Copper: Overnight, copper prices, both domestic and international, weakened amid volatile trading, with the import arbitrage window for refined copper in China remaining closed. On the macro front, the deadlock in US-Iran negotiations persists, and the unresolved navigation issues in the Strait of Hormuz are not only testing the patience of both nations but also wearing down market tolerance. Persistent high crude oil prices have fueled inflation concerns, triggering anxiety in global bond markets. The yield on the US 30-year Treasury note approached 5.20%, a new high since 2007. Concurrently, the bond market's unusual movements have sparked a risk-off sentiment, driving the US dollar index higher and leading to continued adjustments in overseas financial markets. Domestically, economic data for April showed continued divergence, with overall figures remaining weak, particularly in fixed asset investment and real estate investment. Inventory data shows LME stocks increased by 1,275 tonnes to 394,675 tonnes; Comex stocks rose by 2,538 tonnes to 573,776 tonnes; SHFE copper warehouse receipts increased by 97 tonnes to 102,250 tonnes, while BC copper stocks decreased by 200 tonnes to 14,821 tonnes. The prolonged lack of progress in the US-Iran conflict is gradually eroding market patience, suppressing risk appetite and leading to weaker copper price performance. Additionally, the stance of the new Federal Reserve Chair, whether maintaining a hawkish policy, remains uncertain, keeping the market cautious. However, support from profits may limit the downside for overseas AI-related concepts, and the market has already priced in the new Fed Chair to some extent, suggesting macro headwinds could be short-lived. Nevertheless, with the Strait of Hormuz unlikely to reopen soon, overseas sulfur shortages persist. Over time, the anticipated supply contraction may materialize. Coupled with extremely low domestic TC offers and ongoing inventory drawdowns, fundamental support remains solid. Overall, the room for a correction may be limited, and a strategy of buying on dips is recommended.
Nickel & Stainless Steel: Overnight, LME nickel rose 1.21% to $18,780 per tonne, while SHFE nickel increased 0.78% to 143,820 yuan per tonne. Inventories: LME stocks increased by 534 tonnes to 276,096 tonnes; SHFE warehouse receipts rose by 267 tonnes to 78,830 tonnes. Premiums/discounts: The LME 0-3 month spread remained in contango; import nickel discounts stood at -350 yuan/tonne. According to SMM, nickel mining quotas in Indonesia for 2026 are set to tighten significantly, exacerbating the nickel ore supply shortage. Consequently, some Indonesian high-nickel pig iron (NPI) production lines have entered maintenance or reduced output since March-April due to insufficient ore supply and high costs. Additionally, with the commissioning of new electrolytic aluminum capacity in industrial parks, power resource allocation is expected to lead to rotational maintenance affecting 10-15% of existing NPI capacity in the IWIP industrial park over the coming months, making a significant short-term supply recovery unlikely. Indonesia's Ministry of Energy and Mineral Resources has suspended the IUP mining licenses of over 50 companies for failing to submit their 2026 RKAB (Work Plan and Budget) on time. On the supply side, the quota issue has led some related Indonesian mines into maintenance. According to current regulations, companies can formally submit revised RKABs in the second half of 2026, after which the government will decide on approval following a comprehensive assessment. Meanwhile, previous raw material supply and price pressures had already led some Indonesian projects to reduce operating rates, tightening supply. Current sulfur supply and price pressures may ease, but 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 significant pressure recently, with weekly LME stocks rebounding and domestic social inventories continuing to rise. Supply-side disruptions are driving prices higher. Considering opportunities for long positions on dips, monitor whether previous supply-side reductions can drive inventory drawdowns.
Alumina, Electrolytic Aluminum & Aluminum Alloy: Overnight, alumina traded weakly, with the AO2609 contract closing at 2,722 yuan/tonne, down 0.11%. Open interest increased by 9,122 lots to 403,000 lots. SHFE aluminum traded slightly stronger, with the AL2606 contract closing at 24,445 yuan/tonne, up 0.2%. Open interest decreased by 7,595 lots to 228,000 lots. Aluminum alloy also traded slightly stronger, with the main AD2607 contract closing at 23,125 yuan/tonne, up 0.24%. Open interest increased by 256 lots to 14,977 lots. Spot prices: SMM alumina prices retreated to 2,678 yuan/tonne. Aluminum ingot spot discounts widened to 180 yuan/tonne. Foshan A00 prices rebounded to 24,130 yuan/tonne, at a 60 yuan/tonne discount to Wuxi A00. Aluminum billet processing fees remained stable in Baotou, Henan, and Linyi, while fees in Xinjiang, Nanchang, Guangdong, and Wuxi decreased by 40-60 yuan/tonne. Aluminum rod 1A60 series processing fees held steady; 6/8 series processing fees were unchanged, while low-carbon 6/8 series fees increased by 211 yuan/tonne. Guinea mines remain cautious about shipments, with freight rates staying high, keeping CIF costs firm. In Guangxi, alumina capacity that was under maintenance has resumed operations alongside concentrated new capacity releases. However, downstream raw material inventories are high, and restocking willingness is low. The accumulation rate of alumina warehouse receipts is slower than the increase in spot supply, leading to widening spot discounts. Current alumina prices find support from costs but lack upward momentum, maintaining a weak and volatile pattern. For electrolytic aluminum, domestic aluminum ingot inventories have shown an initial inflection point towards drawdown, aligning with low LME inventories. However, as the peak domestic demand season fades, terminal orders face marginal contraction pressure. Combined with the price rebound, this may negatively impact processing plant operating rates, potentially leading to fluctuations in aluminum ingot stocks. As macro risk premiums recede, the pace of inventory drawdown will become a core variable, requiring verification of its magnitude and sustainability.
Industrial Silicon & Polysilicon: On the 19th, industrial silicon traded weakly, with the main 2609 contract closing at 8,450 yuan/tonne, down 0.18% on the day. Open interest increased by 290 lots to 306,000 lots. The Baichuan industrial silicon spot reference price was 9,143 yuan/tonne, down 18 yuan/tonne from the previous session. The lowest deliverable grade price fell to 8,600 yuan/tonne, narrowing the spot premium to 150 yuan/tonne. Polysilicon traded weaker, with the main 2606 contract closing at 36,310 yuan/tonne, down 1.49% on the day. Open interest decreased by 2,306 lots to 47,192 lots. The adjusted lowest deliverable standard price was 34,000 yuan/tonne, with the spot discount narrowing to 2,310 yuan/tonne. With the completion of power line maintenance at a Xinjiang power station, two silicon plants that were under maintenance and shutdown will gradually resume operations. In Leshan, Sichuan, silicon plants will also gradually restart 3-4 furnaces as profits turn positive. Downstream acceptance of high prices is poor, making concentrated restocking unlikely. High inventory levels are being drawn down slowly, warehouse receipt pressure persists, and only arbitrage traders are actively selling. Industrial silicon prices are supported by costs but are trending slightly lower. For polysilicon, with new capacity in Inner Mongolia coming online and resumption of production in the Southwest during the wet season, previously delayed terminal bidding is gradually picking up. Affected by seasonal factors, production schedules from wafers to modules have increased in May. With both supply and demand rising, the market is focused on marginal changes in the polysilicon supply-demand balance. Recent industry conference news and continued market expectations for energy consumption policy announcements are driving sentiment. Capital flows are still influenced by anti-internal competition and energy consumption indicator themes. Polysilicon is entering a phase of wide fluctuations; monitor the potential for volatility-driven price increases.
Lithium Carbonate: Yesterday, the lithium carbonate futures 2609 contract fell 3.71% to 184,400 yuan/tonne, with daily open interest decreasing by 20,533 lots to 446,000 lots. Spot prices: The average battery-grade lithium carbonate price fell by 5,000 yuan/tonne to 186,500 yuan/tonne. The average industrial-grade lithium carbonate price fell by 5,000 yuan/tonne to 182,500 yuan/tonne. Battery-grade lithium hydroxide (coarse particle) fell by 4,500 yuan/tonne to 173,500 yuan/tonne. Warehouse receipts: Yesterday, warehouse receipt inventory increased by 775 tonnes to 52,579 tonnes. Supply side: Weekly production increased by 122 tonnes to 26,016 tonnes. May lithium carbonate production is forecast to increase 3.4% month-on-month to 113,780 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: May production forecasts: ternary materials up 9% month-on-month to 87,920 tonnes; lithium iron phosphate (LFP) up 8% month-on-month to 503,700 tonnes; lithium cobalt oxide up 23% month-on-month to 9,480 tonnes; lithium manganese oxide up 7% month-on-month to 13,000 tonnes. May lithium battery production is forecast to increase 7% month-on-month to 239.3 GWh, with ternary battery production up 6% to 33.3 GWh, LFP battery production up 7% to 196.4 GWh, and other batteries up 7% to 9.5 GWh. Inventory side: Weekly social inventories decreased by 1,255 tonnes to 101,418 tonnes. Downstream inventories fell by 3,421 tonnes to 37,147 tonnes; inventories in other segments increased by 1,870 tonnes to 45,180 tonnes; upstream inventories rose by 296 tonnes to 19,091 tonnes. Yesterday, futures prices continued to decline, while spot trading volume increased significantly. Inventory classification may be adjusted this week. Overall, absolute inventory levels are rising, but weekly data still shows a short-term destocking trend, with social inventory days of cover continuing a slight sequential decline. Short-term prices are likely to remain volatile and consolidating. It is advisable to watch for opportunities to go long on dips, awaiting new catalysts. Also monitor whether any projects in Jiangxi resume operations.
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