Copper prices trended higher overnight, with the SHFE copper VIX index rising slightly to around 18.5. The spot import arbitrage window for refined copper in China remains open. The US June CPI rose 3.5% year-on-year, a significant slowdown from May's 4.2% increase. The core CPI increased by 2.6% year-on-year, lower than the market expectation of 2.8% and the previous reading of 2.9%. This has further delayed market expectations for a Federal Reserve rate hike, leading to a weaker US dollar and supporting higher copper prices.
However, there are no signs of easing in US-Iran tensions, and navigation risks in the Strait of Hormuz persist. Oil prices and persistent inflation could lead to volatility in July's data. In his first congressional testimony last night, Fed Chair Powell stated he would act based on data even if criticized by former President Trump, and that the June CPI cooling does not mean the inflation fight is "mission accomplished."
On the inventory front, LME stocks fell by 1,675 tonnes to 303,525 tonnes; Comex stocks increased by 2,502 tonnes to 617,621 tonnes; SHFE copper warehouse receipts decreased by 2,461 tonnes to 44,697 tonnes, while BC warehouse receipts dropped by 300 tonnes to 8,207 tonnes. Regarding demand, downstream buyers continue to purchase based on immediate needs, with weak willingness to stock up at high prices.
Following statements on Strait of Hormuz navigation and the cooling US inflation data, macro conditions have marginally eased. Combined with recent supply-side disruption risks for copper, prices are expected to remain firm. However, the potential for macro volatility and underlying liquidity risks cast doubt on the extent of this upward move, warranting cautious optimism.
Nickel & Stainless Steel
LME nickel rose 0.06% overnight to $16,750 per tonne, while SHFE nickel fell 0.21% to 129,160 yuan per tonne. Inventories showed LME stocks unchanged at 274,704 tonnes, and SHFE warehouse receipts increased by 6 tonnes to 98,088 tonnes. In terms of premiums/discounts, the LME 0-3 month spread remains in contango, and the import nickel premium/discount holds at -50 yuan per tonne.
On the news front, Indonesia's Eramet disclosed that PT Weda Bay Nickel (WBN) is continuously coordinating with the Ministry of Energy and Mineral Resources, following its guidance to advance the process for adjusting the 2026 work plan and budget production quota. On July 10, Tri Winarno, Director General of Minerals and Coal at the Ministry, stated in Jakarta that there would be no comprehensive increase in nickel ore quotas, only limited additional allocations for domestic smelters lacking raw materials, with the increment not being substantial.
Export and quota-related policies are driving a price recovery for nickel. Improved demand for Class I nickel and weekly inventory drawdowns provide support, leading to modest short-term price strength. However, from the perspective of the current nickel industry chain, inventory pressure remains the core issue. Concurrently, nickel ore prices may continue to weaken, potentially leading to a decline in cost support.
Alumina, Primary Aluminium & Aluminium Alloy
Alumina prices showed firmness overnight, with the AO2609 contract closing at 2,713 yuan per tonne, up 1.08%. Open interest decreased by 8,304 lots to 381,000 lots. LME aluminium closed overnight at $3,177 per tonne, up 0.24%, with inventories down 1,625 tonnes to 284,600 tonnes. The AL2608 contract closed at 23,165 yuan per tonne, down 1.09%, with open interest down 830 lots to 192,000 lots.
Aluminium alloy prices were softer, with the main AD2609 contract closing overnight at 22,945 yuan per tonne, down 0.11%. Open interest increased by 16 lots to 19,385 lots. On the spot side, SMM's alumina price fell to 2,736 yuan per tonne. The spot premium for aluminium ingots narrowed to 20 yuan per tonne. Foshan A00 prices rebounded to 23,260 yuan per tonne, trading at parity with Wuxi A00.
Aluminium billet processing fees held steady in Baotou, Henan, and Linyi, but were lowered by 70-100 yuan per tonne in Xinjiang, Nanchang, Guangdong, and Wuxi. Processing fees for 1A60 series aluminium rod were cut by 50 yuan per tonne, held steady for the 6-series, lowered by 100 yuan per tonne for the 8-series, and increased by 165-265 yuan per tonne for low-carbon 6/8 series.
Flooding in Guangxi has temporarily restricted local alumina shipments, and the launch of a new project in Fangchenggang may be delayed, introducing marginal supply-side disruptions again. However, weather-related disruptions are not persistent and have not substantially impacted local production. With the return of maintenance-affected capacity in Shanxi and Guizhou, coupled with pressure from canceled warrants and in-transit inventory buildup, spot market pressure is evident.
Market sentiment premium related to Guinea's mining policies has largely been priced out. With alumina prices approaching the breakeven line for low-cost capacity, further downside resistance is increasing. Alumina is expected to find support at lower levels in the short term, though caution is warranted for potential short-lived rebounds before the flood situation clarifies.
The temporary US-Iran agreement has faltered, reintroducing geopolitical risk premium and shifting market drivers, providing new support for aluminium prices. Simultaneously, LME inventories hit new lows, and the pace of domestic social inventory digestion following the price decline has far exceeded expectations, creating a temporary resonance with macro disturbances.
Nevertheless, the market is heavily pricing in factors such as overseas capacity restarts and weakening terminal orders during the consumption off-season, limiting significant upside potential. Aluminium prices are expected to continue a narrow-range recovery.
Industrial Silicon & Polysilicon
On the 14th, industrial silicon prices firmed, with the main 2609 contract closing at 8,490 yuan per tonne, up 0.71% on the day. Open interest decreased by 23,788 lots to 259,000 lots. The Baichuan spot reference price for industrial silicon was 9,074 yuan per tonne, up 10 yuan from the previous session. The price for the lowest deliverable grade fell to 8,550 yuan per tonne, with the spot premium widening to 295 yuan per tonne.
Polysilicon prices weakened, with the main 2609 contract closing at 35,810 yuan per tonne, down 1.62% on the day. Open interest decreased by 2,859 lots to 115,000 lots. The price for the lowest deliverable grade fell to 36,080 yuan per tonne, with the spot premium widening to 970 yuan per tonne.
News of a major northern producer holding back sales, some capacity switching production lines, and concentrated maintenance in Yili, Xinjiang, helped support the market, but the actual impact is relatively limited. The Yili shutdowns have not been widely implemented, and northern operations generally remain at high rates.
Restarting of capacity in the southwest during the wet season is largely complete, while a new round of production control is expanding in the organosilicon sector. The supply-demand gap continues to widen, making a trend reversal for industrial silicon unlikely in the near term. Recent rumors about inspections targeting the actual energy consumption levels of polysilicon enterprises are providing ongoing policy-driven support for market sentiment.
Fundamentally, high inventory pressure remains unresolved. Post-July, new marginal supply increments are expected from the ramp-up of restarted capacity by leading producers. A market turning point has not yet emerged in the short term. Focus will be on merger and acquisition news and the pace of terminal project advancement, awaiting a true convergence of fundamentals and policy, while remaining cautious of market volatility.
Lithium Carbonate
Yesterday, the lithium carbonate futures 2609 contract rose 1.08% to 153,180 yuan per tonne, with open interest decreasing by 1,071 lots to 414,400 lots. Spot prices remained steady: battery-grade lithium carbonate average price held at 154,000 yuan per tonne, industrial-grade at 150,000 yuan per tonne, and battery-grade lithium hydroxide (coarse particle) at 141,500 yuan per tonne.
On warehouse receipts, inventory increased by 497 tonnes yesterday to 42,903 tonnes. On the supply side, weekly production fell by 860 tonnes week-on-week to 24,855 tonnes. July's lithium carbonate production is projected to increase by 90 tonnes month-on-month to 115,410 tonnes. This includes a decrease of 4,500 tonnes for spodumene-based production, an increase of 2,700 tonnes for lepidolite-based, an increase of 1,390 tonnes for salt lake-based, and an increase of 500 tonnes for recycled material.
On the demand side, July production schedules show ternary materials up 3% month-on-month to 89,690 tonnes, lithium iron phosphate (LFP) up 7% to 536,850 tonnes, lithium cobalt oxide up 3% to 7,740 tonnes, and lithium manganese oxide down 1% to 10,770 tonnes. Lithium battery production is scheduled to increase by 7% month-on-month, with domestic production up 7% and overseas up 4%. Domestically, ternary power battery production is scheduled up 7%, LFP power battery up 9%, and LFP energy storage battery up 4%.
Inventory-wise, large-sample inventories decreased by 3,423 tonnes week-on-week to 124,381 tonnes, while small-sample inventories fell by 2,337 tonnes to 92,236 tonnes. Based on the large-sample口径, inventories in other segments decreased by 1,135 tonnes to 61,627 tonnes, smelter inventories fell by 1,175 tonnes to 12,415 tonnes, and downstream inventories dropped by 1,113 tonnes to 50,339 tonnes.
Based on production schedules, July could see a destocking of around 14,000 tonnes, with the short-term destocking pace potentially accelerating. However, for the medium term, caution is warranted regarding the pace of the Jianxiawo project restart and the supply increment from concentrated arrivals of Zimbabwean lithium ore. These factors could lead to a month-by-month decrease in the destocking level in the third quarter. It is advised to monitor whether the spot market can provide further positive feedback to support prices.
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