Copper:
Overnight, both domestic and international copper prices showed a firming trend, with the import window for domestic refined copper opening. Market focus has shifted back to Middle East geopolitics. As hostilities resume between the US and Iran with no signs of abating, navigation risks in the Strait of Hormuz are increasing. With oil prices rebounding quickly, the market is trading on the themes of persistent inflation and rising interest rate expectations. Additionally, Federal Reserve Governor Christopher Waller stated that if core inflation remains high, the Fed may need to raise rates, leading to a slight increase in the probability of a July rate hike. On the inventory front, LME stocks fell by 1,300 tonnes to 305,200 tonnes; Comex stocks increased by 1,370 tonnes to 615,118 tonnes; SHFE copper warehouse receipts decreased by 1,252 tonnes to 47,158 tonnes, while BC warehouse receipts rose by 2,203 tonnes to 8,507 tonnes. Regarding demand, downstream users are maintaining purchases for immediate needs, with weak willingness to stock up at high prices. The rekindling of Middle East conflict and the heightened navigation risks in the Strait of Hormuz present a dual-edged sword for copper. On one hand, there remains a risk of sulfur shortages overseas, increasing potential supply-side disruptions. On the other hand, a prolonged conflict could amplify global economic and trade risks, thereby suppressing demand. The current strength in copper prices is primarily attributed to supply-side disruption risks. However, with market sentiment tightening and potential liquidity risks, the sustainability of the upward trend is questionable. It is advisable to adopt a wait-and-see approach amid macroeconomic uncertainty. Furthermore, volatility in the Shanghai copper market remains at relatively low levels, suggesting that significant price movements in either direction still require a catalyst.
Nickel & Stainless Steel:
Overnight, LME nickel rose 0.51% to $16,740 per tonne, while Shanghai nickel increased 0.46% to 129,290 yuan per tonne. Inventory-wise, LME stocks increased by 120 tonnes to 274,704 tonnes, and SHFE warehouse receipts decreased by 17 tonnes to 98,082 tonnes. Looking at premiums, the LME 0-3 month spread remained in negative territory, and the import nickel premium held at -50 yuan per tonne. On the news front, Indonesia's Eramet revealed that PT Weda Bay Nickel (WBN) is continuously coordinating with the Indonesian Ministry of Energy and Mineral Resources and following its guidance to advance the process of adjusting the 2026 work plan and budget production quota. On July 10th, Tri Winarno, Director General of Minerals and Coal at the Indonesian Ministry of Energy and Mineral Resources, stated in Jakarta that there would be no comprehensive increase in nickel ore quotas; only limited additions would be made for domestic smelters lacking raw materials, with the increment not being substantial. Export and quota-related policies are driving the nickel price recovery. Improved demand for Class I nickel and weekly inventory drawdowns are providing support, leading to a slight short-term price firming. However, from the perspective of the current nickel industry chain, inventory pressure remains the core issue. Simultaneously, nickel ore prices may continue to weaken, potentially leading to a decline in cost support.
Alumina, Electrolytic Aluminum & Aluminum Alloy:
Overnight, alumina prices firmed slightly, with the AO2609 contract closing at 2,698 yuan per tonne, up 0.15%. Open interest decreased by 919 lots to 401,000 lots. Aluminum prices also edged higher; LME aluminum closed at $3,157.5 per tonne, up 0.43%, with stocks decreasing by 1,500 tonnes to 286,000 tonnes. The AL2608 contract closed at 23,075 yuan per tonne, up 0.33%, with open interest down 6,493 lots to 211,000 lots. Aluminum alloy prices weakened slightly, with the main AD2608 contract closing at 22,825 yuan per tonne, down 0.22%. Open interest decreased by 61 lots to 19,344 lots. On the spot market, SMM's alumina price fell to 2,741 yuan per tonne. The spot premium for aluminum ingots widened to 30 yuan per tonne. Foshan A00 aluminum was quoted down to 23,000 yuan per tonne, at a 10 yuan per tonne premium to Wuxi A00. Aluminum billet processing fees remained stable in Baotou, Henan, and Linyi, increased by 40-80 yuan per tonne in Xinjiang, Guangdong, and Wuxi, and decreased by 20 yuan per tonne in Nanchang. Aluminum rod processing fees for the 1A60 series were stable, as were those for the 6/8 series, while low-carbon 6/8 series fees fell by 133 yuan per tonne. Flooding in Guangxi has temporarily restricted local alumina shipments, and the new project in Fangchenggang may be delayed, introducing marginal supply-side disruptions. However, weather-related disruptions are not persistent and have not substantially impacted local production. With the return of maintenance capacities in Shanxi and Guizhou, coupled with pressure from canceled warehouse receipts and in-transit inventory accumulation, spot supply pressure is evident. Market premium for Guinea mining policy sentiment has largely been priced out, and alumina prices are approaching the break-even line for low-cost capacity, increasing resistance to further declines. In the short term, alumina prices are stabilizing at low levels, with caution warranted for potential short-term spikes before the flood situation clarifies. Changes in the US-Iran temporary agreement have reignited geopolitical risk premiums, shifting market drivers and providing new support for aluminum prices. Concurrently, LME inventories hit new lows, and the pace of domestic social inventory digestion after the price pullback far exceeded expectations, creating a temporary alignment with macro disturbances. However, with overseas capacity resumptions and weakening terminal orders during the off-season weighing heavily on sentiment, upside room appears limited for now, and aluminum prices are expected to continue a narrow-range recovery.
Industrial Silicon & Polysilicon:
On the 13th, industrial silicon prices firmed slightly. The main 2609 contract closed at 8,435 yuan per tonne, up 0.48% on the day, with open interest decreasing by 18,099 lots to 282,600 lots. Baichuan's spot reference price for industrial silicon was 9,064 yuan per tonne, unchanged from the previous trading day. The price for the lowest deliverable grade fell to 8,550 yuan per tonne, narrowing the spot premium to 200 yuan per tonne. Polysilicon prices weakened, with the main 2609 contract closing at 36,110 yuan per tonne, down 0.66% on the day, and open interest decreasing by 319 lots to 118,200 lots. The price for the lowest deliverable polysilicon grade fell to 36,080 yuan per tonne, widening the spot premium to 175 yuan per tonne. News of a major northern producer holding back sales, some capacity switching production lines, and concentrated maintenance in Yili, Xinjiang helped the market find a bottom. However, the actual impact is relatively limited. The Yili shutdowns have not been widely implemented, and overall high operating rates continue in the north. Resumption of production in the southwest during the wet season is largely complete, while a new round of production control is expanding in the organic silicon sector. The supply-demand gap continues to widen, making a trend reversal in industrial silicon unlikely in the short term. The latest "15th Five-Year Plan Carbon Peak Action Plan" proposes a target of 2800 GW for total installed photovoltaic capacity. Additionally, recent rumors suggest inspections into the actual energy consumption levels of polysilicon enterprises, with policy measures continuously boosting market sentiment. Fundamentally, high inventory pressure remains unresolved, and the ramp-up of restarted capacity by leading producers after July introduces new marginal supply increments. A market turning point has not yet emerged in the short term. Attention should be paid to merger and acquisition news and the pace of terminal project advancement, awaiting a true convergence of fundamentals and policy support, while remaining cautious of repeated price fluctuations.
Lithium Carbonate:
Yesterday, the lithium carbonate futures 2609 contract rose 0.07% to 152,240 yuan per tonne, with open interest increasing by 3,603 lots to 415,500 lots on the day. On the spot price front, the average price for battery-grade lithium carbonate fell by 1,000 yuan per tonne to 154,000 yuan per tonne, while industrial-grade lithium carbonate also fell by 1,000 yuan per tonne to 150,000 yuan per tonne. Battery-grade lithium hydroxide (coarse particle) decreased by 500 yuan per tonne to 141,500 yuan per tonne. Regarding warehouse receipts, inventory increased by 339 tonnes yesterday to 42,406 tonnes. On the supply side, weekly production decreased by 860 tonnes week-on-week to 24,855 tonnes. July's lithium carbonate production is estimated to increase by 90 tonnes month-on-month to 115,410 tonnes, with spodumene-based production down 4,500 tonnes, lepidolite-based production up 2,700 tonnes, salt lake-based production up 1,390 tonnes, and recycled production up 500 tonnes. On the demand side, July production schedules show ternary cathode material output up 3% month-on-month to 89,690 tonnes, lithium iron phosphate (LFP) cathode 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 schedules increased by 7% month-on-month, with domestic production up 7% and overseas production up 4%. Domestically, ternary power battery production is up 7% month-on-month, LFP power battery production is up 9%, and LFP energy storage battery production is 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 week-on-week to 92,236 tonnes. Based on the large-sample data, inventory in other segments decreased by 1,135 tonnes to 61,627 tonnes, smelter inventory decreased by 1,175 tonnes to 12,415 tonnes, and downstream inventory decreased 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 gradually. However, in the medium term, caution is warranted regarding supply increments from the resumption of the Jianxiawo project and the concentrated arrival of lithium ore shipments from Zimbabwe. This could lead to a month-by-month decrease in the monthly destocking level in the third quarter. It is recommended to monitor whether the spot market can provide further positive feedback to support the downside.
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