[SMM Analysis] SHFE copper cathode spot premiums experienced notable volatility in H1 2026, marked by deep discounts in phases, a recovery in Q2, and a return to positive territory by mid-year. In Q1, seasonal inventory buildup after the Chinese New Year, slow downstream recovery, and disruptions from contract rollovers repeatedly put spot premiums under pressure. Entering Q2, consumption improved QoQ, and concentrated smelter maintenance drove continuous destocking of domestic social inventory. In particular, the rapid decline in Guangdong inventory lifted spot premiums in South China, opened arbitrage opportunities for shipping inventory from East China to South China, and provided support to premiums in Shanghai and other regions. From May to June, although high copper prices and off-season expectations suppressed downstream purchases, the widening LME-COMEX spread diverted overseas supply to the US market, constraining the pace of imported copper replenishment in China, with low inventory levels still underpinning spot market resilience. Looking ahead to H2, SHFE copper premiums will be shaped by the interplay of inventory, consumption, imports, and supply additions. The Q3 off-season may limit the upside for premiums, but low inventories, uncertainty over import replenishment, and tight regional supply will continue to support spot premiums. In Q4, attention should be focused on the capacity ramp-up of new expansion projects such as Humon Phase 2, Chifeng Jintong Phase 2, and Shenghai Phase 2. If new supply is released smoothly, the import window opens, and consumption recovery remains weak, spot premiums may gradually come under pressure. However, if inventories stay low and import replenishment remains limited, premiums could still see intermittent strengthening opportunities.

This week, finished steel continued its gradual decline, while raw materials began to stabilize, with coking coal rebounding to some extent. During the week, rumors about a coal mine accident in Shanxi and customs clearance restrictions at the Mongolian border spread, boosting sentiment. Coupled with the China Mineral Resources talks, the raw materials side rebounded from lows. In the second half of the week, as rumors of maintenance at steel mills across various regions emerged, negative feedback expectations intensified somewhat, and raw materials pulled back. Approaching the weekend, however, the 10th round of coke price increases was initiated, pushing coking coal and coke futures higher. In the spot market, the off-season characteristics of end-users became increasingly evident, with the market restocking at low prices as needed. With spot prices remaining relatively firm, the spot-futures price spread continued to widen...

SMM Weekly Stainless Steel Futures Review — week of June 29 – July 3, 2026. Weak nickel and a softening off-season demand backdrop offset firm mill pricing and low inventories, steadying the benchmark contract near RMB 14,655/mt

Rebar prices drifted lower this week. The nationwide average price now stands at 3,089 yuan/mt, down 20 yuan/mt WoW from last Friday. Supply side, steel mill margins continued to shrink. A few blast furnace steel mills have gradually arranged maintenance and production cut plans, but most are still operating at previous levels. Attention will remain on the extent of production cuts. Among EAF steel mills in different regions, margins diverged slightly. In southwest China, electricity price subsidies during the rainy season kept margins relatively favorable, and most mills maintained previous output levels for now. However, in east China, adjustments to critical peak electricity pricing during the summer led to shorter operating hours, while in south China, high inventory pressure at steel mills also prompted reduced operating hours. Overall EAF production declined. Demand side, intermittent rainfall in east China this week slowed project construction progress. In central and northwest China, low-priced inflows from other regions encouraged downstream buyers to adopt a wait-and-see stance. Overall transaction performance was mediocre. Inventory side, total inventory continued to edge up. Given weak demand expectations, social inventory will remain in a phase of periodic accumulation. Looking ahead, supply-side margins turned worse, weakening production incentives, but soft demand provides limited support to bottom prices. While raw material side saw some sentiment-driven momentum, the underlying rebar fundamentals remain weak. Short-term market prices are likely to consolidate near the bottom. Future attention will be on the pace of inventory buildup.

The most-traded HRC contract fluctuated today, closing at 3,279 with a slight intraday decline of 0.3%. This week, cold-rolled and hot-rolled prices continued to weaken, and overall transaction volumes remained low. In terms of supply, the impact from mill line maintenance decreased WoW, leading to a slight increase in total HRC production. On the demand side, apparent demand dropped MoM. Regarding inventory, according to SMM statistics, HRC social inventory across 86 warehouses nationwide (large sample) reached 4.3757 million mt, up 84,500 mt or 1.97% WoW, and up 43.10% YoY on a lunar calendar basis. By region, all markets saw inventory buildup WoW, with the Northeast market recording a relatively large buildup. Cost side, the ninth round of coke price increases was implemented this week. Influenced by raw material market news, costs showed a pattern of strength early on and weakness later. Looking ahead, although the market has initiated a tenth round of coke price hikes, hot metal output has slowly pulled back from its peak, and cost support is expected to remain flat compared to earlier estimates. From the HRC supply-demand perspective, the current imbalance continues to accumulate. Amid off-season demand, inventory pressure is expected to persist and weigh on prices. Combined with remaining cost-side support, downside room is relatively small. HRC prices are likely to show a bottom-consolidation pattern next week, with the most-traded HRC contract moving in the 3,250–3,330 range.

Nickel prices consolidated at lows and hit bottom this week. Early in the week, expectations for further US Fed interest rate hikes and a stronger US dollar weighed on the most-traded SHFE nickel contract, keeping it under pressure around 124,000 yuan/mt. Mid-week, US June non-farm payrolls data significantly missed expectations, triggering a sharp reversal in macro sentiment. Rate hike expectations cooled abruptly, the US dollar index pulled back quickly, and nickel prices rebounded slightly, leaving the weekly decline at 1.2%. The LME nickel 3M contract also traded under pressure this week, breaching the $17,000 level and falling nearly 2% WoW. In the spot market, SMM #1 refined nickel averaged 127,080 yuan/mt this week, down 4,500 yuan/mt WoW. Jinchuan nickel premiums trended higher this week, climbing to around 2,200 yuan/mt, while mainstream electrodeposited nickel discounts held steady in the 400-400 yuan/mt range. On spot transactions, the sustained drop in nickel prices encouraged bargain-hunting by end-users, but after some downstream players had already stockpiled during the earlier price decline, overall weekly trading activity was moderate. On the macro front, US Labor Department data on July 3 showed that non-farm payrolls increased by only 57,000 in June, roughly half the 113,000 expected and well below the downwardly revised 129,000 for May. The sharper-than-expected cooling in non-farm payrolls data prompted a more cautious assessment of the employment outlook and led investors to re-evaluate the Fed’s monetary policy path. Rate hike expectations cooled markedly, the US dollar index fell to a two-week low, and the US Treasury yield curve steepened steadily. Inventory side, bonded zone inventory in Shanghai stood at around 2,700 mt, flat WoW. China’s social inventory stood at approximately 130,000 mt, a WoW buildup of about 1,100 mt. Nickel prices are currently caught between macro disruptions and weak industry fundamentals. In the short term, recovering macro sentiment supports a rebound, but the upside is still capped by high inventory pressure. The most-traded SHFE nickel contract is expected to trade in a core range of 125,000-135,000 yuan/mt next week.