Copper: Overnight, copper prices traded within a narrow range both domestically and internationally, while the physical import of refined copper in China remained at a loss. Macroeconomic data showed the U.S. ISM Services Index for February rose to 56.1, reaching its highest level since mid-2022 and exceeding market expectations. The new orders index climbed to 58.6, a more than one-year high, and the order backlog index hit its highest level in nearly four years. U.S. ADP employment increased by 63,000 in February, surpassing the expected 50,000 and marking the highest level in three months. The resilience of the U.S. economy and job market boosted financial market sentiment overnight. Geopolitically, former President Trump announced a plan to escort ships through the Strait of Hormuz. Domestically, attention remains on reports from the Two Sessions. Inventory data showed LME copper stocks increased by 3,850 tons to 261,525 tons; Comex copper stocks fell by 354 tons to 545,176 tons; SHFE copper warehouse receipts rose by 1,940 tons to 302,475 tons; while BC copper stocks decreased by 49 tons to 13,256 tons. Although overseas financial market sentiment improved overnight, providing some support for copper prices, short-term macroeconomic risks and fundamental pressures cannot be ruled out. Persistent inventory accumulation both domestically and internationally may continue to weigh on copper prices, with the risk of a secondary correction remaining. However, opportunities may arise as financial markets have largely priced in risks and inventory accumulation is expected to taper off. Against a backdrop of positive signals from both China and the U.S., market risk appetite may gradually recover. Strategically, a buy-on-dips approach is recommended.
Nickel & Stainless Steel: Overnight, LME nickel rose 2.42% to $17,550 per ton, while SHFE nickel increased 1.29% to 138,460 yuan per ton. LME nickel stocks decreased by 426 tons to 287,550 tons, while SHFE warehouse receipts fell by 17 tons to 53,632 tons. The LME 0-3 month spread remained in negative territory, and the import nickel premium rose by 50 yuan per ton to 150 yuan per ton. Regarding news, in response to statements from the Indonesian Nickel Miners Association (APNI) that a July revision of the RKAB could potentially increase production by 30%, Tri Winarno, Director General of Minerals and Coal at the Ministry of Energy and Mineral Resources (ESDM), clarified that while nickel miners can apply to revise their 2026 production quotas under current regulations, the specific approved increase will depend on actual demand and individual assessments, rather than a uniform percentage. Tri emphasized that the revision process is expected to begin in the second half of 2026 as part of standard regulatory procedures, not as a special policy in response to recent quota cuts to 260-270 million tons. Nickel ore prices in the domestic market and premiums continue to strengthen, while nickel pig iron prices have also risen, elevating the cost support for pyrometallurgical nickel. Stainless steel inventories have accumulated seasonally after the holiday, and March crude steel production schedules show a month-on-month increase, with cost support remaining relatively firm. In the new energy sector, third-party data indicates that ternary material production in March is also expected to increase month-on-month. Fundamentally, cost remains the core support. Weekly data still shows significant inventory pressure for Class I nickel. Light long positions near cost levels may be considered, while monitoring Class I nickel inventory levels. If visible inventories see a significant drawdown, it could provide further positive feedback to prices. Caution is advised regarding overseas macroeconomic risks.
Alumina, Primary Aluminum & Aluminum Alloy: Overnight, alumina prices weakened slightly, with the AO2605 contract closing at 2,766 yuan per ton, down 1.04%, and open interest increasing by 20,169 lots to 328,000 lots. Primary aluminum prices on the SHFE strengthened, with the AL2604 contract closing at 25,145 yuan per ton, up 2.65%, and open interest rising by 1,977 lots to 265,000 lots. Aluminum alloy prices also strengthened, with the main AD2604 contract closing at 23,670 yuan per ton, up 2.31%, and open interest increasing by 82 lots to 6,470 lots. Spot SMM alumina prices rebounded to 2,646 yuan per ton. The spot discount for aluminum ingots narrowed to 150 yuan per ton. Foshan A00 aluminum was quoted at 24,360 yuan per ton, at a 40 yuan discount to Wuxi A00. Aluminum billet processing fees remained stable in most regions, while fees in Xinjiang, Nanchang, Guangdong, and Wuxi decreased by 20-50 yuan per ton. Processing fees for aluminum rod 1A60 series held steady, as did fees for 6/8 series; fees for low-carbon aluminum rod increased by 431 yuan per ton. Production cuts at a major northern alumina refinery, combined with seasonal consumption of raw material inventories by aluminum smelters, have led to a slight drawdown in alumina stocks, with spot prices beginning to stabilize and rebound. However, the accumulation of futures warehouse receipts and the restart of some production capacity post-holiday maintenance continue to cap upside potential. Inventories are expected to decline slightly, with alumina prices trending weakly stable. The ongoing U.S.-Iran conflict is evolving into a regional issue. Following the shutdown of Norsk Hydro's aluminum production in Qatar, Aluminum Bahrain (Alba) also declared force majeure on shipments, escalating supply concerns in the Middle East. Domestically, concentrated arrivals of goods and manpower shortages at terminals are temporarily limiting logistics efficiency. Aluminum ingot inventories are expected to continue accumulating, potentially peaking in mid-to-late March. Short-term supply and demand remain mismatched, with post-holiday production resumption and inventory accumulation creating a tug-of-war, limiting upside potential and widening the price gap between domestic and international markets. Continued monitoring of the situation in the Middle East is advised.
Industrial Silicon & Polysilicon: On the 4th, industrial silicon prices strengthened, with the main 2605 contract closing at 8,515 yuan per ton, up 3.46% for the day, while open interest decreased by 37,662 lots to 311,000 lots. The Baichuan spot reference price for industrial silicon was 9,321 yuan per ton, down 1.45% from the previous day. The price for the lowest deliverable grade fell to 8,750 yuan per ton, with the spot premium narrowing to 235 yuan per ton. Polysilicon prices weakened, with the main 2605 contract closing at 42,200 yuan per ton, down 4.51% for the day, and open interest decreasing by 1,702 lots to 37,638 lots. The Baichuan price for N-type polysilicon dropped to 49,500 yuan per ton. The price for the lowest deliverable polysilicon grade also fell to 49,500 yuan per ton, with the spot premium at 7,300 yuan per ton. A small amount of production has resumed in northwest China's industrial silicon sector, but downstream restocking remains weak. The market is pricing in post-holiday pessimism and high inventory pressure, capping upside potential. New polysilicon order placements have stalled. As the final window for March export rush shipments approaches, terminal demand shows some resilience, but high spot inventories and low procurement volumes make it difficult for polysilicon producers to maintain firm pricing, limiting upward transmission of demand. Coupled with poor spot sales leading to continued warehouse receipt registrations, pressure on futures prices persists. Polysilicon continues to face downward pressure, with the market awaiting clearer policy signals and a post-holiday pickup in terminal demand.
Lithium Carbonate: Yesterday, the lithium carbonate futures 2605 contract fell 2.86% to 153,060 yuan per ton. Spot prices declined, with the average price for battery-grade lithium carbonate dropping by 7,000 yuan per ton to 154,000 yuan per ton, and the average for industrial-grade falling by 7,000 yuan per ton to 150,500 yuan per ton. The price for battery-grade lithium hydroxide (coarse powder) decreased by 4,100 yuan per ton to 151,500 yuan per ton. Warehouse receipts inventory decreased by 600 tons to 37,155 tons. On the supply side, the latest production data showed a week-on-week increase of 1,638 tons to 21,822 tons. Production via spodumene increased by 1,460 tons to 13,484 tons, while lepidolite-based production decreased by 150 tons to 2,812 tons. Salt lake-based production rose by 250 tons to 3,290 tons, and recycling-based production increased by 78 tons to 2,236 tons. Domestic production in March is forecast to increase by 28% month-on-month to 106,390 tons. On the demand side, March production of ternary materials is projected to increase by 19% month-on-month to 84,360 tons, while lithium iron phosphate production is expected to rise by 24% to 430,000 tons. Social inventories of lithium carbonate fell by 2,839 tons week-on-week to 100,093 tons. Inventories at downstream users decreased by 4,471 tons to 40,021 tons, inventories in other segments increased by 170 tons to 41,690 tons, and upstream producer inventories rose by 1,462 tons to 18,382 tons. The current fundamentals present a mixed picture. Bullish factors include the potential for further inventory drawdowns in March based on the supply-demand balance, with total inventories now around 100,000 tons representing less than one month of turnover. Expectations of restocking demand at lower prices and uncertainties surrounding Zimbabwean supply also provide support. Bearish factors include risks from external markets and concerns over negative feedback from weak terminal data. Currently, price downside appears limited, but a sustained move higher requires more definitive positive catalysts.
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