Copper: A Cautious Outlook Amid Global Shifts
Copper prices traded with a firm tone overnight, as domestic refined copper import margins turned slightly positive and the spread between US and London copper narrowed to approximately $135 per tonne. On the macro front, the New York Fed's Empire State manufacturing index fell to 7.6, well below the expected 12.1 and the prior reading of 20.6. Geopolitically, Russian Foreign Minister Lavrov stated that Russia is prepared to make reasonable concessions on Ukraine but will not allow NATO presence near its borders, while Houthi spokespersons reported 52 Saudi-led strikes on Yemeni territory.
According to the CME FedWatch tool, market pricing for a 25-basis-point rate hike this week has climbed to 95%, with the probability of a December hike also rising to 70%, indicating the market is nearing full pricing of a September move by the Fed. Inventory data showed LME stocks rising by 6,325 tonnes to 249,225 tonnes, Comex inventories adding 452 tonnes to 696,813 tonnes, SHFE copper warrants increasing by 10,003 tonnes to 31,850 tonnes, and BC copper warrants declining by 1,271 tonnes to 5,429 tonnes.
While the Fed's September rate hike is nearly fully priced in, concerns remain that any hawkish commentary could exceed expectations. However, sustained reports from the White House that no final decision has been made on refined copper tariffs have significantly compressed the US-London copper spread, signaling that trade arbitrage and migration may be nearing its conclusion. This undermines the tariff-driven stockpiling logic in the US, yet the final decision remains highly uncertain, warranting a cautious stance on copper prices in the near term.
Nickel & Stainless Steel: Supply Pressures Intensify
Overnight, LME nickel dropped 3.04% to $15,940 per tonne, while SHFE nickel fell 2.47% to 121,020 yuan per tonne. Inventory data showed LME stocks increasing by 4,248 tonnes to 278,580 tonnes, while SHFE warrants decreased by 946 tonnes to 95,337 tonnes. The LME 3-month spread remained in backwardation, and imported nickel premiums held steady at 50 yuan per tonne.
On the news front, Indonesia's Commodity Exchange chief regulatory officer Sanito announced Tuesday that the nation's new commodity exchange is slated to begin trading on January 4, 2027, with initial products including tin and ferronickel. Meanwhile, Indonesia's Ministry of Energy and Mineral Resources (ESDM) is still evaluating roughly 50 mining companies' proposed work plans and budgets (RKAB) for 2026, with Director General Tri Winarno noting that assessments focus on operational feasibility and compliance with administrative and technical requirements. Stricter regulations now apply to RKAB processing, and companies with outstanding receivables or incomplete reclamation obligations will not be able to proceed.
Nickel ore prices, premiums, and sulfur prices have weakened on a month-over-month basis, while industry chain segments face varying degrees of production cuts due to climate and power pressures. Domestic refined nickel, ferronickel, and nickel sulfate also posted declines. Yesterday's significant LME inventory inflow suggests quota pressures may become more pronounced, and theoretical cost support could shift lower, demanding caution against macro disruptions.
Alumina, Electrolytic Aluminum, and Aluminum Alloys: Cost Dynamics and Demand Uncertainty
Alumina AO2701 settled at 2,682 yuan per tonne overnight, down 1.21%, with open interest rising by 3,155 contracts to 233,000. LME aluminum closed at $3,251.50 per tonne, up 0.22%, with inventories declining by 250 tonnes to 243,600 tonnes. SHFE aluminum AL2610 settled at 24,150 yuan per tonne, up 0.46%, with open interest down 1,806 contracts to 168,000. Aluminum alloy AD2611 closed at 23,275 yuan per tonne, down 0.06%, with open interest up 1,039 contracts to 18,795.
In the spot market, SMM alumina prices eased to 2,674 yuan per tonne, while aluminum ingot premiums stood at 30 yuan per tonne. Foshan A00 offers rebounded to 24,320 yuan per tonne, with Wuxi A00 discounts at 160 yuan per tonne. Aluminum rod processing fees were steady across most regions, with Baotou, Henan, and Nanchang seeing declines of 20-70 yuan per tonne, while Xinjiang and Guangdong saw increases of 30 yuan per tonne. The 1A60 series rod processing fees remained unchanged, as did the 6/8 series, though low-carbon 6/8 series fees rose by 59 yuan per tonne.
Rising freight rates and firmer crude oil have pushed up the delivered cost of Guinean bauxite, amplifying market expectations of production cuts for alumina capacity that has long operated near cost. Port bonded material is being re-exported overseas, and while social inventories fell this week, alumina plant stockpiles remain under pressure, suggesting the price recovery is driven by expectations rather than actual supply-demand improvement. For electrolytic aluminum, the rising probability of a Fed rate hike adds near-term pressure, and with peak-season demand underdelivering in mid-September, spot premiums are unlikely to expand sustainably, while aluminum rod inventory builds risk transmitting to ingots. Focus remains on the Federal Reserve's meeting outcome, with the market awaiting clarity before further stabilization.
Industrial Silicon and Polysilicon: Balancing Expectations and Reality
Industrial silicon traded weakly on the 15th, with the main contract 2611 closing at 8,445 yuan per tonne, down 1.57% intraday, as open interest grew by 14,980 contracts to 324,000. Baichuan's spot reference price for industrial silicon held steady at 9,261 yuan per tonne, while the lowest deliverable grade rebounded to 8,800 yuan per tonne, widening the spot premium to 390 yuan per tonne. Polysilicon also traded weakly, with the main contract 2611 closing at 36,705 yuan per tonne, down 1.21%, with open interest down 1,515 contracts to 108,900. The lowest deliverable grade slipped to 39,680 yuan per tonne, expanding the spot premium to 2,855 yuan per tonne.
As a major Xinjiang producer completes output cuts at its eastern base and an Inner Mongolia plant resumes operations, the market is simultaneously pricing in longer-than-expected production halts at major facilities while acknowledging that actual September reductions may fall short of expectations. Although silicon plants are reluctant to sell and attempt to support prices, frequent Q4 polysilicon production cuts and recent purchasing declines at silicon material plants have fueled demand contraction concerns. Industrial silicon remains rangebound, with limited upside and downside. The polysilicon market continues to grapple with strong reduction expectations versus weak reality, as September batch trading remains stalled, with only a few wafer makers holding low raw material inventories and overseas traceability orders releasing limited purchasing interest. Most wafer plants maintain two months of production inventory, and silicon material stockpiles continue to accumulate. The turning point for polysilicon has yet to emerge, with attention focused on the actual implementation of production cuts and the risk of disappointing peak-season restocking by downstream wafer producers.
Lithium Carbonate: Searching for Strong Support Amid Volatility
Lithium carbonate futures for contract 2701 fell 3.32% to 129,120 yuan per tonne yesterday, with open interest rising by 7,123 contracts to 418,700. In spot pricing, battery-grade lithium carbonate averaged 135,850 yuan per tonne, down 2,800 yuan, while industrial-grade lithium carbonate fell 2,800 yuan to 131,850 yuan. Battery-grade lithium hydroxide (coarse particle) dropped 2,500 yuan to 124,000 yuan. Warrant inventory declined by 1,650 tonnes to 47,164 tonnes.
On the supply side, weekly lithium carbonate output rose by 1,413 tonnes to 27,665 tonnes, with spodumene-based production up 1,040 tonnes to 14,313 tonnes, lepidolite-based up 330 tonnes to 3,387 tonnes, salt lake-based up 177 tonnes to 5,993 tonnes, recycling-based down 45 tonnes to 3,055 tonnes, and lithium slag-based down 89 tonnes to 917 tonnes. September production is projected to increase 10% month-on-month to 128,517 tonnes, with spodumene-based up 10% to 67,680 tonnes, lepidolite-based up 3% to 15,250 tonnes, salt lake-based up 18% to 26,190 tonnes, recycling-based up 12% to 15,350 tonnes, and lithium slag-based up 1% to 4,047 tonnes.
On the demand side, September forecasts indicate ternary material output falling 5% to 86,450 tonnes, lithium iron phosphate output rising 6% to 612,000 tonnes, cobalt acid lithium output up 6% to 7,420 tonnes, manganese acid lithium up 7% to 11,487 tonnes, and total lithium battery output up 7% to 314.5 GWh. Weekly inventories decreased by 4,912 tonnes to 164,435 tonnes, with upstream down 1,848 tonnes to 34,796 tonnes, cathode plants up 1,366 tonnes to 40,861 tonnes, traders down 570 tonnes to 70,450 tonnes, and cell makers and others up 840 tonnes to 18,328 tonnes.
Precious metals and non-ferrous markets continued their weak run, and lithium prices were affected, accelerating declines yesterday before showing relative stabilization. September presents strong supply and demand on both sides, with weekly apparent consumption rising slightly. Although the basis has strengthened, warrant pressure has prevented spot from reflecting positive feedback, though recent modest warrant outflows deserve monitoring for magnitude and sustainability. Price declines require stronger spot support, while upside faces fragile demand concerns and weak expectations, compounded by macro disruptions. The market should watch whether basis and warrant dynamics can establish a strong-spot thesis.
Comments