[SMM Aluminum Express] This week, the operating rate at China's downstream aluminum processing industry leaders fell 0.2 percentage points WoW to 60.1%, extending its downward trend for several consecutive weeks. Off-season characteristics continued to deepen, with operations across all sectors generally weakening or holding steady at low levels. The aluminum processing industry remained weak this week, pressured by both deepening off-season effects and rebounding aluminum prices, as export support faded and domestic demand recovery was slow. The overall operating rate in August is expected to remain on a weak trend.

Why the Regulation Matters For mining and mineral-processing projects in Indonesia, regulatory certainty extends beyond investment permits, construction costs and production capacity. Companies must also understand how export revenue can be managed and how much cash remains available for operations, financing and reinvestment. DHE SDA, or Devisa Hasil Ekspor Sumber Daya Alam , refers to foreign-exchange proceeds generated from the exploitation, management or processing of Indonesia’s natural resources. Its treatment can affect working-capital requirements, debt servicing and project returns. Rare-earth content checks recently delayed alumina and nickel-product exports even though Indonesia had not established limits governing rare-earth elements occurring as by-products in those shipments. The government subsequently moved to address the regulatory gap. Against this backdrop, Government Regulation No. 21 of 2026 introduces more flexible DHE SDA treatment for certain mining-sector exports. The regulation amended Article 18A and became effective on June 1, 2026. What PP No. 21 of 2026 Changes Under the general framework, exporters must repatriate 100% of their DHE SDA into Indonesia. Non-oil-and-gas exporters must generally retain the full amount for at least 12 months through Bank BUMN. PP No. 21 of 2026 provides different treatment for certain mining-sector DHE SDA connected with bilateral agreements, understandings or other intergovernmental arrangements concerning trade. Requirement General non-oil-and-gas rule Article 18A mining treatment Repatriation into Indonesia 100% 100% Minimum retention 100% 30% Minimum retention period 12 months 3 months Banking channel Bank BUMN A foreign-exchange bank designated under the framework, potentially including a non-BUMN bank The change is a relaxation rather than a complete exemption. Full repatriation remains mandatory, but the amount subject to retention may fall from 100% to 30%, while the minimum period declines from 12 months to three months. Qualifying exporters may also place or convert the proceeds through banks outside Bank BUMN, subject to Bank Indonesia’s designation. For every US$100 million in export proceeds, the minimum retained amount could consequently fall from US$100 million for 12 months to US$30 million for three months. The actual financial effect would depend on the exporter’s working-capital requirements, financing arrangements, banking costs and the permitted use of the retained funds. How the Framework Appears to Operate PP No. 21 of 2026 refers to mining trade conducted in the implementation of bilateral agreements or other recognised trade arrangements. Based on that wording, this analysis reads the framework as follows: A qualifying trade arrangement exists or is recognised → an exporter or transaction is linked to that arrangement → the Article 18A treatment may apply. This is an analytical reading of the regulation’s structure, not a procedure expressly prescribed in PP No. 21 of 2026. The underlying trade arrangement appears to provide the policy basis for the relaxation. However, the regulation does not explain how an individual exporter, contract, shipment or export receipt becomes formally connected to that arrangement. Exporter Qualification and Bank Designation Are Separate The framework appears to involve two separate determinations. First, the exporter or DHE SDA flow must qualify for the Article 18A treatment because the relevant mining trade is connected with a recognised bilateral or other trade arrangement. Second, qualifying proceeds must be handled through a foreign-exchange bank designated under the framework. This may include a non-BUMN bank, but exporters cannot automatically use any foreign-exchange or non-BUMN bank. The designation of a bank does not establish that every exporter or transaction processed through it qualifies for reduced retention. Similarly, an exporter that qualifies for Article 18A treatment must still use an authorised banking channel. The qualification of the exporter or transaction determines whether the relaxation applies; bank designation determines where the qualifying proceeds may be handled. Four Countries Were Publicly Identified At separate press briefings on July 23, the United States, China, Australia and Canada were identified as countries associated with the exception. When explaining China’s inclusion, the finance minister referred to bilateral or multilateral arrangements, significant investment ties and the longstanding presence of Chinese banks in Indonesia. These considerations should not automatically be assumed to have been applied in the same way to all four countries. In this context, the term “exception” refers to the more flexible Article 18A treatment. It does not mean that export proceeds may remain overseas or that the minimum 30% retention requirement is removed. PP No. 21 of 2026 does not name the four countries and is drafted more broadly around bilateral agreements, understandings and other trade arrangements. They should therefore be treated as countries publicly identified by the government at that stage. The unresolved question is whether country-level recognition is sufficient or whether individual exporters and transactions must still pass a separate qualification process. What Remains Unclear The financial treatment is defined. The missing link is how a specific exporter or DHE SDA receipt is connected to a qualifying trade arrangement. Unresolved issue Practical question Buyer Must the contractual buyer be established in the partner country? Cargo destination Does the destination stated in the export declaration determine eligibility? Payment flow Does the country from which payment is received matter? Exporter affiliation Does this refer to foreign ownership, corporate control or another relationship? Contract Must the sales contract expressly fall under a recognised trade arrangement? Assessment level Is qualification determined by exporter, contract, shipment or individual payment? Verification Which authority confirms eligibility, and what documents are required? These questions are material because a mineral transaction may involve an Indonesian producer, a trader in Singapore, an end user in China and a foreign-linked bank operating in Indonesia. The available framework does not identify which connection would be decisive. Implications for Exporters and Investors The revised treatment could reduce the amount of cash tied up under the DHE SDA regime and lower short-term financing requirements for qualifying operations. This may be relevant to capital-intensive alumina refineries, aluminium smelters and other mineral-processing facilities. However, exporters may remain cautious about applying the 30%-for-three-month treatment until they can establish that their trade falls within the qualifying framework. The same uncertainty limits how confidently investors can include the relaxation in project cash-flow and financing models. Conclusion PP No. 21 of 2026 provides a measurable change for qualifying mining-sector DHE SDA. Full repatriation remains mandatory, but minimum retention may fall from 100% for 12 months to 30% for three months, with the proceeds handled through a foreign-exchange bank designated under the Bank Indonesia framework, potentially including a non-BUMN bank. The remaining uncertainty is how a bilateral or other recognised trade arrangement translates into eligibility for a particular exporter, contract, shipment or DHE SDA receipt. Until that connection is formally explained, the financial treatment and banking channel are identifiable, but access to the relaxation remains open to interpretation.

The price inversion pressure on cobalt salt was high, and this week nickel intermediate product payables were in the doldrums.

[India] Indian long steel prices registered a slight decline across major markets, with buying activity remaining cautious amid the monsoon season. Mandi Gobindgarh TMT held at 503.10 USD/tonne (47,900 INR/tonne), while primary producer offers remained at 525.15 USD/tonne (50,000 INR/tonne) ex-Durgapur. In the semis market, Mandi Gobindgarh billet was unchanged at 447.43 USD/tonne (42,600 INR/tonne), although billet prices in Durgapur and Raipur slipped by 4.20 USD/tonne (400 INR/tonne) and 1.05 USD/tonne (100 INR/tonne), respectively. Export sentiment remained subdued, with Indian HRC offers heard at 490 USD/tonne FOB to European buyers and 520 USD/tonne FOB to Middle Eastern buyers. But buyers were not interested in these levels amid the availability of lower-priced material from other regions. Domestic raw material prices softened in July, led by lower iron ore and manganese ore prices. NMDC reduced Baila lump (65.5%) prices by 4.4% month on month to 57.10 USD/tonne (5,450 INR/tonne) and Baila fines (64%) by 3.1% to 49.30 USD/tonne (4,700 INR/tonne), while MOIL's 37% Mn lump ore declined 5.0% to 194.20 USD/tonne (18,529 INR/tonne).

On August 7, the SMM Imported Copper Concentrate Index (weekly) was reported at -$173.91/dmt, down $14.54/dmt from the previous -$159.37/dmt. The payable indicator for domestic trade ore with 20% grade stood at 98.5%-99.5%. This week, spot market transactions were relatively active, but transaction prices declined further. In spot trading, a trader sold 30,000-50,000 mt of bundled ore for delivery from Q4 2026 to Q1 2027 to a smelter at -$170/dmt, QP: M+1/M+5; another trader sold 10,000 mt of clean ore at -$183/dmt to a smelter, with shipment in August/September, QP: M+1/M+5; a trader sold 40,000-60,000 mt of bundled ore for Q4 delivery at -$170/dmt to -$175/dmt to a smelter, QP: M+1/M+5; a trader sold 20,000 mt of bundled ore at -$174/dmt to -$175/dmt and also sold 10,000 mt of high-arsenic ore at around -$100/dmt to smelters, with shipment in Q4, QP: M+1/M+4; a trader sold 70,000 mt of bundled ore to smelters at an index minus $18/dmt, with shipment in Q4; a trader sold 10,000 mt of bundled ore for August/September shipment at an index minus $22/dmt to $23/dmt to smelters; a trader offered 10,000 mt of South American clean ore at an index minus $20/dmt. In mine tenders, on the trader side, the winning bid price for 10,000 mt of BISHA ore, September-October shipment, was -$240/dmt to -$230/dmt; the winning bid result for Chuquicamata was below -$200/dmt. Overall, fixed-price transactions increased in the spot market this week. Due to weather-related shipment delays from some mines in Chile and Peru, there was restocking demand. Coupled with rigid restocking needs from new smelting capacity, spot TC continued to deteriorate, and smelter profit margins kept narrowing. However, smelters had limited acceptance of low-priced supply. Downward pressure remained but downside room was limited. According to foreign media reports, the DRC government signed a decree on June 29 to ban the export of copper and cobalt concentrates, effective immediately. Under "strategic" conditions, the Minister of Mines may still grant an export exemption for a period of one year. It should be noted that the DRC had already imposed strict controls on copper and cobalt concentrate exports. Under current policy, such exports are prohibited in principle, and enterprises must obtain government-approved export quotas or exemptions before shipping. Therefore, this policy is more about reaffirming and further tightening the existing management framework, rather than a sudden complete halt to copper concentrate exports. The additional impact of the ban on short-term global copper concentrate trade is likely to be relatively limited. What is more noteworthy is the policy signal it sends: As the strategic importance of critical minerals grows, resource-rich countries are using export restrictions, local processing mandates, and tax policies to capture a greater share of the industry chain and resource value added at home. Resource nationalism is increasingly disrupting global copper raw material flows and the supply landscape. On August 4, Codelco announced that it had temporarily suspended the development and construction activities of the Andes Norte project at its El Teniente mine, due to a potential new-type seismic risk in the deep areas of the project. This measure only applies to the Andes Norte project and does not mean a full stoppage at the El Teniente mine. Other production areas at the mine continue to operate, with seismic monitoring and related safety measures in place. According to the latest data from China Customs, China's copper concentrate imports in July 2026 totaled 2.379 million mt, up 1.88% MoM and down 6.93% YoY. From January to July 2026, cumulative copper concentrate imports amounted to 16.985 million mt, representing a cumulative YoY decline of 1.8%. On August 6, 2026, SMM recorded copper concentrate inventories at eleven ports of 692,000 mt in physical content, up 27,600 mt in physical content from July 31. The main increase came from Fangchenggang Port and Qinzhou Port, up MoM by 20,000 mt and 29,000 mt respectively; the main decrease was from Yantai Port and Qingdao Port, down MoM by 22,400 mt and 20,000 mt respectively.

This week (Aug. 3 – Aug. 7), the weekly average warrant transaction price range for Yangshan copper premiums was $101–$112/mt, QP August, with an average of $106/mt; the weekly average B/L transaction price range was $96–$107/mt, QP September, with an average of $102/mt; and EQ copper CIF B/L prices were $64–$73/mt, QP September, with an average of $69/mt. As of Aug. 7, the ex-exchange rate SHFE/LME copper price ratio for the SHFE copper 2608 contract against LME copper was 1.1247, with an import loss of around 1,385.43 yuan/mt, expanding by about 857 yuan/mt WoW. As of Friday, the backwardation structure for the August LME copper date widened WoW, with the carry spread between the August and September dates at −$61.53/mt. Currently, mainstream offer prices for ER registered copper B/L have dropped to double-digit levels; mainstream warrant offer prices for registered copper were near $100/mt. This week, Yangshan copper premiums pulled back from high levels, mainly because the SHFE/LME price ratio continued to deteriorate, compounded by the widening backwardation structure of nearby LME contracts, which increased suppliers' willingness to offer cargo. Meanwhile, as copper prices surged, downstream consumption demand was poor. Additionally, high premiums in the domestic market previously attracted cancelled warrants from LME Asian warehouses, which gradually arrived in China, causing temporary congestion at Shanghai Port. Together with some export cargo pressuring prices, market spot premiums weakened. According to SMM data, China's bonded zone copper inventories as of Thursday this week (Aug. 6) decreased by about 6,000 mt WoW from the previous period (Jul. 30) to 31,100 mt. Specifically, Shanghai bonded inventory decreased by 6,500 mt WoW to 26,900 mt, while Guangdong bonded inventory increased by 500 mt WoW to 4,200 mt. The weekly bonded zone inventory decline was mainly because of reports that cargo ships were heading to the US. Additionally, the slight opening of the export window led to small-scale exports by some smelters to the bonded zone. Looking ahead, the siphoning effect from North America continues, so the logic of overall supply constraints in the market remains. However, with the SHFE/LME price ratio significantly inverted, consumption demand suppressed by high copper prices, and expectations of concentrated cargo arrivals at ports, traders' psychological price expectations for spot cargo are rapidly declining, and imported copper premiums are expected to see a temporary pullback. Additionally, with the export window slightly open, smelters have export expectations. According to SMM, export volumes in the first week of August up to now have been relatively limited, and future export volumes need continued monitoring.