[SMM Brass Billet News Flash] Affected by wild swings in copper prices, cost uncertainty increased. End-user wait-and-see sentiment was strong, and the pace of taking orders and picking up goods slowed down, leading to some accumulation of finished product inventories at brass billet enterprises.

This week (5.8-5.14), the operating rate of the brass billet industry was 52.34%, up 7.67 percentage points WoW. The impact of the post-holiday period gradually faded, and industry production saw a slight recovery. However, affected by the arrival of the traditional consumption off-season, the recovery in operating rates was insufficient and unable to rebound to pre-holiday levels. Supply side, recycled brass raw materials supply remained tight, enterprise raw material inventories continued to decline, and production was subject to certain constraints. Meanwhile, copper prices swung wildly, cost uncertainty increased, end-user wait-and-see sentiment was strong, and the pace of taking orders and picking up goods slowed down, leading to a buildup of finished product inventories at enterprises. Looking ahead to next week (5.15-5.21), SMM expects the industry operating rate to decline 0.23 percentage points WoW to 52.11%. The industry has currently entered the traditional off-season. Coupled with copper prices fluctuating at highs and weak follow-through on end-user orders, the industry operating rate is unlikely to improve in the short term and is expected to remain at low levels.

[Bulls Cut Open Interest, Silicon Metal Prices Weakened; Polysilicon Prices Remained Stable Overall]: Spot prices were mostly stable this week, with prices of certain silicon grades edging down slightly. As of May 14, SMM east China oxygen-blown #553 silicon was at 9,200-9,400 yuan/mt, down 50 yuan/mt WoW; #441 silicon was at 9,400-9,600 yuan/mt, flat WoW; #3303 silicon was at 10,100-10,300 yuan/mt, flat WoW. Futures market sentiment cooled. In terms of total open interest, it began to decline sharply from Tuesday as funds took profits and exited, causing futures prices to pull back. On Thursday (May 14), total open interest in silicon metal stood at 450,000 lots, down 85,000 lots or 16% from Monday. The most-traded SI2609 contract closed at 8,655 yuan/mt on Thursday, down 455 yuan/mt or 5% from Monday, as the silicon market returned to fundamentals-driven logic. Transaction side, downstream users showed strong wait-and-see sentiment amid the price fluctuations, with transactions mainly driven by rigid restocking demand.

Iron ore futures showed a weak-then-strong pattern today. The most-traded contract I2609 ultimately closed at 817 yuan/mt, basically flat compared to the previous trading day. Port spot prices were down 2-5 yuan/mt from the previous day. Traders offered prices in line with the market; steel mills purchased as needed; overall spot trading sentiment was lukewarm. SMM ten-port data by product category showed that total port inventory fell 1.7 million mt MoM from pre-holiday levels, with fines, concentrates, and lump ore all destocking. By major product, inventories of Jimblebar fines, blended fines, Mac fines, and super special fines declined notably, while inventories of IOCJ fines, PB fines, PB lump, and Newman fines increased somewhat, posing certain pressure on future prices. On the macro front, market attention today focused on Trump's visit to China. As of now, no positive news has emerged, and attention should be paid to the impact of subsequent news on futures. Ore prices are expected to maintain a fluctuating trend at highs in the short term.

SMM May 14 Update: Guangdong region: Premiums in this region fluctuated at highs this week. Although copper prices surged significantly, suppliers maintained a bullish stance on premiums and were unwilling to lower prices for shipments, keeping premiums firm. As of Thursday, high-quality copper was quoted at 270 yuan/mt, on par with last Thursday; standard-quality copper premiums were quoted at 200 yuan/mt, up 10 yuan/mt from last Thursday; SX-EW copper was quoted at 130 yuan/mt, up 10 yuan/mt from last Thursday. On Thursday, the price spread of standard-quality copper premiums between Shanghai and Guangdong showed Guangdong higher by 280 yuan/mt. Given the large price spread, cargoes from Jiangxi and Hunan moved southward. According to SMM statistics, as of Thursday, total inventory in Guangdong warehouses was 16,800 mt, down 1,500 mt from last Thursday, with warrants totaling 5,100 mt, up 675 mt from last Thursday. Specifically: Arrivals at warehouses this week were 13,000 mt/week, up 1,100 mt/week WoW, below the annual average (14,000 mt/week); increased arrivals from northern sources were the main reason. Warehouse withdrawals were 14,800 mt/week, up 3,600 mt WoW, slightly above the annual average (14,200 mt/week). As downstream restocking before the holiday was limited, end-user enterprises began restocking after the holiday, driving up warehouse withdrawals. Looking ahead to next week, as copper prices hover at historical highs, end-user cargo pick-up enthusiasm declined notably this week, and finished product inventories at many copper processing enterprises increased. Production cuts are expected next week. Therefore, inventory is expected to edge up next week, and premiums are expected to hover at highs without further climbing. (The above information is derived from market data collection and comprehensive assessment by the SMM research team. The information provided in this article is for reference only. This article does not constitute direct advice for investment research decisions. Clients should make prudent decisions and not replace independent judgment with this information. Any decisions made by clients are not related to SMM.)

SMM May 14 Update: Data Brief: As of Thursday, May 14, SMM copper inventories across major regions nationwide increased by 700 mt WoW from Thursday to 243,300 mt, with total inventory up 111,300 mt compared to the same period last year (132,000 mt). Specifically, arrivals of both imported and domestic copper in Shanghai pulled back, while demand was dragged down by persistently rising copper prices, with subdued downstream transactions and relatively small overall inventory fluctuations. Inventory in Jiangsu remained flat from Monday, with the pace of inbound and outbound shipments staying stable. In Guangdong, domestic copper arrivals saw a notable increase, but high copper prices suppressed downstream processing enterprises' production and consumption, leading to a slight inventory buildup in the region. Market outlook: Supply side, imported copper arrivals are expected to increase in the near term, while domestic copper arrivals are also expected to see a slight rebound. Demand side, as copper prices moderately pull back, rigid demand in the market is expected to be gradually released, though the overall recovery momentum remains limited. The current market features a pattern of relatively tight supply with rigid demand underpinning consumption. Social inventory is expected to continue a modest inventory buildup trend next week.