Prices for copper saw a rise overnight, with both domestic and international markets experiencing gains. The volatility index for Shanghai copper remains low at around 17.5, while domestic refined copper imports are showing a slight profit. Official statistics indicate China's CPI fell 0.3% month-on-month but rose 1.0% year-on-year in June, with the core CPI also up 1.0%. Geopolitical tensions have escalated again in the Strait of Hormuz, with reports of Iran expediting crude exports and Qatar considering a pause in LNG capacity restoration. As the US and Iran enter a second round of conflict, military actions are intensifying. Despite statements from former US officials downplaying the risk of full-scale war, the conflict continues to spill over. Regarding inventories, LME copper stocks fell by 2,900 tonnes to 307,750 tonnes, while COMEX copper stocks increased by 1,646 tonnes to 613,166 tonnes. Shanghai Futures Exchange copper warehouse receipts dropped by 3,487 tonnes to 53,849 tonnes, and bonded copper receipts remained steady at 5,301 tonnes. Downstream demand is characterized by essential purchasing only. Market reaction to the latest US-Iran conflict appears skeptical about its sustainability, with the US dollar weakening, oil prices retreating, and gold and copper rebounding. The persistence of this trend requires further observation. Given the currently low volatility in Shanghai copper, prices are expected to remain within a narrow range, with developments in the geopolitical situation being closely monitored.
Nickel and Stainless Steel
Overnight, LME nickel rose 1.13% to $16,605 per tonne, and Shanghai nickel increased 1.08% to 128,340 yuan per tonne. Inventory levels showed no change, with LME stocks at 274,584 tonnes and SHFE warehouse receipts at 98,183 tonnes. The LME cash-to-three-months spread remains in contango, while the import premium for nickel stands at -50 yuan per tonne. In news, Indonesia's Eramet indicated that PT Weda Bay Nickel is coordinating with the country's Ministry of Energy and Mineral Resources to adjust its 2026 production quota. A major steel mill in South China reportedly set its July high-grade nickel iron procurement price at 1,120 yuan per nickel point for August delivery. Indonesia has strengthened export controls on higher-value nickel products under a new regulation, requiring inspection reports and export permits. Starting January 1, 2027, exports will原则上 only be permitted through designated state-owned enterprises, with some exemptions. While this policy is not expected to significantly impact global nickel supply, it reinforces Indonesia's downstream strategy and may slightly slow some export processes due to added compliance. Although policy and potential short-term production cuts could provide price support, high inventory levels remain the core issue for the nickel market. Additionally, nickel ore prices may continue to weaken, reducing cost support. The market also faces potential pressure if production quotas continue to be issued in the second half of the year.
Alumina, Aluminium, and Aluminium Alloy
Alumina prices edged higher overnight, with the AO2609 contract closing at 2,721 yuan per tonne, up 0.29%. Open interest increased by 8,099 lots to 358,000 lots. Aluminium prices also strengthened, with LME aluminium closing at $3,200.5 per tonne, a gain of 2.19%, while its inventory fell by 1,600 tonnes to 289,000 tonnes. The Shanghai AL2608 contract closed at 23,105 yuan per tonne, up 0.48%, with open interest rising by 6,639 lots to 231,000 lots. Aluminium alloy prices followed suit, with the main AD2608 contract closing at 23,050 yuan per tonne, up 0.63%, and open interest increasing by 56 lots to 19,073 lots. Spot prices showed mixed movements, with SMM's alumina price dipping to 2,743 yuan per tonne. The premium for aluminium ingots held steady at 10 yuan per tonne. Foshan A00 aluminium was quoted at 22,980 yuan per tonne, a 30-yuan premium over Wuxi A00. Processing fees for aluminium rods were mostly stable, with increases in Wuxi and Nanchang. Aluminium rod processing fees for the 1A60 series fell by 50 yuan per tonne, while other series remained stable or saw minor declines. Market sentiment is influenced by expectations of increased supply from Emirates Global Aluminium, new capacity ramping up in Guangxi, and the release of warehouse receipts. The short-term lack of policy action from Guinea has led to a quick retreat in market premium. The potential impact of flooding in Guangxi on new alumina projects has not yet been factored into prices, suggesting alumina may trade with a weak bias in the near term, awaiting clearer catalysts. For aluminium, the main resistance comes from broader macroeconomic pressures and expectations of accumulated Middle Eastern stocks being released. However, smooth inventory drawdowns both domestically and internationally, reflecting strong downstream restocking at lower prices, provide fundamental support against deeper declines. With social inventories still above historical levels for this time of year and narrowing export margins, significant upward momentum is currently limited. Aluminium prices are recovering in line with market sentiment. Key factors to watch include the accuracy of the market's recent pricing of delayed US interest rate hikes and whether the current smooth inventory drawdown can be sustained.
Industrial Silicon and Polysilicon
Industrial silicon prices strengthened on the 9th, with the main 2609 contract closing at 8,340 yuan per tonne, up 0.48%. Open interest decreased by 30,145 lots to 345,000 lots. The Baichuan spot reference price was steady at 9,114 yuan per tonne. The price for the lowest deliverable grade fell to 8,550 yuan per tonne, narrowing the spot premium to 275 yuan per tonne. Polysilicon prices weakened, with the main 2609 contract closing at 35,795 yuan per tonne, down 1.24%. Open interest fell by 473 lots to 119,200 lots. The price for the lowest deliverable grade declined to 35,250 yuan per tonne, moving from a premium to a discount of 110 yuan per tonne. News of major producers halting sales helped stabilize the market. In Yunnan's Baoshan region, July electricity tariffs dropped to 0.28 yuan per kilowatt-hour, accelerating local production restarts with government subsidies and pre-hedged orders. Downstream, production controls in the organic silicon sector are expanding, while a polysilicon plant in Qinghai underwent unexpected maintenance, increasing marginal pressure on industrial silicon. New energy consumption standards for the photovoltaic sector have been released, with a transition period of just six months. Recent market rumors about polysilicon industry mergers remain unverified. Inventory is building up again across the industry, with only a slight drawdown at the module level. Stocks are accumulating from silicon materials to cells. The sector is caught between weak current fundamentals and strong future expectations. Polysilicon is likely to remain in a cyclical bottoming phase in the short term, awaiting clearer policy signals and market consensus.
Lithium Carbonate
The lithium carbonate futures 2609 contract fell 5.39% yesterday to 153,020 yuan per tonne, with open interest increasing by 3,477 lots to 416,000 lots. Spot prices also declined. The average price for battery-grade lithium carbonate dropped by 5,500 yuan to 158,500 yuan per tonne. Industrial-grade lithium carbonate fell by the same amount to 154,500 yuan per tonne. Battery-grade lithium hydroxide (coarse particle) decreased by 5,500 yuan to 145,250 yuan per tonne. Warehouse receipt inventory rose by 380 tonnes to 44,020 tonnes. On the supply side, weekly production fell by 860 tonnes to 24,855 tonnes. July production is estimated to increase slightly by 90 tonnes month-on-month to 115,410 tonnes, with production from spodumene declining, while output from lepidolite, salt lakes, and recycling increased. Demand projections for July show month-on-month increases: ternary materials up 3% to 89,690 tonnes, lithium iron phosphate up 7% to 536,850 tonnes, lithium cobalt oxide up 3% to 7,740 tonnes, while lithium manganese oxide production is expected to dip 1% to 10,770 tonnes. Lithium battery production is forecast to rise 7% overall, with domestic output up 7% and overseas up 4%. Within China, production of ternary power batteries is projected to increase 7%, lithium iron phosphate power batteries 9%, and lithium iron phosphate energy storage batteries 4%. Inventory data shows a weekly drawdown of 3,423 tonnes to 124,381 tonnes based on a broad sample, and a decrease of 2,337 tonnes to 92,236 tonnes based on a narrower sample. Breaking down the broad sample, inventories at other stages fell by 1,135 tonnes, smelter stocks dropped by 1,175 tonnes, and downstream inventories decreased by 1,113 tonnes. Based on production schedules, July could see a destocking of around 14,000 tonnes, with the pace potentially accelerating in the short term. However, the market must remain vigilant about potential supply increases in the medium term from the restart of the Jianxiawo project and concentrated arrivals of lithium ore from Zimbabwe, which could lead to a deceleration in the monthly destocking rate during the third quarter. Currently, prices are under pressure from a synchronized decline in both equity and commodity markets, driven by bearish sentiment towards next year's fundamentals. The market will be watching for positive feedback from the spot market to provide support at lower price levels.
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