Copper: Overnight, copper prices both domestically and internationally initially declined before rebounding. LME copper hit a low of $11,754 per tonne, while the import window for domestic spot refined copper opened. Macroeconomic factors saw the European Central Bank, Bank of England, and Bank of Japan all hold rates steady following the Fed's FOMC meeting, citing inflation uncertainties stemming from Middle East conflicts. Geopolitically, market focus remained on US-Iran tensions, with Iran warning of retaliation if its infrastructure is attacked again, and speculation about US military actions to open the Strait of Hormuz. Domestically, the People's Bank of China affirmed its commitment to stabilizing financial markets including stocks, bonds, and foreign exchange. Inventory data showed LME stocks up 1,325 tonnes to 335,425 tonnes; Comex stocks up 115 tonnes to 534,159 tonnes; SHFE copper warrant stocks down 12,244 tonnes to 306,380 tonnes; and BC copper warrants down 726 tonnes to 15,144 tonnes. Crude oil and copper again showed a seesaw effect, indicating market focus remains on US-Iran tensions. Escalating conflicts raise concerns about global energy and economic slowdowns impacting commodity demand and financial markets, as reflected in yesterday's panic-driven performance across financial and metal markets. Short-term support is eyed in the 90,000-100,000 yuan/tonne range. If inventory builds ease and spot discounts narrow, light long positions could be considered to bet on a seasonal rebound. However, if geopolitical conflicts worsen, markets may continue pricing in macro risks, warranting a cautious stance on copper prices.
Nickel & Stainless Steel: Overnight, LME nickel fell 0.55% to $17,065/tonne, while SHFE nickel rose 0.95% to 134,050 yuan/tonne. LME stocks decreased by 180 tonnes to 283,770 tonnes; SHFE warrant stocks fell by 295 tonnes to 56,899 tonnes. LME 0-3 month backwardation remained negative; import nickel discounts held at -150 yuan/tonne. Tight nickel ore supply and rising freight costs are pushing nickel ore prices higher. Weekly nickel iron offers and transaction prices also increased, while primary nickel social inventories showed significant pressure. On the demand side, total stainless steel social inventories in mainstream national markets (89 warehouse caliber) were 1.1274 million tonnes, down 1.32% week-on-week. MHP supply faces disruptions, but auxiliary material costs are rising, leading to higher transaction coefficients. March ternary material output is forecast to increase 19% month-on-month to 84,360 tonnes. With Indonesia tightening nickel ore quotas, supply-side disruptions persist. Given strengthening cost support, short-term long opportunities near cost levels may be considered. However, attention is needed on overseas geopolitical events and market sentiment. Expectations for supplementary quotas in July and high primary nickel inventory levels continue to pressure nickel prices.
Alumina, Primary Aluminum & Aluminum Alloy: Overnight, alumina weakened slightly, with the AO2605 contract closing at 3,008 yuan/tonne, down 2.21%. Open interest fell by 8,099 lots to 260,000 lots. Primary aluminum also weakened, with the AL2605 contract closing at 23,930 yuan/tonne, down 2.53%. Open interest decreased by 7,321 lots to 285,000 lots. Aluminum alloy weakened, with the main AD2604 contract closing at 22,750 yuan/tonne, down 2.34%. Open interest dropped by 161 lots to 4,914 lots. Spotwise, SMM alumina prices rose to 2,736 yuan/tonne. Aluminum ingot spot discounts narrowed to 190 yuan/tonne. Foshan A00 prices fell to 24,490 yuan/tonne, flat versus Wuxi A00. Aluminum billet processing fees held steady in Baotou, Henan, and Linyi, but fell 50-60 yuan/tonne in Xinjiang, Nanchang, Guangdong, and Wuxi. Aluminum rod 1A60 series processing fees were steady; 6/8 series fees held; low-carbon aluminum rod fees fell 30 yuan/tonne. Guinea plans to tighten ore supply, with mines unable to secure suitable shipping rates, delaying overall shipment schedules. Overseas alumina feedstock destined for the Middle East is being diverted to other regions at lower prices due to strait blockages, narrowing the import price differential and repairing import margins. Rising freight costs for ore provide support for alumina. Middle East alumina feedstock inventories are bottoming, with potential production cuts at UAE Aluminum exacerbating supply disruption risks. Overseas markets are seeing precautionary aluminum buying. LME squeeze risks are boosting overseas prices, while domestic inventory builds and slow demand recovery are limiting gains. The stronger overseas, weaker domestic pattern persists, with domestic funds awaiting a turning point signal. Note that aluminum billets are de-stocking ahead of ingots, suggesting potential for domestic price increases following overseas trends.
Industrial Silicon & Polysilicon: On the 19th, industrial silicon weakened, with the main 2605 contract closing at 8,285 yuan/tonne, down 1.78% on the day. Open interest increased by 6,591 lots to 254,000 lots. The Baichuan spot reference price was 9,313 yuan/tonne, unchanged from the previous day. The lowest deliverable grade price rose to 8,800 yuan/tonne, with the spot premium widening to 515 yuan/tonne. Polysilicon weakened, with the main 2605 contract closing at 38,550 yuan/tonne, down 5.77% on the day. Open interest fell by 1,612 lots to 32,966 lots. The Baichuan N-type polysilicon price fell to 43,750 yuan/tonne; the lowest deliverable grade price also fell to 43,750 yuan/tonne, with the spot premium narrowing to 5,200 yuan/tonne. Hindered restarts in Xinjiang and limited restarts in Southwest China are structurally offsetting for industrial silicon. Rising costs for petroleum coke原料 and Xinjiang grid electricity prices provide cost support. Downstream demand involves essential restocking with limited willingness for additional inventory. Industrial silicon futures are trading in a narrow range with spot prices stabilizing at lows. Polysilicon transactions are consistently shifting towards lower prices. Some major plants have start-up plans in March, ending the supply contraction trend. New inventory is continuously transferred to warrants to alleviate plant storage pressure. Downstream wafer procurement remains weak, suggesting polysilicon prices will continue seeking a bottom short-term. The market awaits specific policy signals regarding anti-internal competition in the photovoltaic sector.
Lithium Carbonate: Yesterday, the lithium carbonate futures 2605 contract fell 6.73% to 14,600 yuan/tonne. Spot prices saw battery-grade lithium carbonate average price fall 3,000 yuan/tonne to 152,500 yuan/tonne; industrial-grade average fell 3,000 yuan/tonne to 149,500 yuan/tonne; battery-grade lithium hydroxide (coarse particle) fell 2,500 yuan/tonne to 145,500 yuan/tonne. Warrant inventory decreased by 1,029 tonnes to 34,740 tonnes. Supply-side weekly production increased by 760 tonnes to 24,186 tonnes; March output is forecast to rise 28% month-on-month to 106,390 tonnes. Demand-side, March ternary material output is forecast to increase 19% to 84,360 tonnes; lithium iron phosphate output is forecast to rise 24% to 430,000 tonnes. Social inventory of lithium carbonate fell by 86 tonnes week-on-week to 98,873 tonnes, with downstream inventory up 458 tonnes to 46,105 tonnes, other sectors down 860 tonnes to 36,160 tonnes, and upstream inventory up 316 tonnes to 16,608 tonnes. Recent market sentiment and negative news flow weighed on prices, with the main contract open interest falling by approximately 25,000 lots yesterday. Fundamentally, overall contradictions are not prominent, but conditions are weakening sequentially. The weekly destocking pace has slowed, and terminal data struggles to provide support, suggesting continued short-term weakness. Attention is also needed on overseas geopolitics and market sentiment. However, the absolute decline in inventory levels and potential for downstream restocking at lower prices may provide support. Long-term positioning on dips could still be considered.
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