This report provides an analysis of key nonferrous metals markets, including copper, nickel, stainless steel, alumina, aluminum, silicon, polysilicon, and lithium carbonate, based on recent price movements, inventory data, and macroeconomic developments.
Copper Market Overview
Copper prices weakened overnight. The SHFE copper VIX volatility index fell back near 17, while China's spot import arbitrage window for refined copper remained open. On the macro front, U.S. June PPI fell 0.3% month-on-month, the largest monthly decline since April 2020, with the year-on-year increase narrowing to 5.5%, significantly below the market expectation of 6.2%. This below-expectation data further supports the view that inflationary pressures are easing. Federal Reserve Governor Waller acknowledged the improvement in June CPI and PPI data but noted inflation indicators do not perfectly reflect underlying conditions, and suggested AI might push up prices but not necessarily inflation. Domestically, China's GDP grew 5.0% year-on-year in Q1 and 4.3% in Q2. Inventory data shows LME stocks decreased by 1,250 tonnes to 302,275 tonnes; Comex stocks increased by 1,037 tonnes to 618,659 tonnes; SHFE copper warrant stocks fell by 753 tonnes to 43,944 tonnes, while BC stocks held steady at 8,207 tonnes. Downstream demand remains based on immediate needs, with weak willingness to stock up at high prices. With former President Trump's comments on Strait of Hormuz transit and the softer U.S. inflation data, macro conditions have marginally eased and the U.S. dollar has weakened. Coupled with recent supply-side disruption risks, copper prices remain relatively firm. However, with positive factors already priced in, prices have failed to move higher. The current macro volatility and potential liquidity risks remain market concerns, casting doubt on copper's ability to break free from its current range. Caution is advised.
Nickel and Stainless Steel Market Overview
Overnight, LME nickel rose 0.48% to $16,830 per tonne, while SHFE nickel fell 0.08% to 128,950 yuan per tonne. LME inventory decreased by 156 tonnes to 274,548 tonnes, and SHFE warrant stocks fell by 12 tonnes to 98,076 tonnes. The LME 0-3 month spread remains in contango, while import premiums for nickel are steady at -50 yuan/tonne. In news, Indonesia's Eramet revealed that PT Weda Bay Nickel (WBN) is coordinating with the Ministry of Energy and Mineral Resources to adjust its 2026 work plan and production quota budget as per guidance. On July 10th, the Ministry's Director General stated there would be no comprehensive increase in nickel ore quotas, only limited additions for smelters lacking raw materials, with minimal increments. LME data shows Chinese-origin nickel stocks were 186,384 tonnes as of June 30th, up 738 tonnes from the previous month, while Indonesian-origin stocks were 19,338 tonnes, up 894 tonnes. Macro sentiment, export policies, and quota-related policies are driving a price recovery. Improved demand for Class I nickel and weekly inventory drawdowns provide support, leading to a short-term price uptick. However, high inventory pressure remains the core issue for the nickel industry chain. Concurrently, nickel ore prices may continue to weaken, potentially reducing cost support.
Alumina, Aluminum, and Aluminum Alloy Market Overview
Alumina prices edged higher overnight, with the AO2609 contract settling at 2,712 yuan/tonne, up 0.18%, while open interest decreased by 8,705 lots to 361,000 lots. Aluminum prices weakened, with LME aluminum closing at $3,150/tonne, down 0.85%, and stocks down 1,500 tonnes to 283,000 tonnes. The AL2608 contract settled at 23,090 yuan/tonne, down 0.58%, with open interest down 2,031 lots to 184,000 lots. Aluminum alloy prices also softened, with the AD2608 contract settling at 22,905 yuan/tonne, down 0.28%, and open interest up 55 lots to 19,440 lots. Spot SMM alumina prices retreated to 2,735 yuan/tonne. Aluminum ingot spot premiums held steady at 20 yuan/tonne. Foshan A00 aluminum was quoted at 23,160 yuan/tonne, at a 10 yuan/tonne discount to Wuxi A00. Aluminum billet processing fees were steady in Baotou, Henan, and Linyi, but increased by 20-40 yuan/tonne in Xinjiang, Nanchang, Guangdong, and Wuxi. Aluminum rod processing fees for 1A60 and 6/8 series were steady, while low-carbon 6/8 series fees fell by 95 yuan/tonne. Flooding in Guangxi has temporarily disrupted local alumina shipments, and new projects 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 idled capacity in Shanxi and Guizhou, coupled with the accumulation of cancelled warrants and in-transit inventory, spot market pressure is evident. Market premium for Guinea mining policy sentiment has largely been priced out. As alumina prices approach the break-even line for low-cost capacity, the resistance to further declines increases. Alumina is expected to stabilize at low levels in the short term, with caution needed for potential short-lived rebounds before the flood situation clarifies. Changes to the U.S.-Iran interim agreement have reintroduced geopolitical risk premium, shifting market drivers and providing new support for aluminum prices. Simultaneously, LME aluminum stocks hit a new low, and the pace of domestic social inventory drawdowns after the price drop has far exceeded expectations, creating a temporary resonance with macro disturbances. However, with overseas restarts and weak terminal orders during the consumption off-season heavily factored in, the upside appears limited. Aluminum prices are expected to continue a narrow-range recovery.
Industrial Silicon and Polysilicon Market Overview
On the 15th, industrial silicon prices weakened. The main 2609 contract settled at 8,425 yuan/tonne, down 0.71% on the day, with open interest down 4,443 lots to 254,000 lots. The Baichuan spot reference price was 9,074 yuan/tonne, unchanged from the previous day. The lowest deliverable grade price fell to 8,550 yuan/tonne, narrowing the spot premium to 185 yuan/tonne. Polysilicon prices also weakened, with the main 2609 contract settling at 35,160 yuan/tonne, down 2.31%, and open interest up 3,968 lots to 119,000 lots. The lowest deliverable grade polysilicon price fell to 35,800 yuan/tonne, with the spot premium narrowing to 735 yuan/tonne. News of a major northern producer holding back sales, some capacity switching production lines, and concentrated maintenance in Xinjiang's Ili region supported the market. However, high operating rates persist in the north, limiting the actual impact. Resumption of production in the southwest during the wet season is largely complete, while a new round of production controls in the organic silicon sector is expanding. The supply-demand gap continues to widen, making a trend reversal for industrial silicon unlikely in the near term. Recent rumors of inspections into actual energy consumption levels at polysilicon companies have boosted market sentiment from the policy side. Fundamentally, high inventory pressure persists, and new marginal supply increments are expected from leading producers ramping up production post-July. A market turning point has not yet emerged. Attention is on M&A news and the pace of terminal project rollouts, awaiting a true convergence of fundamental and policy factors. Caution is advised against market volatility.
Lithium Carbonate Market Overview
Lithium carbonate futures (contract 2609) fell 2.19% yesterday to 149,240 yuan/tonne, with open interest increasing by 4,348 lots to 418,700 lots. Spot prices held steady, with battery-grade lithium carbonate averaging 154,000 yuan/tonne and industrial-grade averaging 150,000 yuan/tonne. Battery-grade lithium hydroxide (coarse particle) fell by 1,000 yuan/tonne to 140,500 yuan/tonne. Warrant stocks decreased by 483 tonnes to 42,420 tonnes. According to Custeel News, as of July 14th, congestion at two Zimbabwean lithium export ports has caused slightly slower-than-expected shipment recovery. On the supply side, weekly production fell by 860 tonnes week-on-week to 24,855 tonnes. July production is estimated to increase by 90 tonnes month-on-month to 115,410 tonnes, with spodumene-sourced lithium down 4,500 tonnes, lepidolite-sourced lithium up 2,700 tonnes, salt lake-sourced lithium up 1,390 tonnes, and recycled lithium 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 is scheduled to increase by 7% month-on-month, with domestic output up 7% and overseas up 4%. Domestically, ternary power battery output is scheduled to rise 7%, LFP power battery output 9%, and LFP energy storage battery output 4%. Inventory data shows large-sample stocks fell by 3,423 tonnes week-on-week to 124,381 tonnes, while small-sample stocks fell by 2,337 tonnes to 92,236 tonnes. Using the large-sample data, inventory in other segments fell by 1,135 tonnes to 61,627 tonnes, smelter inventory fell by 1,175 tonnes to 12,415 tonnes, and downstream inventory fell by 1,113 tonnes to 50,339 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 medium-term outlook requires caution regarding the pace of the Jianxiawo project restart and potential supply increases from concentrated Zimbabwean ore arrivals, which could lead to a month-by-month decrease in destocking levels in Q3. It is recommended to monitor whether the spot market provides further positive feedback for price support, while remaining alert to potential supply increment surprises.
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