Copper: Overnight copper prices both on the LME and in China dipped before recovering. Domestic refined copper spot imports showed a slight profit, and the Comex-LME copper price spread stood at around $100 per ton. On the macroeconomic front, France saw nationwide violent protests, with riots impacting financial markets. The 10-year government bond yield rapidly climbed 15 basis points, pushing the euro weaker and indirectly supporting the dollar. Geopolitically, Iran's Revolutionary Guard stated that if the regional situation becomes unsafe for Iran, the entire region will no longer be safe, and Iran's response will be far more severe than before; Yemen's Houthi armed forces claimed six military operations against Saudi Arabia in the past 48 hours. Domestically, China's real estate development investment for January to September fell 20.6% year-on-year, and sales of newly built commercial housing dropped 13.9% year-on-year. On the inventory side, LME inventories increased by 6,750 tons to 232,175 tons; Comex copper inventories rose by 1,173 tons to 718,206 tons; SHFE copper warrants declined by 976 tons to 35,410 tons, while BC copper warrants fell by 125 tons to 2,954 tons. On the demand side, domestic supply improved marginally, but enterprises remained cautious about stocking at high prices, and spot premiums continued to decline. The White House has still not made a final decision on refined copper tariffs. US copper maintains a premium structure of $0 to $200 per ton relative to LME copper, which has weakened the marginal arbitrage benefits of refined copper trading, but the premium structure also means US copper will not flow out significantly. Additionally, the LME has approved Owensboro in the United States as a qualified delivery location for copper, which may help ease the squeeze pressure on LME copper. Overall, the marginal macroeconomic disturbance to copper is weakening. The market focus is on potential changes in fundamentals arising from US refined copper tariff policy. Before the policy becomes clear, a range-bound pattern is appropriate.
Nickel & Stainless Steel: Overnight LME nickel rose 1.5% to $15,600 per ton, while Shanghai nickel gained 1.18% to 117,960 yuan per ton. On the inventory side, LME inventories increased by 120 tons to 280,110 tons, and SHFE warrants decreased by 594 tons to 92,938 tons. In terms of spreads, the LME 0-3 month spread remained negative; the imported nickel premium held at 250 yuan per ton. On the news front, the chairman of the Indonesian Nickel Industry Forum (FINI) stated that Indonesia controls approximately 60% of global nickel supply, with total nickel output reaching 2.5 million tons in 2025 and refining facility capacity exceeding 2.7 million tons. Total processed nickel output is expected to decline by about 3.5% to 4% year-on-year in 2026, while capacity will surge in 2027 driven by HPAL projects, with MHP capacity expected to exceed 900,000 tons. Indonesia's Deputy Minister for Downstreaming and Energy Transition, who also serves as Minister of Energy and Mineral Resources, Bahlil Lahadalia, stated that the government does not plan to restrict nickel ore production but is considering regulatory policies targeting oversupply of refined nickel products. INSG forecasts that the nickel surplus will expand to 70,000 tons in 2027, with demand reaching 4 million tons and production rising to 4.07 million tons. From a fundamental perspective, nickel ore prices, premiums, and sulfur prices weakened month-on-month. Due to climate and power pressures, some segments of the supply chain saw production cuts in October, but the feedback from these cuts to inventories has been limited so far. Quota increases and weakening theoretical cost support remain pressures. Short-term range-bound trading at low levels is likely, but attention should be paid to supply-side production cut variables, Indonesian policy, and macroeconomic disturbances.
Alumina & Electrolytic Aluminum & Aluminum Alloy: Overnight alumina AO2701 closed at 2,628 yuan per ton, down 0.3%. Open interest increased by 3,471 lots to 281,000 lots. Overnight LME aluminum closed at $3,034 per ton, up 0.86%, with inventories declining by 1,500 tons to 236,400 tons. Shanghai aluminum AL2611 closed at 23,415 yuan per ton, up 0.41%, with open interest decreasing by 6,154 lots to 182,000 lots. Aluminum alloy AD2612 closed at 22,870 yuan per ton, unchanged. Open interest decreased by 39 lots to 21,357 lots. On the spot side, SMM alumina prices fell back to 2,655 yuan per ton. Aluminum ingot spot premiums widened to 290 yuan per ton. Foshan A00 quotes widened to 23,610 yuan per ton, at a discount of 1,030 yuan per ton to Wuxi A00. Aluminum billet processing fees remained stable in most regions, with Xinjiang, Nanchang, Guangdong, Wuxi, and Baotou下调 by 70-180 yuan per ton; aluminum rod 1A60 series processing fees held steady, while low-carbon 6/8 series increased by 144 yuan per ton. Guangxi projects that reached full production after feeding materials in late September began to generate significant incremental output in October. Combined with recent declines in bauxite sea freight rates, the cost support line shifted further downward, and alumina's rhythm shifted from bottoming out to probing for a bottom. After the holiday, aluminum ingot destocking exceeded seasonal norms and fell to a ten-year low. Combined with persistently tight warrants, the November-December spread widened, and the back structure deepened further. However, as non-ferrous valuations remain under pressure before the late-October FOMC meeting, short-term aluminum prices should still be treated as range-bound. Attention should be paid to changes in Federal Reserve rate hike expectations, overseas production resumption pace, and the slope of domestic aluminum ingot destocking.
Industrial Silicon & Polysilicon: On the 19th, industrial silicon traded in a weak range, with the main 2611 contract closing at 8,595 yuan per ton, down 0.58% intraday, and open interest decreasing by 16,290 lots to 128,000 lots. Baichuan industrial silicon spot reference price was 9,246 yuan per ton, unchanged from the previous trading day. The lowest deliverable price was lowered to 8,800 yuan per ton, and the spot premium widened to 205 yuan per ton. Polysilicon traded in a firm range, with the main 2611 contract closing at 35,040 yuan per ton, up 2.26% intraday. Open interest decreased by 5,588 lots to 61,134 lots; the lowest deliverable price was raised to 39,455 yuan per ton, and the spot premium narrowed to 4,435 yuan per ton. On the cost side, silicon coal declined. Northern production increases continued to offset southwestern production cuts. Combined with simultaneous demand contraction across three segments, low-priced cargo from spot-futures traders was gradually absorbed, and spot-futures procurement volumes continued to decline, becoming the dominant marginal negative feedback. Industrial silicon is unlikely to see a significant recovery in the short term. After the closed-door meeting of polysilicon leaders, production cuts at silicon material plants accelerated, with unexpected cuts in Qinghai. Spot price support strengthened somewhat, but effective spot transactions were scarce. The futures market had already priced in production cut expectations in advance, and once the cuts materialized, it turned into a "sell the news" event. If polysilicon continues to bottom out in a range, it may attract some hedging buying, but marginal demand is declining. There is room for upward repair but a reversal is unlikely. If inventories continue to accumulate, the high basis structure may become further extreme. New meeting news is still awaited, and volatility risks should be monitored.
Lithium Carbonate: Yesterday, lithium carbonate futures 2701 rose 1.49% to 100,560 yuan per ton, with open interest decreasing by 6,558 lots to 418,800 lots. On the spot side, the average price of battery-grade lithium carbonate rose 800 yuan per ton to 102,950 yuan per ton, industrial-grade lithium carbonate rose 1,000 yuan per ton to 99,450 yuan per ton, and battery-grade lithium hydroxide (coarse particles) rose 1,000 yuan per ton to 93,750 yuan per ton. On warrants, yesterday's warrant inventory decreased by 2,088 tons to 23,552 tons. On the supply side, weekly lithium carbonate production increased by 191 tons month-on-month to 26,086 tons. October lithium carbonate production is expected to decrease by 370 tons month-on-month to 118,071 tons. On the demand side, October ternary material production is expected to increase 3% month-on-month to 84,110 tons, lithium iron phosphate production is expected to increase 4% month-on-month to 640,000 tons, lithium cobalt oxide production is expected to decrease 9% month-on-month to 5,760 tons, and lithium manganese oxide production is expected to decrease 6% month-on-month to 10,400 tons. Lithium battery production is expected to increase 6% month-on-month to 320.4 GWh. On the inventory side, weekly inventories decreased by 5,145 tons month-on-month to 134,372 tons, with upstream increasing 773 tons month-on-month to 32,115 tons, cathode plants decreasing 3,343 tons month-on-month to 39,609 tons, traders decreasing 3,275 tons month-on-month to 41,950 tons, and battery cell plants and others increasing 700 tons month-on-month to 20,698 tons. Macro sentiment is gradually being digested, and market sentiment is recovering. From a fundamental perspective, weekly data continues to show destocking, but the pace has slowed month-on-month, and there remains downside risk to production schedules, weakening the strong reality. Meanwhile, adjustments to export tax rebate policies and China-Europe negotiations are dragging down forward export consumption expectations, reinforcing weak expectations. Attention should be paid to warrant inventory, supply-side disruptions, and market sentiment.
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