Copper prices retreated from record peaks as shifting tariff expectations rattled the market, while nickel, aluminum, and lithium markets faced their own distinct pressures.
Copper: Tariff Uncertainty Triggers Sharp Pullback
Macroeconomic data in the United States now presents a mixed picture of steady employment alongside re-emerging inflationary pressures. Initial jobless claims for the week ending September 5 fell by 1,000 to 206,000, maintaining the narrow 189,000-212,000 range seen since mid-July, while continued claims dipped slightly to 1.774 million.
On the inflation front, August PPI rose 0.4% month-over-month and 5.4% year-over-year, surpassing expectations. The headline CPI increased 3.4% annually and 0.4% monthly, both in line with forecasts, though core CPI eased from 2.5% in July to 2.4% year-over-year as expected. However, the monthly core CPI reading of 0.3% exceeded the 0.2% estimate. Following the data release, market odds for a September Fed rate hike jumped to 90%, although internal divisions remain within the Federal Reserve.
Geopolitically, US-Iran tensions continued to escalate throughout the week with ongoing attacks and retaliatory actions. Meanwhile, Yemen's Houthi rebels seized strategic positions in the Bab el-Mandeb Strait and maintained assaults on Saudi Arabia, prompting urgent mediation by major powers. The situation remains highly uncertain.
In fundamentals, domestic copper concentrate TC quotes continued to decline to -$209.7 per ton, setting another historic extreme low, reflecting persistently tight concentrate supply and providing robust support for the current market. September refined copper output is estimated at 1.1393 million tons, down 0.6% month-over-month but up 1.6% year-over-year. July refined copper net imports increased 13.21% year-over-year to 244,700 tons, though cumulative imports fell 10.07% year-to-date. Scrap copper imports in July rose 3.89% month-over-month to 219,100 metal tons, up 15.29% year-over-year.
Inventory data through September 11 showed global visible copper stocks easing 2,000 tons to 1.057 million tons from the September 4 reading. LME inventories added 300 tons to 234,475 tons, Comex stocks grew 643 tons to 696,267 tons, while domestic social inventories of refined copper slipped 1,400 tons to 87,500 tons, and bonded-area stocks declined 1,800 tons to 38,800 tons. Downstream buyers maintained hand-to-mouth procurement with weak appetite for accumulating inventory at elevated prices.
LME copper posted back-to-back record highs early in the week, reaching $14,875 per ton on September 10. However, late Thursday news from the White House indicated no decision had been made on refined copper tariffs, dismantling the tariff-driven US stockpiling rationale. LME prices plunged 4% in a single session to $14,182 per ton, while the COMEX benchmark fell more than 5%.
With September FOMC hike odds approaching 90%, the market has already largely priced in this "credibility-driven" tightening, suggesting macroeconomic headwinds may be shifting. Still, attention remains fixated on Section 232 tariffs, with a final decision due by September 28. The White House's current ambivalence introduces significant uncertainty, warranting a cautiously bearish short-term stance on copper prices amid fluctuating inventory arbitrage dynamics.
Nickel & Stainless Steel: Output Cuts Meet Quota Pressures
Supply-side data showed weekly nickel ore prices for 1.2% grade fell $1 per wet ton to $27, while 1.6% grade held steady at $64.1 per wet ton. Indonesia's domestic HPM for 1.2% grade dropped $0.47 per ton to $45.65, with 1.6% grade down $0.64 to $63.64. MHP discount coefficients weakened while weekly average spot prices edged higher; high-grade matte discount coefficients held steady as weekly average spot prices slipped modestly.
September refined nickel output is projected to decline 2% month-over-month to 29,500 tons. Domestic ferronickel production is expected to fall 2% to 32,000 nickel tons, Indonesian ferronickel output down 1% to 133,300 nickel tons, and nickel sulfate production down 2% to 37,105 nickel tons. Weekly smelting margins weakened as well.
Demand indicators for battery materials showed September lithium battery output expected to rise 7% to 314.5 GWh, with ternary batteries down 1% to 45.8 GWh. August new energy passenger vehicle production reached 1.528 million units, up 19.2% year-over-year and 5.0% month-over-month. Wholesale NEV sales hit 1.51 million units, up 16.4% annually and 3.9% monthly; retail volume was 1.005 million units, down 10.1% annually but up 5.7% monthly; exports totaled 518,000 units, surging 154.7% year-over-year while declining 5.0% month-over-month.
For stainless steel, total social inventories across 89 mainstream warehouses stood at 1.151 million tons, down 0.55% week-over-week, with the 300-series decreasing 2,971 tons to 671,000 tons. September stainless steel production is expected at 3.538 million tons, down 3%, with 300-series down 1% to 1.907 million tons, 200-series up 1% to 1.015 million tons, and 400-series down 6% to 616,000 tons.
Weekly LME nickel inventories increased 3,552 tons to 274,320 tons, while SHFE stocks fell 847 tons to 110,552 tons. Social inventories declined 1,306 tons to 127,799 tons, and bonded-area stocks rose 500 tons to 1,900 tons.
In news, Eramet announced that after four months of maintenance, mining operations at PT Weda Bay Nickel have resumed following authorization from Indonesian authorities. With nickel ore and sulfur prices weakening amid climate and power pressures across the supply chain, various production cuts are emerging. Domestic refined nickel, ferronickel, and nickel sulfate all show varying output declines, which could help digest inventory pressures. However, quota pressures are becoming more prominent, and theoretical cost support may continue shifting lower. Short-term prices remain rangebound with a cautious eye on macro disruptions.
Alumina, Aluminum & Aluminum Alloys: Expectation Correction Amid Pallid Peak Season
Alumina futures traded softer this week, with the main contract settling at 2,697 yuan per ton by September 11, down 2.2% for the week. SHFE aluminum also weakened, with the main contract closing at 24,235 yuan per ton, down 0.2%. Aluminum alloy contracts slipped 0.87% to 23,425 yuan per ton.
Supply data from SMM showed alumina weekly operating rates increased 1.01% to 76.67%, with output rising 23,000 tons to 1.741 million tons. Shanxi producers have fully resumed operations. Overseas, EGA's Al Taweelah alumina refinery continues to ramp up production, while Hydro's 3.15 million-ton-per-year Alunorte facility in Brazil has begun a gradual restart.
For electrolytic aluminum, weekly operating rates held steady at 98.53%, with output stable at 874,700 tons and the aluminum-water ratio rising 0.15% to 78.93%. At the UAE's Al Taweelah smelter, 25% of the 1,262 electrolytic cells have been restarted, with the recovery pace exceeding expectations.
Demand indicators are showing early signs of peak-season improvement as downstream processing rates continue to recover. Weekly average operating rates at processing plants rose 0.3% to 61.3%. By segment, aluminum plate/sheet held at 69.4%, foil steady at 71.1%, profiles rose 0.2% to 51.3%, and wire/cable held at 64%. Recycled aluminum alloy operating rates climbed 1% to 52.6%. Aluminum rod processing fees were steady in Linyi but rose 50-180 yuan per ton in other regions; aluminum pole fees held in Shandong and Guangdong, rose 50 yuan in Henan, and fell 25 yuan in Inner Mongolia.
Exchange inventory data showed alumina stocks adding 9,279 tons to 146,500 tons weekly, while SHFE aluminum shed 17,000 tons to 347,700 tons and LME aluminum declined 425 tons to 244,100 tons. Social inventories saw alumina port stocks fall 99,500 tons to 917,500 tons, aluminum ingot stocks decrease 19,000 tons to 796,000 tons, and aluminum rod inventories build 11,000 tons to 153,000 tons.
Stronger freight rates and firmer crude oil prices have pushed up landing costs for Guinean bauxite. Production cut expectations at alumina facilities that have been operating near breakeven have been amplified by speculators. Despite demand for reshipment to overseas markets from port bonded zones driving weekly social inventory draws, alumina plant inventories remain elevated, suggesting the market is pricing expectations rather than genuine supply-demand improvement.
For electrolytic aluminum, rising September Fed hike probabilities have renewed pressure from a strong dollar on non-ferrous metals. Approaching mid-September, peak-season demand fulfillment has fallen short. Spot small premiums have reverted to discounts, and aluminum rod inventory accumulation risk is transmitting to ingot markets, capping upside potential. Key factors to monitor include inventory drawdown sustainability, peak-season order fulfillment, and shifts in Fed policy signals.
Industrial Silicon & Polysilicon: Stubborn Inventory Build, Inflection Point Elusive
Industrial silicon futures traded on a weak note this week, with the 2611 main contract closing at 8,605 yuan per ton on September 11, down 2.44% for the week. Polysilicon also weakened, with the 2611 contract settling at 36,480 yuan per ton, down 3.48%. Spot prices were steady to slightly higher, with non-oxygenated grade holding at 8,900 yuan, oxygenated 553 grade steady at 9,100 yuan, and 421 grade rising 50 yuan to 9,600 yuan per ton.
According to Baichuan data, weekly industrial silicon output declined 2,070 tons to 76,450 tons, while furnace operating rates rose 1.95% to 28.13% with 15 additional furnaces brought online to 216 total. In the northwest region, 128 furnaces are operating, with Xinjiang adding 2 and Gansu adding 9 during the week. The southwest region has 64 furnaces running, with Sichuan adding 2 while Yunnan held steady at 37. Other regions account for 24 operating furnaces, with Inner Mongolia and the northeast each adding one.
On the demand side, N-type polysilicon prices held at 40,000 yuan per ton weekly, while N-type mixed-batch material rose 150 yuan to 39,400 yuan. Spot transactions for silicon material were nearly nonexistent as wafer makers maintained cautious procurement. The market awaits policy implementation details and industry requirements. Meanwhile, integrated manufacturers have resumed operations with increased monthly production schedules, though expectations hinge on October's output reduction meetings.
Silicone prices were raised to 14,500-14,800 yuan per ton this week. Monomer producers have again reduced supply to defend pricing, with downstream inquiry and purchasing levels improving on peak-season stocking sentiment. However, large-scale procurement has yet to materialize, and buyers remain resistant to premium-priced material.
Weekly polysilicon output increased 10 tons to 27,000 tons, while DMC production rose 400 tons to 39,600 tons. Exchange inventories showed industrial silicon stocks drawing 235 tons to 167,200 tons, with polysilicon down 30 tons to 73,000 tons. Social inventories of industrial silicon fell 2,600 tons to 527,700 tons, including plant inventory reductions of 2,100 tons to 321,700 tons. Huangpu port held at 63,000 tons, Tianjin port declined 500 tons to 86,500 tons, and Kunming port held at 56,500 tons. Polysilicon plant inventories increased 3,000 tons to 316,000 tons.
With the eastern base of a major Xinjiang producer completing output reductions while multiple previously halted plants resume operations, the market is simultaneously pricing in longer-than-expected halt durations at major plants and actual September reductions falling short of expectations. Despite silicon plants holding firm on pricing this week, frequent fourth-quarter production cut announcements in polysilicon, combined with reduced silicon material procurement, have amplified demand contraction concerns. Industrial silicon faces limited upside and downside, maintaining a rangebound rhythm.
Polysilicon's strong production cut expectations continue to clash with weak reality. September large-order transactions have stalled, and spot premiums are widening again. Inventory pressure at silicon material plants continues to accumulate. Only wafer manufacturers with low raw material inventories and overseas traceability orders are releasing modest buying interest, as most wafer plants maintain two months of operational inventory. The polysilicon inflection point has yet to emerge. Key watchpoints include production cut negotiations and the risk of disappointing downstream wafer peak-season restocking expectations.
Lithium Carbonate: Macro Headwinds, Focus on Spot Dynamics
Weekly lithium carbonate output increased 1,413 tons to 27,665 tons. Spodumene-based production rose 1,040 tons to 14,313 tons, lepidolite-based output gained 330 tons to 3,387 tons, salt lake production increased 177 tons to 5,993 tons, recycling-based output fell 45 tons to 3,055 tons, and lithium slag extraction declined 89 tons to 917 tons. September lithium carbonate production is expected to rise 10% month-over-month to 128,517 tons, with spodumene-based output up 10% to 67,680 tons and salt lake production up 18% to 26,190 tons.
In end-use demand, the August NEV data mirrors earlier figures, with strong production and sales growth. On the energy storage front, August system bidding reached 9.3GW/30.5GWh, up 63.9%/67.1% month-over-month, while awarded contracts reached 3.1GW/43.0GWh, down 47.3% in capacity but up 167.6% in energy terms. EPC (including PC) bidding reached 17.2GW/54.5GWh, up 5.2%/21.2%, with awards at 14.7GW/42.3GWh, up 17.0%/20.5%.
Weekly inventories declined 4,912 tons to 164,435 tons. Upstream stocks fell 1,848 tons to 34,796 tons, cathode producers added 1,366 tons to 40,861 tons, traders reduced holdings by 570 tons to 70,450 tons, and cell manufacturers plus others increased 840 tons to 18,328 tons.
Market sentiment weakened this week, with futures prices and lithium mining/battery stocks broadly correcting. Fundamentally, September shows strength on both supply and demand sides with weekly output increases and slowing inventory drawdowns. Warrant registrations continue to flow in on a weekly basis, and while basis has strengthened, it has not yet reflected positive spot feedback. End-market data remains respectable but insufficient to shift market expectations. Downside is supported by physical reality, while upside is capped by expectation pressure. Lacking near-term catalysts, rangebound trading is likely. Key focus lies in whether basis and warrant inventory changes can validate a strong fundamentals scenario.
Disclaimer: This report's information is sourced from public data. The company makes no guarantees regarding accuracy or completeness of this information, nor does it warrant that included information and recommendations will not change. This report is intended solely for professional investors among the company's clients. While we strive for objectivity and fairness, the views, conclusions, and recommendations herein are for reference only and do not constitute trading guidance for the mentioned products. Any investment decisions made by investors based on this report are solely their own responsibility, and neither the company nor the authors bear liability.
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