 904 tonnes to 88,223 tonnes, with inventory up 229 tonnes to 96,819 tonnes. SMM data indicates February scheduled production for ternary materials decreased 14.6% month-on-month to 69,250 tonnes, LFP decreased 10.7% to 354,000 tonnes; ternary power battery production fell 14.3% to 24.84 GWh, LFP power battery production decreased 10.8% to 79.71 GWh, and LFP energy storage battery production dropped 8.8% to 57.46 GWh. Inventory-wise, weekly social inventory of lithium carbonate decreased by 1,414 tonnes to 107,482 tonnes. Downstream inventory increased by 3,007 tonnes to 40,599 tonnes, inventory in other segments decreased by 3,590 tonnes to 47,880 tonnes, and upstream inventory decreased by 831 tonnes to 19,903 tonnes. Previously, market sentiment deteriorated, leading to a rapid devaluation of lithium carbonate, with weighted open interest nearly halving from its peak. Yesterday, market sentiment showed some recovery. Against the backdrop of inventory drawdown expected in the first quarter, lithium carbonate performed relatively strongly. Opportunities for valuation recovery in commodities driven by sentiment resonance deserve attention. However, caution is warranted as last week's and Monday's significant price declines led to notably higher spot transaction volumes, suggesting pre-holiday stocking is largely complete, leaving fundamental support relatively weak before the holiday. Additionally, potential disruptions from the US Strategic Critical Minerals Reserve Program warrant monitoring.
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