Copper: LME copper was closed overnight, while domestic copper prices showed strength with volatility. Macro factors are centered on US-Iran negotiations. Public statements from the US administration indicated progress in talks but emphasized no agreement would allow Iran to obtain nuclear weapons. US officials expressed optimism about a near-term resolution, with reports suggesting a draft memorandum includes extending the current ceasefire by 60 days, Iran immediately reopening the Strait of Hormuz, and taking measures within 30 days to restore transit traffic to pre-war levels. Inventory-wise, LME stocks held at 391,900 tonnes; Comex inventory increased by 269 tonnes to 575,140 tonnes; SHFE copper warehouse receipts decreased by 399 tonnes to 100,265 tonnes, while BC copper receipts fell by 496 tonnes to 12,778 tonnes. On the demand side, fluctuating copper prices are affecting downstream purchasing patterns. Amid macro uncertainties and fundamental complexities, the market lacks catalysts to break the current equilibrium. News of a potential breakthrough in US-Iran talks could theoretically support copper prices, but a resolution to the Strait of Hormuz issue might also alleviate overseas sulfur shortages, leading to a cautiously optimistic market stance. Continued monitoring of US-Iran negotiations is advised.
Nickel & Stainless Steel: Overnight, SHFE nickel rose 0.42% to 144,430 yuan per tonne. SHFE warehouse receipts increased by 508 tonnes to 80,262 tonnes. The LME 0-3 month spread remained in contango, while import nickel premiums stood at -250 yuan per tonne. Indonesia announced plans to centralize management of key commodity exports to boost fiscal revenue and enhance control over natural resources. According to SMM, some high-nickel pig iron (NPI) production lines in Indonesia have been under maintenance or reduced operations since March-April due to insufficient nickel ore supply and high costs. Coupled with the commissioning of new electrolytic aluminum capacity within industrial parks and subsequent power allocation, an estimated 10-15% of existing NPI capacity in the IWIP industrial park will undergo rotational maintenance in the coming months, limiting short-term supply recovery. Additionally, Indonesia's Ministry of Energy and Mineral Resources suspended mining permits (IUPs) for over 50 companies for failing to submit 2026 RKAB plans on time. On the supply side, quota-related issues have led some Indonesian mines into maintenance phases. Under current regulations, companies can formally submit RKAB revisions in the second half of 2026, after which the government will conduct a comprehensive assessment for approval. Meanwhile, previous raw material supply and price pressures prompted load reductions at some Indonesian projects, tightening supply. Although sulfur supply and price pressures may ease, replenishment will take time. Demand-wise, nickel consumption in ternary precursors, ternary materials, and stainless steel increased in May. However, primary nickel inventory pressure remains significant, with weekly LME stocks rising and domestic social inventories continuing to accumulate. Supply-side disruptions are driving price strength, suggesting potential long opportunities at lower levels, while monitoring whether earlier supply reductions can lead to inventory drawdowns.
Alumina, Primary Aluminum & Aluminum Alloy: Overnight, alumina prices showed strength with volatility. The AO2609 contract settled at 2,848 yuan per tonne, up 4.82%, with open interest decreasing by 27,920 lots to 379,000 lots. Primary aluminum prices weakened slightly, with the AL2607 contract settling at 24,370 yuan per tonne, down 0.29%, and open interest increasing by 5,867 lots to 294,000 lots. Aluminum alloy prices also weakened, with the main AD2607 contract settling at 23,020 yuan per tonne, down 0.26%, and open interest decreasing by 187 lots to 14,904 lots. Spot alumina prices (SMM) retreated to 2,667 yuan per tonne. Aluminum ingot spot discounts narrowed to 140 yuan per tonne. Foshan A00 aluminum prices fell to 24,140 yuan per tonne, at a 170 yuan per tonne discount to Wuxi A00. Aluminum billet processing fees remained stable in most regions, with Nanchang up 20-30 yuan per tonne. Aluminum rod (1A60 series) processing fees rose by 50 yuan per tonne, while 6/8 series fees held steady; low-carbon 6/8 series fees decreased by 62 yuan per tonne. Alumina futures rebounded driven by news of export control measures set for June implementation and reports of a blocked wharf at Indonesia's Hongfa Weil alumina company. Domestic alumina inventories are accumulating with structural divergence; increased arrivals of imported alumina far outweighed reductions from May contract deliveries, maintenance shutdowns at calcination plants, and raw material consumption by smelters. With continued growth in import arrivals, new capacity coming online by late May, and slow downstream offtake, supply pressure is evident, warranting caution over near-month delivery risks. For primary aluminum, a hawkish tilt in Fed rate cut expectations may temporarily dampen base metals, limiting aluminum's upside breakout from its current range. Resilient exports and phased recovery in downstream processing have shifted domestic aluminum ingot social inventories into a destocking phase, resonating with low LME stocks and allowing for potential narrowing of the wide domestic-international price spread.
Industrial Silicon & Polysilicon: On the 25th, industrial silicon prices showed strength with volatility. The main 2609 contract settled at 8,570 yuan per tonne, up 1.48% on the day, with open interest decreasing by 17,511 lots to 289,000 lots. Baichuan's spot reference price was 9,136 yuan per tonne, unchanged from the previous session. The lowest deliverable grade price fell to 8,600 yuan per tonne, with the spot premium narrowing to 30 yuan per tonne. Polysilicon prices also strengthened. The main 2606 contract settled at 36,995 yuan per tonne, up 1.2%, with open interest decreasing by 4,841 lots to 30,372 lots. The adjusted lowest deliverable standard fell to 31,000 yuan per tonne, with the spot discount widening to 5,995 yuan per tonne. The Ministry of Industry and Information Technology recently included industrial silicon in its key energy conservation supervision scope, aiming to optimize inefficient capacity based on energy efficiency indicators. However, before supply-side policies materialize, sustained upward momentum in market sentiment is limited, with significant resistance near previous highs. The market is currently pricing in expectations for a cost center decline entering June and a sudden increase in operating rates in Southwest China. Downstream purchasing sentiment remains weak, leading to new hedging positions entering at current price levels, suggesting a short-term consolidation phase. Polysilicon demand is recovering with terminal bidding, prompting moderate downstream restocking but no large-scale concentrated procurement. After cost adjustments, the current spot price stalemate is unsustainable. Following the concentrated delisting of May contract warehouse receipts, selling pressure from silicon plants and traders may weigh on the June contract. Caution is advised regarding potential deep corrections and volatile rallies. Notices from the NDRC and NEA on direct green power connections support long-term photovoltaic installation demand, providing some near-term sentiment support.
Lithium Carbonate: Yesterday, the lithium carbonate futures 2609 contract fell 0.06% to 181,200 yuan per tonne, with open interest decreasing by 3,073 lots to 449,800 lots. Spot prices: battery-grade lithium carbonate average rose by 5,250 yuan per tonne to 183,250 yuan per tonne; industrial-grade average rose by 5,250 yuan per tonne to 179,250 yuan per tonne; battery-grade lithium hydroxide (coarse particle) rose 4,000 yuan per tonne to 170,000 yuan per tonne. Warehouse receipts decreased by 904 tonnes to 52,143 tonnes. In news, Western Australia disclosed regulatory approval for the expansion of the Mount Holland hard-rock lithium mine, set to double capacity. The expansion adds mineral resources and replicates existing production lines, targeting spodumene concentrate capacity of 4.4 million tonnes per year, while lithium hydroxide output remains at 50,000 tonnes annually. Weekly production decreased by 123 tonnes week-on-week to 25,893 tonnes. May production is estimated to increase 3.4% month-on-month to 113,780 tonnes. Customs data shows China imported 32,650 tonnes of lithium carbonate in April, up 9% month-on-month and 15% year-on-year. Imports from Chile accounted for 65% (21,000 tonnes), Argentina 29% (9,555 tonnes), and Indonesia 3% (1,100 tonnes). Chile's total lithium carbonate exports in April 2026 were 29,526 tonnes, up 3.40% month-on-month and 35.63% year-on-year, with exports to China at 22,956 tonnes, up 21.29% month-on-month and 47.66% year-on-year. Demand-side estimates for May: ternary material output up 9% month-on-month to 87,920 tonnes; lithium iron phosphate (LFP) output up 8% to 503,700 tonnes; lithium cobalt oxide output up 23% to 9,480 tonnes; lithium manganate output up 7% to 13,000 tonnes. Lithium battery output is estimated up 7% to 239.3 GWh, with ternary battery output up 6% to 33.3 GWh, LFP battery output up 7% to 196.4 GWh, and other batteries up 7% to 9.5 GWh. Large-sample inventories decreased by 1,115 tonnes week-on-week to 137,260 tonnes; small-sample inventories decreased by 755 tonnes to 100,663 tonnes. By segment (large-sample): other sector inventories fell 5,980 tonnes to 76,157 tonnes; smelter inventories fell 717 tonnes to 18,374 tonnes; downstream inventories rose 5,582 tonnes to 42,729 tonnes. Last week's inventory sample adjustments resulted in a slightly larger-than-expected discrepancy. The slower-than-expected destocking pace in the small sample, coupled with a renewed weakening in market sentiment, led futures prices to rise initially before falling. However, after the weekly price correction, spot transaction volumes increased noticeably, which may help alleviate future delivery pressure. Despite rising absolute inventory levels, the short-term destocking trend continues, with social inventory days of supply showing a slight sequential decline. Additionally, supply-side news is resurfacing, with some lithium mine project delays. On the demand side, new energy storage policies may provide renewed market confidence. Prices are expected to remain volatile in the near term, suggesting monitoring for potential long opportunities at lower levels while awaiting new catalysts.
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