Copper: Macro Sentiment Cools, Copper Prices Primarily Correct Overnight, the main Shanghai copper contract broke through the 100,000 yuan mark, hitting a low of 99,210 yuan, while LME copper corrected to around $12,785. The macro outlook is neutral to bearish. Trump's intervention in Greenland, coupled with a Danish pension fund's proposal on US Treasury investments, has heightened fiscal concerns and geopolitical tensions, putting downward pressure on copper prices. Fundamentals are neutral. Yesterday, LME copper inventories increased by 8,875 tonnes to 156,300 tonnes, while LME copper warrants decreased by 4,462 tonnes to 148,000 tonnes. Although Mantoverde is currently maintaining normal operations, its copper output can only sustain 75% of regular levels; monitor the progress of strike mediation. Overall, overseas fiscal concerns combined with geopolitical disturbances are cooling macro sentiment, suggesting short-term copper prices still face downward pressure. Watch for the extent of downstream pre-holiday demand recovery during the price decline. Today, the main Shanghai copper contract is expected to trade within a range of 98,500 - 100,500 yuan/ton. Strategically, consider light short positions for the short term, while for medium to long term, wait for lower levels to establish long positions in deferred months.
Alumina: Overnight, alumina futures traded weakly, while spot prices stabilized after their decline. With the Spring Festival holiday approaching, traders are concerned about rising pre-holiday freight costs and are reluctant to sell at deep discounts. Some producers face pressure from high costs and increasing finished product inventories. Recently, individual enterprises in Guizhou and Guangxi have begun maintenance and short-term shutdowns; monitor whether this phenomenon becomes more widespread before the holiday. Yesterday saw concentrated deregistration of delivery and near-expiry warrants, causing alumina warrant registrations to drop significantly by over 70,000 tonnes to 116,000 tonnes. The physical warrant stock is expected to flow to end-user aluminum plants and surrounding warehouses. Considering potential future warrant registrations, the actual impact is relatively limited. The alumina 05 contract is expected to trade within a range of 2,500 - 2,800 yuan/ton; hold short positions. Medium-term inflation expectations remain upward, but short-term factors like Japanese long-term bond selling and the Greenland crisis have boosted risk-off sentiment, leading to significant declines in major US stock indices and a slight correction in non-ferrous metals. Fundamentally, domestic supply is growing steadily, with ingot production increasing phase-wise. Hesitation remains in processing and consumption segments due to high prices, and with the holiday nearing, some processors are opting for early closures. On Monday, social inventories of primary aluminum increased by 15,000 tonnes, and aluminum billet inventories rose by 11,000 tonnes. Fundamentals remain weak, suggesting aluminum prices will maintain high-level volatility in the short term. The Shanghai aluminum 03 contract is expected to trade within a range of 23,000 - 24,300 yuan/ton; adopt a wait-and-see approach for now.
Zinc: Overnight zinc prices traded weakly. Macro-wise, escalating EU-US trade friction has heightened market risk aversion, creating a bearish macro sentiment. Fundamentally, the decline in Treatment Charges (TC) across regions has slowed, and recent loosening of the import window has provided some supplement from imported ore. On the supply side, affected by raw material availability, January zinc ingot output is expected to increase by less than 10,000 tonnes month-on-month. On the demand side, weak performance in the steel sector offers limited support for galvanizing and other primary processing operations. Spot discounts have widened, and with previous shipping issues resolved, social inventories are expected to continue accumulating. Overall, fundamental support is insufficient, and guided by macro sentiment, zinc prices are likely to focus on bottom-building in the short term. Operationally, adopt a wait-and-see stance on Shanghai zinc; the main contract is expected to trade around 23,800 - 24,800 yuan/ton.
Lead: Overnight Shanghai lead traded weakly. Fundamentally, on the supply side, for primary lead, TCs remain under pressure. Some smelter maintenance in Central and East China has partially concluded, leading to a month-on-month supply increase. For secondary lead, scrap battery output is expected to decline, and recyclers show relatively strong price support intentions. Secondary lead smelting profits have recovered, but growth in secondary enterprise operating rates is limited by scrap battery supply. On the consumption side, entry into the traditional off-season, combined with the impact of new national standards, has significantly reduced downstream willingness for active inventory replenishment; purchasing is mainly based on immediate needs. Spot-wise, domestic social inventories continue to accumulate. Overall, supply and demand remain weak, suggesting lead prices will trade weakly. Operationally, trade within a range for Shanghai lead; the main contract is expected to trade around 16,800 - 17,800 yuan/ton.
Aluminum Alloy: Overnight aluminum alloy traded weakly. Macro-wise, escalating EU-US trade friction has heightened market risk aversion, creating a bearish macro sentiment. Fundamentally, on the raw material side, sentiment for supporting prices of invoiced scrap aluminum is strengthening, although overall cost support has weakened. On January 20, Fubao recorded a smelting profit of 849.8 yuan/ton. On the supply-demand side, die-casting manufacturers show weak purchasing willingness, while smelters, affected by policy pushes, are actively managing costs, keeping selling prices relatively firm. Yesterday, warrants decreased by a further 605 tonnes. Spread-wise, the Baotai price dropped to 23,300 yuan, and the AD-AL front-month spread saw a low-level correction. Overall, in the short term, aluminum alloy is expected to follow primary aluminum in bottom-building; consider establishing AD-AL spread positions on dips. Operationally, trade within a range for aluminum alloy; the main contract is expected to trade around 22,500 - 23,500 yuan/ton.
Precious Metals: Precious metals rallied across the board, with gold and silver breaking previous highs, and platinum and palladium following the upward trend. This was primarily driven by safe-haven buying inflows due to heightened geopolitical tensions. The European Parliament's announcement to suspend the trade agreement approval process and Trump's statement not ruling out military options for the island have intensified geopolitical shocks and increased trade war risks, fueling safe-haven demand that supports the uptrend. Institutionally, the Polish central bank's accelerated gold purchase plan and expectations of EU sales of US assets have also bolstered buying interest in precious metals. Overall, intensifying global geopolitical turbulence is the core driver of the recent precious metals rally. However, current tightness in silver, platinum, and palladium spot supplies has eased; the market is significantly influenced by sentiment and fund flows, warranting attention to short-term correction risks and high volatility. Operationally, hold long-term long positions in gold; maintain a wait-and-see stance on silver, platinum, and palladium for the short term. Shanghai gold 2604 reference range: 1,040 - 1,100 yuan/gram; Shanghai silver 2604 reference range: 22,000 - 24,000 yuan/kg; Guang platinum 2606 reference range: 600 - 660 yuan/gram; Guang palladium 2606 reference range: 480 - 530 yuan/gram.
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