Copper: Copper prices showed strength overnight, with domestic refined copper imports turning slightly profitable. On the macro front, the minutes from the Fed's April meeting indicated that participants generally believe the period of maintaining the current policy stance may be longer than previously expected, given persistent high inflation and uncertainty surrounding the Middle East conflict. However, if the U.S.-Iran conflict keeps inflation elevated, a rate hike might be necessary. Geopolitical tensions remain, with former President Trump stating there's no rush to end the conflict with Iran and that negotiations are in the "final stages." The rapid rise in U.S. Treasury yields, adjustments in U.S. financial markets, renewed strength in oil prices, and hawkish Fed commentary, coupled with signs of progress in U.S.-Iran talks, are shifting market dynamics. Inventory data shows LME stocks down 1,275 tons to 393,400 tons; Comex stocks up 512 tons to 574,289 tons; SHFE copper warehouse receipts up 1,236 tons to 101,014 tons; BC copper receipts down 1,198 tons to 13,623 tons. Fundamentally, the domestic market is transitioning from peak to off-peak season, but near-term demand remains firm, continuing to support copper prices. The strategy remains to buy on dips.
Nickel & Stainless Steel: LME nickel rose 1.09% overnight to $18,985/ton, while SHFE nickel gained 0.27% to 144,940 yuan/ton. LME inventories increased by 3,576 tons to 279,672 tons; SHFE warehouse receipts rose by 437 tons to 79,267 tons. LME 0-3 month spreads remain in contango; import premiums for nickel stand at -250 yuan/ton. According to SMM, Indonesia's nickel mining quota for 2026 is expected to tighten significantly, exacerbating supply tightness. Consequently, some Indonesian high-grade nickel pig iron (NPI) production lines have entered maintenance or reduced output since March-April due to insufficient ore supply and high costs. Combined with the commissioning of new electrolytic aluminum capacity in industrial parks, which affects power allocation, it is estimated that 10-15% of existing NPI capacity in the IWIP industrial park will undergo rotational maintenance in the coming months, limiting near-term supply recovery. Additionally, Indonesia's Ministry of Energy and Mineral Resources has suspended the mining permits (IUP) of over 50 mining companies for failing to submit their 2026 RKAB work plans on time. On the supply side, quota issues have led to maintenance at related Indonesian mines. Under current regulations, companies can formally submit revised RKAB plans in the second half of 2026, with government approval pending a comprehensive assessment. Meanwhile, previous supply and price pressures had already caused some Indonesian projects to reduce operating rates, tightening supply. While sulfur supply and price pressures may ease, replenishment will take time. On the demand side, nickel consumption for ternary precursors, ternary materials, and stainless steel increased in May. However, primary nickel inventories remain under pressure, with weekly LME stocks rising and domestic social inventories continuing to increase. Supply-side disruptions are supporting prices, suggesting opportunities for long positions on dips, while monitoring whether previous supply cuts can lead to inventory drawdowns.
Alumina, Electrolytic Aluminum & Aluminum Alloy: Alumina prices showed strength overnight, with the AO2609 contract settling at 2,718 yuan/ton, up 0.07%, and open interest increasing by 5,155 lots to 409,700 lots. Electrolytic aluminum (AL2606) gained 0.35% to 24,510 yuan/ton, with open interest down 3,286 lots to 213,000 lots. Aluminum alloy (AD2607) rose 0.24% to 23,115 yuan/ton, with open interest up 15 lots to 15,132 lots. Spot alumina prices (SMM) fell to 2,671 yuan/ton. Spot discounts for aluminum ingots narrowed to 170 yuan/ton. Foshan A00 aluminum was quoted at 24,170 yuan/ton, at a 100 yuan/ton discount to Wuxi A00. Aluminum billet processing fees were stable in Baotou, Henan, and Linyi, but down 20-40 yuan/ton in Xinjiang, Nanchang, and Guangdong. Aluminum rod processing fees for 1A60 series were stable; 6/8 series fees were also stable, with low-carbon 6/8 series up 25 yuan/ton. Guinea mines remain cautious on shipments, with high freight rates keeping CIF costs firm. In Guangxi, alumina capacity is resuming from maintenance and new supply is being released, but downstream raw material inventories are high with weak restocking interest. The accumulation of alumina warehouse receipts is slower than the increase in spot supply, leading to widening spot discounts. Alumina prices are supported by costs but lack upward momentum, likely maintaining a weak, range-bound pattern. For electrolytic aluminum, domestic ingot inventories have shown a tentative turning point, aligning with low LME stocks. However, as the peak demand season fades, terminal orders face marginal contraction pressure. Combined with the recent price rebound, which may negatively impact processing plant operating rates, ingot inventory drawdowns could be volatile. As macro risk premiums recede, the pace of destocking will become a key variable, requiring verification of its scale and sustainability.
Industrial Silicon & Polysilicon: Industrial silicon prices were firm on the 20th, with the main 2609 contract settling at 8,460 yuan/ton, up 0.06%, and open interest rising by 3,385 lots to 309,600 lots. The Baichuan spot reference price was 9,136 yuan/ton, down 7 yuan/ton from the previous day. The price for the lowest deliverable grade fell to 8,600 yuan/ton, with the spot premium narrowing to 140 yuan/ton. Polysilicon was also strong, with the main 2606 contract up 1.38% to 37,055 yuan/ton, and open interest down 4,838 lots to 42,354 lots. The adjusted lowest deliverable standard is 34,000 yuan/ton, with the spot discount widening to 3,055 yuan/ton. With the completion of power line maintenance in Xinjiang, two idled silicon plants are set to resume operations. In Leshan, Sichuan, plants are also expected to restart 3-4 furnaces as profits turn positive. Downstream acceptance of high prices is poor, limiting concentrated restocking. High inventory levels are depleting slowly, and warehouse receipt pressure persists, with only arbitrageurs actively selling. Industrial silicon prices are supported by costs but trending slightly lower. For polysilicon, new capacity in Inner Mongolia is coming online, and Southwest China capacity is resuming with the wet season. Previously delayed terminal bidding is gradually picking up. Seasonal factors have led to increased production schedules from wafers to modules in May. With both supply and demand rising, polysilicon prices are influenced by marginal changes in the supply-demand balance. Recent notices from the NDRC on promoting direct green power consumption for multiple users, along with frequent industry conference news, keep market expectations alive for energy consumption policies. Capital flows continue to focus on anti-internal competition and energy consumption indicators, leading polysilicon into a wide range-bound pattern with potential for volatile upward moves.
Lithium Carbonate: The lithium carbonate futures 2609 contract fell 1.3% yesterday to 183,100 yuan/ton, with open interest up 840 lots to 447,300 lots. Spot prices declined: battery-grade lithium carbonate average down 7,500 yuan/ton to 179,000 yuan/ton; industrial-grade down 7,500 yuan/ton to 175,000 yuan/ton; battery-grade lithium hydroxide (coarse particle) down 6,500 yuan/ton to 173,250 yuan/ton. Warehouse receipts increased by 504 tons to 53,083 tons. On the supply side, weekly production rose by 122 tons to 26,016 tons. May production is forecast to increase 3.4% month-on-month to 113,780 tons. Chile's total lithium carbonate exports in April 2026 were 29,526 tons, up 3.40% month-on-month and 35.63% year-on-year, with exports to China at 22,956 tons, up 21.29% month-on-month and 47.66% year-on-year. Demand-wise, May production forecasts show: ternary materials up 9% month-on-month to 87,920 tons; lithium iron phosphate (LFP) up 8% to 503,700 tons; lithium cobalt oxide up 23% to 9,480 tons; lithium manganese oxide up 7% to 13,000 tons. Lithium battery production is expected to rise 7% month-on-month to 239.3 GWh, comprising ternary batteries up 6% to 33.3 GWh, LFP batteries up 7% to 196.4 GWh, and other batteries up 7% to 9.5 GWh. Inventory data shows weekly social stocks down 1,255 tons to 101,418 tons, with downstream inventories falling 3,421 tons to 37,147 tons, other segments up 1,870 tons to 45,180 tons, and upstream stocks up 296 tons to 19,091 tons. Futures prices fell over 5% intraday yesterday before recovering in the afternoon. The recent price decline has spurred significant spot trading volume. Inventory calculation methods may be adjusted this week, but overall absolute inventory levels are rising. However, weekly data still shows a short-term destocking trend, with social inventory days of supply continuing to decline slightly. Prices are expected to remain range-bound in the near term, suggesting opportunities for long positions on dips while awaiting new catalysts. Monitoring for potential production resumptions in Jiangxi projects is also advised.
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