Market commentary for key non-ferrous metals on June 9th is provided below, covering copper, nickel, stainless steel, alumina, aluminum, silicon, and lithium carbonate.
Copper Market Overview
Overnight, copper prices on both domestic and international markets showed a firming trend with slight gains. The import window for physical refined copper in China is currently closed. Geopolitical tensions initially flared with mutual attacks between Iran and Israel, raising market concerns, but the situation temporarily eased following intervention by the U.S., shifting market focus back to U.S.-Iran negotiations. In the short term, the market is also focused on the upcoming U.S. Federal Reserve's June policy meeting, the first chaired by the new Fed Chair, with attention on the bias for interest rate expectations and his stance on monetary policy. On the inventory front, LME copper stocks decreased by 2,450 tonnes to 376,775 tonnes; COMEX copper stocks increased by 1,561 tonnes to 586,289 tonnes; SHFE copper warehouse receipts fell by 48 tonnes to 95,044 tonnes, while BC copper receipts remained at 10,806 tonnes. Regarding demand, the recent dip in copper prices has spurred some downstream procurement, but a lack of significant new end-user orders indicates a seasonal slowdown. While the easing of Iran-Israel tensions prompted a brief market rebound, the overall momentum remains weak. Short-term focus is likely to remain on the Fed meeting. Ahead of this key event, the market may adopt a cautious stance, with persistent macro headwinds potentially continuing to exert a bearish influence on copper. Fundamentally, while expectations of tightening supply continue to support bullish sentiment, the anticipation of a seasonal demand slowdown is also strengthening. Overall, a cautious approach is advised in the near term.
Nickel and Stainless Steel Market Overview
Overnight, LME nickel fell 0.94% to $18,400 per tonne, and SHFE nickel dropped 0.77% to 138,140 yuan per tonne. LME nickel inventories decreased by 18 tonnes to 274,218 tonnes, while SHFE warehouse receipts increased by 225 tonnes to 86,813 tonnes. The LME cash-3 months spread remains in contango, and the import premium for nickel remains at -450 yuan/tonne. News-wise, Indonesia's Mining Minister indicated that the country might relax mineral production quotas if prices are favorable. Supply is actively tightening, partly due to maintenance at an Indonesian mine related to quota issues. Based on policy signals, additional quota volumes may be released in the second half of the year. Extrapolating from Indonesia's nickel ore production for January-April, the annual output could reach nearly 280 million wet tonnes. Additionally, adjustments to the HPM policy, coupled with prices for nickel ore and sulfur, have led to reduced operating rates at some Indonesian projects. On the demand side, June production schedules suggest ternary cathode material output will be flat month-on-month, while nickel consumption for stainless steel is expected to decline slightly. However, despite ongoing, piecemeal supply tightening, primary nickel inventory pressure continues to build. The projected drop in June electrolytic nickel production is not substantial, meaning inventory pressure remains the core issue, as supply cuts have yet to be reflected in stock levels. Concurrently, recent declines in nickel ore prices have weakened overall cost support. Market participants are monitoring Indonesian quota policies and sulfur supply developments.
Alumina, Aluminum, and Aluminum Alloy Market Overview
Overnight, alumina prices firmed slightly. The AO2609 contract settled at 2,779 yuan/tonne, up 0.22%, with open interest increasing by 3,033 lots to 312,000 lots. Aluminum prices also edged higher, with the AL2607 contract closing at 24,125 yuan/tonne, a gain of 0.15%, and open interest up 1,573 lots to 269,000 lots. Aluminum alloy prices were similarly firm, with the main AD2608 contract ending at 22,995 yuan/tonne, up 0.15%, and open interest rising by 13 lots to 14,808 lots. Spot prices for SMM alumina rose to 2,683 yuan/tonne. The spot discount for aluminum ingots narrowed to 80 yuan/tonne. Foshan A00 aluminum was quoted at 23,890 yuan/tonne, at a 110 yuan/tonne discount to Wuxi A00. Aluminum billet processing fees were stable in Baotou, Henan, and Linyi, but increased by 50-100 yuan/tonne in Xinjiang, Nanchang, Guangdong, and Wuxi. Processing fees for 1A60 series aluminum rod were steady, as were those for 6/8 series, while fees for low-carbon 6/8 series decreased by 211 yuan/tonne. The policy situation in Guinea remains unclear, with debates ongoing over whether the final implementation will involve mandatory quotas or excess production fines. Guinean mines are still observing and managing shipments. High freight rates are supporting CIF prices. New capacity in Guangxi is starting to feed material this month, while idled capacity in northern China is set to return soon. Port inventories continue to accumulate, and insufficient delivery arbitrage profits make it difficult to alleviate social inventory pressure. Before the Guinea policy is finalized, a wait-and-see sentiment dominates both bulls and bears. As peak seasonal demand fades, domestic end-user orders face accelerating contraction pressure, negatively impacting processing plant operating rates, and the offsetting effect of export orders is also weakening. Domestic aluminum ingot inventories have declined for two consecutive weeks, but absolute levels remain high, and the pace of destocking needs to accelerate. Macro uncertainties persist, with geopolitical risks from the fluctuating U.S.-Iran situation being repeatedly priced in. The high premium structure overseas is unlikely to converge quickly. Whether the aluminum ingot destocking cycle can exceed expectations will be a key fundamental variable.
Industrial Silicon and Polysilicon Market Overview
On the 9th, industrial silicon prices firmed. The main 2609 contract settled at 8,660 yuan/tonne, up 0.23% for the day, with open interest increasing by 2,140 lots to 242,000 lots. The Baichuan spot reference price was 9,196 yuan/tonne, unchanged from the previous session. The price for the lowest deliverable grade fell to 8,600 yuan/tonne, with the spot discount steady at 50 yuan/tonne. Polysilicon prices also strengthened. The main 2606 contract closed at 35,400 yuan/tonne, up 0.14%, with open interest decreasing by 406 lots to 104,400 lots. The adjusted standard for the lowest deliverable grade was lowered to 31,000 yuan/tonne, with the spot discount narrowing to 4,400 yuan/tonne. Falling hydropower electricity rates in southwestern China are offsetting the pressure from increased safety-inspection-related coal costs, prompting accelerated restarts by producers in the region. The price gap between high and low-grade silicon has narrowed. Downstream, organic silicon production cuts are balancing against polysilicon production resumptions, with overall restocking demand gradually increasing. Industrial silicon is expected to trade within a range, with the lower support level slightly shifting down. The pace of restarts in southwestern China will be monitored for its impact on the upside, focusing on the incremental supply of spot material available for circulation after excluding self-consumption. As mid-to-late June approaches, expectations for polysilicon plant restarts and the pressure from inventory accumulation are materializing, leading to further marginal weakness in spot prices. Following the conclusion of the photovoltaic exhibition, high volatility and elevated futures premiums in the market are expected to gradually converge and subside.
Lithium Carbonate Market Overview
Yesterday, the lithium carbonate futures 2609 contract rose 0.84% to 163,340 yuan/tonne, with daily open interest increasing by 1,378 lots to 423,400 lots. Spot prices saw battery-grade lithium carbonate average rise by 750 yuan/tonne to 163,750 yuan/tonne, while industrial-grade lithium carbonate average increased by 500 yuan/tonne to 159,750 yuan/tonne. The price for battery-grade lithium hydroxide (coarse particle) held steady at 150,000 yuan/tonne. Warehouse receipts increased by 253 tonnes yesterday to 55,940 tonnes. On the supply side, weekly production increased by 797 tonnes week-on-week to 26,344 tonnes. June's total lithium carbonate production is projected to increase by 2.6% month-on-month to 116,275 tonnes. Demand-wise, according to SMM data, June production for ternary cathode material is estimated to be flat month-on-month at 88,990 tonnes, lithium iron phosphate (LFP) is forecast to grow 3% month-on-month to 504,150 tonnes, lithium cobalt oxide is expected to increase 3% to 8,250 tonnes, while lithium manganese oxide production is projected to decline 2% to 10,780 tonnes. Other institutions' production schedules suggest a 6.5% month-on-month increase for cathode materials in June and a 6.2% increase for battery cell production. Market statistics indicate global lithium-ion battery production is expected to rise 8.9% month-on-month. Inventory data shows large-sample inventories decreased by 1,240 tonnes week-on-week to 134,403 tonnes, while small-sample inventories fell by 630 tonnes to 98,786 tonnes. Breaking down the large-sample data, inventories in other sectors decreased by 3,835 tonnes to 71,359 tonnes, smelter inventories dropped by 316 tonnes to 16,615 tonnes, while downstream inventories increased by 2,911 tonnes to 46,429 tonnes. Weekly destocking continues. A significant week-on-week decline in overseas lithium salt shipments is expected to alleviate subsequent import supply pressure. In the short term, prices may be in a bottoming process. If positive feedback between the basis and warehouse receipts emerges, it could support further price recovery. However, it's important to note that the renewed increase in downstream inventory stocking coefficients means that if a one-sided market trend develops, it could still lead to a situation of "price without market," potentially capping near-term upside. The market will then need to watch for new variables that could alter expectations, such as potential shipment disruptions from Zimbabwe, the possible restart of the Jianxiawo mine, and actual demand growth performance.
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