Copper: Weak Macro and Micro Factors Lead to Price Correction 1. Macroeconomic Factors. Overseas, the U.S. Labor Department reported that February CPI remained at 2.4% year-on-year, while core CPI fell to 2.5% year-on-year, both meeting expectations, indicating that inflation has not immediately spiraled out of control due to earlier oil price increases. However, the market is more focused on March data. Additionally, structural contradictions in the job market remain prominent, with initial jobless claims at 213,000, lower than expected, suggesting limited corporate layoffs, contrasting with the sharp drop in non-farm payrolls. Geopolitically, the crisis over the potential blockade of the Strait of Hormuz persists amid escalating U.S.-Iran conflict, pushing international oil prices higher and continuously impacting commodity markets. Domestically, China's February total social financing increased by 2.38 trillion yuan, up 146.9 billion yuan year-on-year; RMB loans issued by financial institutions increased by 900 billion yuan, down 110 billion yuan year-on-year; M1 and M2 grew 5.9% and 9.0% year-on-year respectively, compared to previous figures of 4.9% and 9.0%.
2. Fundamentals. For copper concentrate, the domestic TC offer fell to -60.9, highlighting renewed tightness in copper concentrate supply, becoming a strong supportive factor for fundamentals. In refined copper production, March electrolytic copper output is estimated at 1.1952 million tons, up 4.6% month-on-month and 6.5% year-on-year, showing a slight recovery from February. Regarding imports, China's December net refined copper imports fell 48.44% year-on-year to 201,800 tons, with a cumulative yearly drop of 15.21%; December scrap copper imports rose 14.81% month-on-month to 239,000 metal tons, up 9.88% year-on-year, with a cumulative increase of 4.12%. Inventory-wise, as of March 13th, global visible copper stocks increased by 16,000 tons from the previous (6th) count to 1.487 million tons. LME stocks rose by 27,500 tons to 311,825 tons; Comex stocks fell by 5,709 tons to 536,731 tons; domestic refined copper social inventories dropped 3,300 tons weekly to 573,900 tons, while bonded area stocks fell 2,800 tons to 64,200 tons. On the demand side, weaker copper prices have led to improved downstream orders and increased purchasing interest.
3. Outlook. With the ongoing escalation of U.S.-Iran conflict, market concerns about its adverse impact on the global economy dominate. Significant declines in overseas financial markets, coupled with expectations of weaker demand and liquidity worries, have pressured copper prices downward. Additionally, the price spread between U.S. and LME copper has reversed and narrowed, raising concerns that outflows from U.S. copper inventories may increase stocking pressure on LME copper. However, the market is not entirely bearish. Extremely low TC/RC fees have expanded theoretical losses for smelters, potentially leading to production cut expectations and limiting deep price declines. Meanwhile, China is approaching the traditional peak consumption season in April, with improved production schedules for downstream cable and air conditioning enterprises. Essential restocking demand is expected to emerge after price declines, accelerating the drawdown of domestic social inventories. Short-term focus is on support within the 90,000-100,000 yuan/ton range. If global inventory accumulation slows and spot discounts narrow, light long positions could be considered to bet on a seasonal rebound. However, if geopolitical conflicts worsen, continued pricing of macro risks may warrant a cautious stance on copper prices.
Nickel & Stainless Steel: Cost Push and Macro Drag 1. Supply: For nickel ore, Indonesian nickel ore premiums remain at $40/wet ton, while Philippine 1.5% nickel ore premiums rose $4.5/ton to $15/wet ton. For nickel pig iron (NPI), domestic producers and traders maintain firm offers, mostly at 1,100 yuan/nickel (ex-factory/CFR tax-incl) or above; Tsingshan's high-grade NPI tender price was 1,070 yuan/nickel (CFR tax-incl); Indonesian NPI transactions were at 1,120 yuan/nickel (delivered tax-incl). For MHP, due to a February landslide accident, four hydrometallurgical projects (QMB, Meiming, ESG, Green-Eco) in the park were forced into maintenance shutdowns, idling about 30% of Indonesia's hydrometallurgical capacity. Recent transaction coefficients have increased.
2. Demand: In new energy, March ternary precursor output is estimated to increase 14% month-on-month to about 90,000 tons; ternary material output is expected to rise 19% to 84,360 tons. According to CPCA data, from February 1-28, national passenger vehicle retail sales were 1.034 million units, down 25.4% year-on-year and 33.1% month-on-month. February new energy passenger vehicle retail sales were 464,000 units, down 32.0% year-on-year; January-February cumulative new energy vehicle retail sales were 1.06 million units, down 25.7% year-on-year. For stainless steel, weekly futures prices were largely flat, with the monthly spread widening to 155 yuan/ton, and deliverable grade premiums slightly declined. National stainless steel social inventories across 89 warehouses totaled 1.142 million tons, down 0.66% weekly, with 300-series stocks down 9,000 tons to 707,000 tons. March stainless steel crude steel output is scheduled at 3.6335 million tons, up 32.69% month-on-month and 3.46% year-on-year.
3. Inventory: LME nickel stocks decreased by 2,760 tons weekly to 284,658 tons; SHFE nickel stocks rose 2,894 tons to 56,462 tons; social inventories increased 2,953 tons to 87,490 tons; bonded area stocks remained at 2,200 tons.
4. Outlook: Tight nickel ore supply and rising freight costs continue to push nickel ore prices higher. Weekly NPI offers and transaction prices also increased. However, primary nickel social inventories rose significantly weekly, indicating considerable pressure. With tightening Indonesian nickel ore quotas causing supply disruptions, expectations exist for supplementary quotas in July. Despite high primary nickel inventory pressure, persistently strong cost support suggests short-term long opportunities near cost levels, while remaining cautious of macro drag.
Alumina, Primary Aluminum & Aluminum Alloy: Squeeze-Driven Buying, Stronger Overseas, Weaker Domestic Alumina futures strengthened weekly, with the main contract closing at 2,956 yuan/ton on the 13th, up 4.4% weekly. SHFE aluminum also strengthened, with the main contract closing at 24,960 yuan/ton, up 1% weekly. Aluminum alloy futures strengthened, with the main contract closing at 23,655 yuan/ton, up 1.6% weekly.
1. Supply: According to SMM, weekly alumina operating rates decreased 0.05% to 77.08%. Production reductions continued in Shanxi and Guizhou, while Henan producers gradually resumed after maintenance. For primary aluminum, ongoing Middle East conflicts led to production halts at Qatar's Norsk Hydro and supply suspensions by Bahrain's aluminum producer. A Mozambique plant's 580,000-ton capacity faces shutdown due to unresolved power contracts. Mt. Holly's 50,000-ton idle capacity is expected to restart in April, reaching full production by end-Q2; an Iceland plant resumes production end-April, reaching full capacity end-July. Domestic and Indonesian projects ramp up, keeping daily primary aluminum output high. SMM estimates March domestic metallurgical alumina operating capacity will drop to 86.248 million tons, output at 7.378 million tons, up 11.5% month-on-month but down 2.3% year-on-year; March domestic primary aluminum operating capacity expected to rise to 44.3 million tons, output at 3.875 million tons, up 12.9% month-on-month and 4.3% year-on-year, with aluminum liquid ratio falling to 64.4%.
2. Demand: During the peak March period, operating rates across sectors continued to recover. Weekly average operating rates for processing enterprises rose 2.4% to 61.9%. By sector: aluminum cable rates up 2% to 65%; aluminum sheet/plate up 1% to 70%; aluminum foil stable at 72.9%; aluminum profiles up 7.3% to 51.8%. Secondary aluminum alloy rates up 2.5% to 58.8%. Aluminum billet processing fees stable in Baotou, down 50-250 yuan/ton in Xinjiang, Henan, Linyi, Wuxi, Guangdong; aluminum rod processing fees stable overall.
3. Inventory: Exchange inventories: alumina stocks rose 7,813 tons weekly to 274,000 tons; SHFE aluminum stocks up 21,900 tons to 416,400 tons; LME stocks down 11,600 tons to 445,000 tons. Social inventories: alumina stocks up 8,000 tons to 188,000 tons; aluminum ingot stocks up 38,000 tons to 1.294 million tons; aluminum billet stocks down 12,000 tons to 386,000 tons.
4. Outlook: Domestic producers use maintenance to counter losses. Overseas alumina feedstock destined for the Middle East is diverted elsewhere at lower prices due to strait blockages, narrowing import price differentials and repairing import margins. Rising ore transport costs support alumina, but accelerated warrant registration and inventory accumulation turning point have weakened alumina's strength. As Middle East alumina feedstock inventories deplete, production cuts may extend to UAE aluminum producers, intensifying supply disruption pressures and triggering a risk-averse "aluminum rush" in overseas markets. LME squeeze risks resurface, boosting overseas prices, while domestic inventory builds and slow demand recovery limit gains, establishing a stronger overseas, weaker domestic pattern. Domestic funds await a turning point signal. Note that aluminum billets began destocking ahead of ingots, suggesting domestic price increases may be near. Current geopolitical developments remain key, requiring close monitoring of U.S.-Iran tensions and actual domestic downstream consumption.
Industrial Silicon & Polysilicon: Bottom Adjustments, Awaiting Policy Industrial silicon futures weakened weekly, with the main May contract closing at 8,675 yuan/ton on the 13th, down 0.17% weekly; polysilicon strengthened, with the main May contract closing at 42,040 yuan/ton, up 2.25% weekly. Spot prices were mixed: 553 without oxygen up 50 yuan/ton to 8,800 yuan/ton; 553 with oxygen stable at 9,000 yuan/ton; 421 down 100 yuan/ton to 9,600 yuan/ton.
1. Supply: According to Baichuan, weekly industrial silicon output rose 250 tons to 66,300 tons; weekly operating rate up 0.38% to 25.38%; number of operating furnaces increased by 3 to 202. In the Northwest, Xinjiang operations stable, Shaanxi shut 1 furnace, total 165 furnaces operating in the region; Southwest: Yunnan and Sichuan each started 2 new furnaces, total 13 furnaces operating; other regions unchanged.
2. Demand: Polysilicon P-type prices down 3,000 yuan/ton to 38,000 yuan/ton; N-type down 4,000 yuan/ton to 43,500 yuan/ton. Uncertain raw material pricing makes downstream procurement cautious. New polysilicon orders stalled; previous firm pricing strategies are hard to maintain, with continued discount promotions likely. Organic silicon prices weekly stable at 14,000-14,300 yuan/ton. The Ningbo meeting resulted in organic silicon producers implementing rotating production cuts from March-May, with total cuts reaching 35%, each plant cutting no less than 30% monthly. Monomer plants have orders scheduled until March; new price increase orders are acceptable, but downstream resistance to high prices suggests a loosening trend. Weekly polysilicon output down 330 tons to 19,000 tons; DMC output down 100 tons to 41,900 tons.
3. Inventory: Exchange inventories: industrial silicon stocks up 5,700 tons weekly to 109,900 tons; polysilicon stocks up 10,200 tons to 320,700 tons. Social inventories: industrial silicon stocks down 15,300 tons to 437,400 tons, with plant stocks down 14,300 tons to 254,900 tons. Huangpu port stocks down 1,000 tons to 56,500 tons; Tianjin port down 1,000 tons to 73,000 tons; Kunming port up 1,000 tons to 53,000 tons. Polysilicon social stocks down 3,200 tons to 357,000 tons.
4. Outlook: Obstacles to restarting production in Xinjiang's industrial silicon sector are offset by limited restarts in the Southwest. Rising petroleum coke costs and Xinjiang grid tariff hikes provide cost support. Downstream maintains essential stocking, but incremental restocking willingness is lacking. Industrial silicon futures trade narrowly, with spot prices stabilizing at lows. Polysilicon transactions continue shifting towards lower prices. Some major plants have startup plans in March, ending the supply contraction trend. New inventory continues shifting to warrants to ease plant stock pressure. Downstream wafer procurement remains weak; short-term polysilicon likely to adjust at low levels. The market awaits post-NPC signals on anti-internal competition policies in photovoltaics, which may trigger positive sentiment.
Lithium Carbonate: Weakening Contradictions, Range-Bound Movement 1. Supply: Weekly output increased by 836 tons to 23,426 tons: spodumene-based up 620 tons to 14,534 tons; lepidolite-based up 105 tons to 2,937 tons; salt lake-based up 20 tons to 3,495 tons; recycling-based up 91 tons to 3,460 tons. March lithium carbonate output is estimated to increase 28% month-on-month to 106,390 tons.
2. Demand: Weekly ternary material output up 406 tons to 16,924 tons, inventories up 208 tons to 18,019 tons; LFP output up 5,050 tons to 101,725 tons, inventories up 5,251 tons to 105,780 tons. March ternary material output expected up 19% to 84,360 tons; LFP output expected up 24% to 430,000 tons. End-user: CPCA data shows February 1-28 passenger vehicle retail sales at 1.034 million units, down 25.4% year-on-year and 33.1% month-on-month. February NEV retail sales 464,000 units, down 32.0% year-on-year; Jan-Feb NEV retail 1.06 million units, down 25.7% year-on-year. February conventional fuel vehicle retail 570,000 units, down 19% year-on-year. According to Daddon Times, this week's bid-winning energy storage project cell prices ranged 0.36-0.43 yuan/Wh, with the low end up 1.3% and high end up 14.7% week-on-week. For lithium battery storage projects, EPC (including PC) winning bid prices ranged 0.511-0.999 yuan/Wh, low end down 35.1%, high end down 32.6%; system winning bid prices 0.499-1.193 yuan/Wh (no weekly comparison), with top-tier company quotes converging with centralized procurement price ranges.
3. Inventory: Weekly lithium carbonate social inventories decreased 414 tons to 98,959 tons: downstream stocks up 1,890 tons to 45,647 tons; other segments down 1,120 tons to 37,020 tons; upstream stocks down 1,184 tons to 16,292 tons.
4. Outlook: Supply-side: Zimbabwe's situation remains unclear; short-term shipment declines are offset by increased shipments from other regions. Demand-side: Positive cathode material production schedules are countered by lagging data showing early-year end-user digestion pressure, failing to boost market confidence. Inventory-side: Weekly destocking continues, with total inventory turnover days falling to 27.8 days. Absolute inventory declines and expanding downstream stocking ratios provide clear price support. However, the lack of clear market contradictions leads to range-bound price movement in the short term. Breaking previous highs requires more definitive positive catalysts, but buying on dips can be considered, alongside monitoring Zimbabwe developments.
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