[SMM Daily Review: Middle East Tensions Heat Up, Silver Prices Under Pressure, Spot Premiums Stable while Trading Weak] SMM July 8 – The escalation of the US-Iran conflict has pushed up oil price expectations, but the technical rebound in precious metals has peaked, and the overall picture has returned to a pattern of being under pressure. In the spot market, transactions were concentrated from parity to small premiums, with demand weak and a wait-and-see stance prevailing.

Core View The main theme of lithium ore prices in H1 2026 was a sharp rally followed by a correction, rather than a one-way upward shift in the price center. The SMM spodumene concentrate index price (SC6, CIF China) started the year at around USD 2,000/t in January, briefly fell to USD 1,875/t in early February, then followed lithium carbonate prices higher and reached the year-to-date high of USD 2,780–2,840/t in mid-May, before retreating to the USD 2,385–2,480/t range in June. This trajectory almost fully mirrored lithium carbonate prices. Lithium carbonate spot prices started the year at around RMB 130,000/t, rose above RMB 200,000/t in May, and then pulled back to RMB 160,000–180,000/t in June. Lithium ore did not experience an independent rally throughout the period. It was pulled upward by lithium carbonate pricing via the futures market and then corrected as lithium carbonate prices peaked. Therefore, the starting point for understanding lithium ore prices in H1 is not resource-side supply and demand, but lithium carbonate pricing and market sentiment. One common misinterpretation needs to be corrected first: the strength in lithium ore prices in H1 was not the result of “tight effective supply pushing the price center higher.” The real drivers were the resonance of front-loaded demand, supply disruption expectations, and futures-driven sentiment. Front-loaded demand was triggered by export tax rebate adjustments; supply disruption expectations came from the repeated delays in Jianxiawo’s restart and Zimbabwe’s lithium concentrate export ban. When warehouse receipts accumulated and macro headwinds were released in May, and when Jianxiawo’s restart expectation materialized in June, prices corrected accordingly. After that, prices rebounded again as demand expectations improved. 1. Lithium Ore Followed Lithium Carbonate, While Spodumene-Based Conversion Margins Stayed Negative Throughout H1 The clearest evidence of the lithium ore pricing mechanism in H1 was not how much ore prices rose, but the fact that spot conversion margins for producing lithium carbonate from externally procured spodumene concentrate were negative for most of the period. The ore-salt margin inversion was structural and persistent in H1, rather than a short-lived squeeze on processing margins. The cause of this inversion directly points to the reversal of the pricing mechanism. Ore prices are no longer determined by a cost-plus model from the upstream side, which then determines lithium salt prices. Instead, lithium carbonate has become the pricing anchor, and ore prices are reverse-priced through the futures market. In early January, when lithium carbonate prices rallied on front-loaded demand and sentiment, ore prices were pushed higher at the same time. However, downstream lithium salt demand could not fully absorb the higher cost, and processing margins were squeezed into negative territory. In April, under the reality of ore-salt inversion and limited hedging opportunities, lithium salt producers relying on externally procured ore saw their ability to accept high-priced ore weaken significantly. For overseas miners, this means their realized selling prices are increasingly anchored by the profitability of China’s refining sector. This is not a narrative assumption, but a mechanism that can be verified month by month through spot margin data. The financialization of pricing was also visible in market transactions. When prices fell at the end of May, lithium salt producers became more active in pricing ore purchases. In June, the basis for new cargoes strengthened. Pricing based on futures quotation plus premium or discount has become the mainstream transaction model. Lithium salt producers tend to use pricing windows during price corrections to lock in ore supply. Whoever holds the pricing right controls the settlement timing, and in H1’s highly volatile two-way lithium carbonate market, this directly led to margin differentiation among different lithium salt producers. 2. The Three Drivers of the Rally and the Triggers of the Correction Front-loaded demand — export tax rebate adjustment. In January 2026, the Ministry of Finance and the State Taxation Administration clarified that the VAT export rebate rate for lithium battery products would be reduced from 9% to 6% from April 1, and fully removed from January 1, 2027. This policy directly stimulated downstream players to concentrate export shipments and inventory preparation before April, significantly front-loading demand into H1, especially supporting demand for energy storage and ternary-related materials. This was the most important demand-side catalyst in H1 and the one most easily overlooked by the “weak recovery” narrative. Supply disruption expectations — Jianxiawo and Zimbabwe. After Jianxiawo’s mining permit expired and production was halted in August 2025, its restart timeline was repeatedly pushed back in H1, continuously providing room for both bullish and bearish speculation in the market. Now that Jianxiawo’s restart has been confirmed, the largest bearish factor has been priced in, and the market’s focus has shifted back to whether demand can outperform expectations. In Zimbabwe, the lithium concentrate export ban at the beginning of the year disrupted shipment expectations. Positive progress was reported in late March, and by mid-May, Chinese-funded mining companies in Zimbabwe had completed export procedures and restarted shipments, easing the previous short-term tightness in African cargo arrivals. SMM expects the first batch of cargoes to arrive in China in mid-to-late July. Correction triggers — warehouse receipts, macro factors, and the materialization of restart expectations. After lithium carbonate prices rose above RMB 200,000/t in May, exchange warehouse receipts continued to accumulate and hit new highs, while concerns over off-balance-sheet inventory increased. Together with macro pressure from expectations of further Fed rate hikes, prices peaked and corrected in late May. On June 17, the approval of Jianxiawo’s land use application materialized, and clearer restart expectations further weighed on both ore and salt prices. By late June, according to SMM monthly production schedules, July demand showed resilience despite the seasonal lull, with both power and energy storage cell production schedules increasing month on month. Monthly lithium carbonate consumption remained at a high level, which restored some market confidence and pushed lithium prices higher again. 3. Supply-Side Reality: Imports Weakened Month on Month, but Cumulative Imports Still Increased; Australia Remained Dominant From January to May, spodumene imports showed a combination of weaker month-on-month momentum and continued year-on-year cumulative growth. On a monthly basis, imports reached 758,000 physical tonnes in April, down 9.5% month on month, and 680,800 tonnes in May, down 10.2% month on month. However, total spodumene imports in January–May reached around 3.66 million tonnes, up approximately 25% year on year. By origin, Australia remained the dominant source. China imported around 1.585 million tonnes from Australia in January–May, although May imports from Australia were around 330,000 tonnes, down approximately 15.2% year on year. The share of African supply continued to rise. On the shipment side, lithium concentrate shipments from Port Hedland to China showed clear quarter-end volume acceleration, with March shipments reaching around 122,000 tonnes, up 64.3% month on month. The marginal changes in overseas mines were concentrated in restarts and offtake agreements. Core Lithium restarted its Finniss project on May 20 and plans to ship the first batch of concentrate in Q4. Mineral Resources also restarted Bald Hill, with first spodumene output expected in July. These restart volumes are limited and will not change the short-term supply structure, but they reinforce the expectation of new supply materializing in H2 2026 and H1 2027. On the domestic side, SMM’s domestic sample mines produced 160,690 tonnes LCE in January–June. The restart of Jiangxi lepidolite mines was constrained by permitting procedures, environmental protection, profitability, and other factors, and did not fully ramp up in H1. 4. Migration of Long-Term Pricing Mechanisms: Floor Price Plus Pricing Optionality Has Become the Norm The long-term spodumene offtake agreements signed intensively in H1 provide direct contractual evidence of the financialization of ore pricing. In February, Pilbara Minerals signed a two-year offtake agreement with Tianhua New Energy, setting a floor price of USD 1,000/t, with no price ceiling, together with a USD 100 million interest-free prepayment. In the same period, Pilbara also signed a long-term agreement with Canmax. Yahua Group signed an offtake agreement with Brazil’s MGLIT, also with a minimum price of USD 1,000/t on a 6% basis. Liontown and Tianhua agreed on supply for 2027–2028, priced against a spodumene index. The common feature is a structure of USD 1,000/t floor price plus index or pricing optionality, with downside protection but no upside cap. The pricing benchmark is migrating from fixed website-based long-term pricing toward index-based and futures-linked pricing. This confirms that ore pricing is shifting from traditional long-term contracts to a more financialized structure of “floor price + pricing optionality + premium/discount.” This provides a contractual basis for assessing pricing transmission lags and distortions, and is also a key point for overseas investors to understand how China’s pricing system is penetrating upstream resources. 5. H2 Outlook H1 2026 provides a very clear methodological lesson for H2: lithium ore prices will not move independently from lithium carbonate. The core pricing variables for ore are not the nominal size of global lithium resources, but the dynamic matching among lithium carbonate futures, spot conversion margins for lithium salt producers using externally procured ore, domestic mine restart progress, African cargo arrival schedules, lithium salt producers’ feedstock inventories, and downstream material production schedules. In H1, lithium salt conversion margins remained negative for an extended period, yet ore prices did not fall quickly. Instead, they rose together with lithium carbonate prices under the influence of downstream restocking and supply disruption expectations. This shows that the H1 rally was not an independent strengthening of upstream fundamentals, but a synchronized industry-chain movement driven by front-loaded demand, delayed supply realization, and amplified futures sentiment. For H2 lithium ore analysis, the first step is to distinguish between “no shortage in total resources” and “short-term tightness in effective ore supply.” From a global resource perspective, Australia, Africa, Brazil, South American brines, and Chinese domestic mines all have incremental supply expectations, so there is no absolute shortage of resources. However, from the perspective of Chinese lithium salt production, what truly affects lithium carbonate supply is ore that can be purchased in time, arrive steadily, meet grade requirements, have controllable impurities, and match existing processing lines. If ore is locked in long-term contracts, still in transit, concentrated in trader inventories, or if high prices reduce lithium salt producers’ willingness to purchase, its contribution to short-term lithium salt supply will be weakened. Therefore, H2 analysis should not simply focus on mine output. It should track port inventories, traders’ saleable inventories, in-plant inventories at lithium salt producers using externally procured ore, vessel schedules, and long-term contract lock-up structures. On the domestic supply side, Jianxiawo is the core variable driving H2 market expectations, but its impact should not be simplified as “restart equals immediate supply.” After the mine was suspended, the market treated it as the key anchor for marginal domestic lepidolite supply. The real question in H2 is not the single event of whether it restarts, but whether the restarted volume becomes freely tradable ore. If the output is mainly consumed within CATL’s integrated system, the impact on the spot ore market and externally procured ore salt producers will be limited. Only if the output enters the spot market will it directly pressure ore prices and conversion margins. At the same time, the suspension and restart timeline of other Jiangxi lepidolite mines also needs to be incorporated into the framework. Previous public reports indicated that some mines in Yichun may first exhaust their annual mining quota during the license renewal process and then enter a production halt for license renewal. If these mines continue to be affected by permitting, environmental protection, safety, or profitability factors in H2, the supply elasticity of domestic lepidolite will be weaker than nominal capacity suggests. Conversely, if Jianxiawo and other Yichun mines move forward with restarts or license renewals in Q3–Q4, the marginal contribution of domestic ore to lithium carbonate supply will increase significantly and put pressure on high ore prices. In other words, domestic ore supply in H2 should not be treated as a single variable. It is jointly determined by Jianxiawo, other Yichun mines, and the operating rates of Jiangxi lepidolite-based lithium salt producers. For overseas ore, African supply remains one of the largest sources of H2 supply elasticity. In H1, the disruptions in Africa were more about policy, shipment, and arrival timing rather than the disappearance of resources. If shipments from Zimbabwe and other regions recover and previously delayed cargoes arrive in China in a concentrated manner, feedstock availability for lithium salt producers will improve and the bargaining power of ore sellers will weaken. However, if policy disruption, logistics cycles, grade volatility, or financing pressure cause arrivals to remain inconsistent, lithium salt producers using externally procured ore may still be unable to raise operating rates quickly even if margin repair expectations improve. Australian supply is relatively stable, but a large portion is locked under long-term contracts, limiting its marginal adjustment impact on the spot market. Brazilian and other emerging resources are more important for medium- and long-term expectations, while their short-term impact on Chinese lithium salt production depends on arrival timing and quality stability. Demand is the key factor determining downside support for ore prices. In H2, power batteries and energy storage will enter the traditional peak season, and the expansion and ramp-up of cell and material producers will continue to lift lithium salt consumption. In particular, lithium iron phosphate output, supported by energy storage and commercial vehicle demand, is expected to remain high and provide sustained demand for lithium carbonate. Although ternary materials are growing more slowly than LFP, they may still see periodic restocking driven by certain overseas and high-end power battery demand. If material producers’ expansion is realized smoothly, lithium salt producers will need to maintain high operating rates to meet long-term contract deliveries and spot orders, which will in turn support rigid ore procurement demand. Conversely, if terminal orders fail to absorb the expansion of materials, material producers may enter a destocking cycle, and lithium salt producers’ ore procurement will quickly weaken, causing ore prices to come under pressure earlier. Therefore, H2 lithium ore prices can be divided into four scenarios. Base case: margins gradually rebalance, and ore prices fluctuate at high levels before edging lower. Jianxiawo’s restart expectation materializes, but actual mining and beneficiation ramp-up is gradual. African cargo arrivals recover but do not form a concentrated shock. Power battery and energy storage production schedules remain high, while material producers’ expansion is gradually realized. In this scenario, lithium carbonate prices remain volatile at high levels, the margin inversion of externally procured ore salt producers slowly improves, and lithium ore prices follow lithium carbonate lower but do not collapse. The profits that were excessively concentrated in upstream resources and futures expectations in H1 begin to gradually flow back toward midstream refining. Correction scenario: supply materializes in a concentrated manner, and profits quickly flow back to midstream refining. If Jianxiawo ramps up faster than expected and part of its output enters the spot market; if other Yichun mines progress faster than expected in license renewals; if African ore arrives in China in a concentrated way; and if lithium carbonate warehouse receipts and futures market pressure intensify, ore prices will face stronger downside pressure. The transmission chain would be: lithium carbonate futures turn bearish → lithium salt producers become more cautious in procurement → rigid demand for externally procured ore slows → traders release saleable inventories → ore prices correct quickly. In this scenario, profits do not disappear; they shift quickly from upstream resources back to midstream refining, and overseas miners’ realized prices also come under pressure. The key is not the nominal restart volume of Jianxiawo, but whether the restarted ore is internally consumed or enters the spot market, and whether downstream material inventories can absorb the additional lithium salt supply. Support scenario: effective ore supply remains tight, and profits stay upstream. If Jianxiawo’s actual output is later than market expectations, if license renewals or environmental factors continue to suppress the supply elasticity of other Yichun mines, if African arrivals remain inconsistent, and if peak-season energy storage and power battery production schedules continue to exceed expectations, lithium salt producers using externally procured ore will still face the situation of “orders and capacity available, but feedstock either expensive or unstable.” In this case, negative conversion margins will force some marginal lithium salt producers to reduce operating rates. The contraction of effective lithium carbonate supply will support lithium salt prices; and once salt prices stabilize, ore prices will also gain support. The persistent margin inversion in H1 has already shown that losses are not simply bearish. They act as an automatic stabilizer for the industry chain: they force some marginal refining capacity to shut down, reduce lithium salt supply, and thereby support prices in reverse. Upside scenario: effective ore shortage transmits into lithium salt supply contraction, driving ore prices higher again. If H2 sees the combination of stronger-than-expected demand, weaker-than-expected domestic ore realization, and inconsistent overseas arrivals, lithium ore prices could still rise further. Specifically, if energy storage demand remains highly robust and power batteries enter the traditional peak season with further upward revisions to cell and material production schedules, especially as new LFP capacity continues to ramp up, monthly lithium carbonate consumption will continue to rise. At the same time, if Jianxiawo’s restart is slower than expected, or if output after the restart is mainly consumed within the integrated system with limited spot supply, and if other Jiangxi lepidolite mines are temporarily halted due to license renewal, environmental protection, safety, or profitability factors, domestic ore supply elasticity will fall short of nominal expectations. If African ore arrivals are also inconsistent due to shipment schedules, policy disruptions, grade volatility, or financing issues, lithium salt producers using externally procured ore will face difficulties replenishing feedstock. Under this scenario, ore is no longer merely a variable reverse-priced by lithium carbonate. It begins to constrain lithium salt supply in reverse. The transmission chain would be: downstream material and cell production schedules are revised upward → lithium carbonate spot destocking accelerates → lithium salt producers increase operating rates to fulfill orders → demand for processable ore rises → domestic ore and overseas arrivals fail to ramp up simultaneously → feedstock inventories at externally procured ore salt producers decline → some marginal producers cut output because they cannot secure suitable ore or because margins remain deeply negative → effective lithium carbonate supply contracts → lithium carbonate spot and futures prices strengthen again → lithium ore prices follow lithium carbonate upward. In this case, ore price increases are not driven by independent upstream strength. They are re-priced upward by lithium carbonate after insufficient effective ore supply starts to restrict lithium salt output. In this upside scenario, spot conversion margins for externally procured ore may remain negative or even widen further. On the surface, negative margins should pressure ore prices. But under the combination of strong demand, strong lithium salt prices, and tight ore supply, negative margins can instead become a price-supporting mechanism. On one hand, they force some high-cost externally procured ore producers to suspend operations, reducing lithium carbonate supply. On the other hand, producers with long-term delivery obligations, customer orders, or futures hedging needs still have to keep buying ore, further consuming saleable ore supply. The end result is that industry-chain profits remain concentrated upstream, lithium salt producers’ margin recovery is delayed, and the ore price center may move further upward. Overall, the core issue for the H2 lithium ore market is not whether there is too much or too little ore, but whether ore can be converted into lithium carbonate supply in time. The correct analytical framework should cover six variables: the strength of power battery and energy storage production schedules, inventory cycles at material and cell producers, lithium carbonate spot and futures pricing, the depth of margin inversion for lithium salt producers using externally procured ore, the actual restart and distribution path of Jianxiawo and other Yichun mines, and changes in African arrivals and traders’ saleable inventories. Lithium ore is not the starting point of the industry-chain cycle. It is the result of reverse pricing by lithium carbonate supply-demand fundamentals, refining margins, and the futures market. Only when ore starts to restrict lithium salt producers’ operating rates, or when new ore supply begins to materially increase lithium carbonate supply, will lithium ore shift from a price-following variable to a supply-demand-leading variable. SMM New Energy Analyst: Lesley Yang yangle@smm.cn +61 0451581533

[SMM Daily Review: Silver Prices Move Sideways, Spot Premiums Edge Down] SMM, July 7: The pullback in inflation and soft nonfarm payrolls delayed rate hike expectations, but the strong US dollar still weighed on precious metals. Supply and demand in the spot market were both weak; the high end of spot premiums loosened, and transactions favored the low end.

[SMM Commentary: Disappointing Nonfarm Payrolls Boost Precious Metals; Spot Premiums Transactions Skewed Lower] SMM, July 3 – US June nonfarm payrolls were far below expectations, cooling rate hike expectations, weakening the US dollar, and triggering a strong rebound in precious metals. Spot market offers maintained premiums, but demand was weak, with transactions mostly skewed to the lower end.

SMM June 26: This week lead prices drifted lower. At the start of the week, mainstream secondary refined lead was offered around parity with SMM #1 lead, with tax-exclusive sources at lower levels; downstream resumptions saw only long-term contract deals. Mid-week, smelters held back from selling and offered sparingly, with only sporadic need-based purchases. At the weekend, the holding-back sentiment intensified, and a few spot orders rose to a premium of 25 yuan/mt. Month-end, downstream players waited on the sidelines for new-month long-term contracts, leaving spot trades sluggish throughout the week. As of June 26, large domestic secondary lead enterprises recorded a per-mt loss of 539 yuan, while small and medium secondary smelters saw losses widen to 740 yuan/mt. Continued weakness in secondary lead prices, coupled with persistently high raw material costs for waste lead-acid batteries, deepened smelter losses WoW. Going forward, although some secondary lead smelters are expected to resume production, ongoing losses and scrap battery raw material supply constraints have led to coexisting reductions and suspensions in the market. Overall secondary lead supply scale next week is expected to be basically flat WoW, and the premium/discount range for secondary refined lead against SMM #1 lead is expected to stay between a discount of 50 yuan/mt and a premium of 50 yuan/mt.

With the continued expansion of aluminum processing and downstream industries in Southeast Asia, regional aluminum billet production, consumption and trade markets have attracted growing attention. Malaysia, Thailand and Vietnam are not only important aluminum billet production and consumption hubs in Southeast Asia, but also play a key role in regional aluminum billet trade flows. Markets such as Indonesia, the Philippines and Cambodia, meanwhile, are still at a stage where local processing capacity development and demand for imported aluminum billet are growing simultaneously. Since March 2026, the escalation of geopolitical conflicts in the Middle East has caused significant disruption to the global aluminum supply chain. On the one hand, uncertainty over the supply of primary aluminum and aluminum processed products from the Middle East has increased, pushing up procurement interest in primary aluminum, aluminum billet and secondary aluminum resources across Asian markets outside China. On the other hand, fluctuations in crude oil prices and ocean freight costs have further lifted regional aluminum processing and trading costs. Against this backdrop, LME aluminum prices, Asian regional premiums and Southeast Asian local aluminum billet processing fees have all fluctuated to varying degrees. At the same time, changes in the SHFE/LME price ratio have periodically affected the export arbitrage window for Chinese aluminum processed products. When overseas aluminum prices are stronger than domestic prices and export margins improve, Chinese aluminum processed products and some processing-trade resources show greater willingness to flow into the Southeast Asian market, creating certain disruptions to local billet supply-demand dynamics and quotations. When the price spread narrows, however, regional pricing returns to a framework driven jointly by local supply, imports from the Middle East and other overseas resources. Trade Flows From the perspective of export destinations, the flow of Southeast Asian products under HS760120 is relatively concentrated. In 2025, the top ten export destinations for Southeast Asian HS760120 products totaled around 1.2695 million mt, accounting for approximately 93.3% of total Southeast Asian exports. China was the largest destination, with full-year exports of around 602,100 mt, accounting for approximately 44.3%. Japan, Vietnam and India followed, with around 149,300 mt, 143,500 mt and 111,700 mt respectively, accounting for approximately 11.0%, 10.5% and 8.2%. It should be noted that HS760120 includes primary aluminum alloy ingots, secondary aluminum alloy ingots, other aluminum alloy billets and some cast aluminum alloy products. Therefore, this data mainly serves as a reference for observing trade flows of unwrought aluminum alloys and aluminum alloy billets in Southeast Asia, and cannot be directly equated with 6063 aluminum billet export volumes. Entering 2026, affected by the escalation of the Middle East conflict, uncertainty in the global supply chain for primary aluminum and aluminum processed products increased, and trade flows of aluminum raw materials and aluminum billets in Asia saw certain adjustments. Data shows that total Southeast Asian HS760120 exports fell to around 88,800 mt in February 2026, before rebounding to around 110,700 mt in March and further increasing to around 116,600 mt in April. From February to April, cumulative growth reached approximately 31.2%. In terms of destination changes, China remained the largest export destination, although exports to China declined in April compared with March. India, South Korea, Taiwan, China and Japan showed more obvious increases from March to April. Among them, exports to India rose from around 8,200 mt in February to around 15,700 mt in April; exports to South Korea increased from around 2,400 mt in February to around 10,000 mt in April; exports to Taiwan, China climbed from around 1,500 mt in February to around 4,100 mt in April; while exports to Japan recovered to around 13,700 mt in April. Overall, the rebound in Southeast Asian HS760120 exports from February to April 2026 reflected, on the one hand, the gradual recovery of regional trade after the Chinese New Year holiday. On the other hand, it may also have been related to Asian buyers increasing procurement of Southeast Asian regional resources and supplementing alternative supply sources after the Middle East conflict raised supply risks for overseas primary aluminum, aluminum billet and secondary aluminum. Considering that China, India, Japan, South Korea and Taiwan, China are all important aluminum processing and consumption markets in Asia, the increase in Southeast Asian product flows to these markets indicates that regional unwrought aluminum alloys and aluminum alloy billets have played a certain supplementary and balancing role in trade during periods of supply chain disruption. For the 6063 aluminum billet market, this trend cannot be directly equated with changes in 6063 aluminum billet exports, but it can serve as an important reference for assessing the circulation activity of aluminum billets and aluminum alloy raw materials in Southeast Asia, regional substitution demand and fluctuations in processing fees. Market and Price Analysis With the continued expansion of aluminum processing and downstream enterprises in Southeast Asia, the situation of 6063 aluminum billet differs across countries due to variations in processing levels and downstream demand. Overall, Malaysia and Thailand are the main aluminum billet producing countries in the region and also have certain local consumption capacity. Vietnam’s aluminum processing capacity is growing rapidly, but some local quotations are still mainly for non-homogenized cast billets. Markets such as Cambodia and the Philippines remain at a stage where local processing capacity development coexists with demand for imported aluminum billet. In terms of homogenization status, mainstream 6063 aluminum billet quotations in Malaysia and Thailand usually already include homogenization treatment, and the relevant homogenization cost is mostly included in the aluminum billet processing fee quoted by producers. A small number of non-homogenized 6063 aluminum billet quotations also exist in the Thai market, which can be used to observe the basic processing cost of cast billets. The situation in Vietnam is different. As some enterprises mainly quote non-homogenized cast billets, the apparent processing fee for 6063 aluminum billet is usually around $50-100/mt lower than homogenized quotations in Malaysia and Thailand. Aluminum billet homogenization is an important heat-treatment process in the production of 6063 aluminum billet. It usually refers to placing cast aluminum billets into a homogenizing furnace for heating, holding and cooling treatment, so that the internal composition distribution of the billet becomes more uniform and microstructural segregation formed during casting is improved. For 6063 aluminum billet, homogenization helps improve stability in the subsequent extrusion process, reduce extrusion cracking, surface defects and performance fluctuations, and improve the surface quality and yield of extruded profiles. Therefore, in the aluminum extrusion value chain, homogenized aluminum billet generally has higher use value than non-homogenized cast billet. According to SMM market research, since March 2026, under the influence of factors such as the escalation of Middle East geopolitical conflicts, tighter supply of overseas primary aluminum and aluminum billet resources, and fluctuations in energy and ocean freight costs, 6063 aluminum billet processing fees in major Southeast Asian countries rose to varying degrees. Among them, processing fees for homogenized 6063 aluminum billet in Malaysia and Thailand once increased from the previous $200-250/mt to $250-300/mt, with some high-end quotations even exceeding $300/mt during the peak period. As the Middle East situation eased periodically in mid-June, 6063 aluminum billet processing fees in Malaysia and Thailand declined. At present, mainstream 6063 aluminum billet processing fees in Malaysia have stabilized around $250/mt, and mainstream processing fees for homogenized aluminum billet in Thailand have also stabilized around $250/mt. However, due to differences in raw material structure, product status and quotation basis among enterprises, processing fees still show a wide range. In Thailand, some 6063 aluminum billet processing fees have fallen to as low as around $100-150/mt. In Vietnam, from March to June, 6063 aluminum billet processing fees rose from the previous $150-200/mt to $200-250/mt, before falling back to around $200/mt in mid-June. In addition, from the perspective of the imported aluminum billet arrival market, from May to June, SMM learned that CIF Thailand and Malaysia 6063 aluminum billet premiums/discounts were mostly around a premium of $100/mt, while some low-priced resources even fell to a discount of around $100/mt. These resources were mainly 6063 aluminum billets processed in China under processing trade and then re-exported to the Southeast Asian market. Amid cost advantages and an increase in cargo inflows at certain stages, these resources exerted some impact on the local aluminum billet market in Southeast Asia. From March to April, affected by Middle East geopolitical conflicts, uncertainty over some Middle Eastern aluminum supply increased. Asian buyers in India, Japan, South Korea and Taiwan, China showed higher interest in Southeast Asian aluminum billets and related aluminum alloy resources, driving some Southeast Asian aluminum billet resources to flow out of the region and supporting stronger regional quotations. However, entering May and June, as Chinese aluminum billets flowed into markets such as Thailand and Malaysia through processing trade and re-export channels, competition pressure faced by local Southeast Asian aluminum billet plants increased. SMM research shows that sales pressure for some 6063 aluminum billet producers in Malaysia and Thailand has increased compared with earlier levels, and low-priced imported arrival resources have put certain downward pressure on local ex-works processing fees and the transaction price center. Outlook for Southeast Asian Aluminum Processing Looking ahead, the Southeast Asian 6063 aluminum billet market will continue to evolve around regional processing capacity expansion, import substitution, changes in raw material structure and overseas low-carbon requirements. In the short term, Malaysia, Thailand and Vietnam will remain the core markets for 6063 aluminum billet production and consumption in Southeast Asia. Malaysia and Thailand have relatively mature local billet casting and homogenization capacity, and their pricing systems are closer to a quotation logic based on “LME + regional premium + homogenized processing fee.” Vietnam, meanwhile, still has room for growth in aluminum billet demand as aluminum extrusion and downstream processing capacity improves, but the quotation basis for homogenized and non-homogenized products still needs to be further differentiated. Although local sample coverage in markets such as Indonesia, the Philippines and Cambodia remains limited at present, with the advancement of local aluminum processing projects, future demand for imported aluminum billet, secondary aluminum billet and intra-regional trade flows will remain worth monitoring. In the medium to long term, CBAM and overseas customers’ low-carbon procurement requirements may further drive segmentation in the price system of the Southeast Asian aluminum value chain. For the Southeast Asian aluminum billet market, the impact of CBAM may not necessarily be directly reflected through large-scale exports of aluminum billet itself to Europe, but may instead be transmitted through the export value chain of aluminum profiles, window and door profiles, industrial profiles and other deep-processed products. In the future, when European customers procure aluminum processed products from Southeast Asia, they may pay greater attention to raw material sources, the ratio of primary aluminum, in-house new scrap and aluminum scrap, carbon emission data during production, supply chain traceability and third-party verification capability. Against this backdrop, enterprises with stable homogenization capacity, clear raw material structures, the ability to provide emissions data and low-carbon material options may gain stronger advantages in securing export orders and price negotiations. From the perspective of the price system, CBAM may not immediately drive a one-sided increase in Southeast Asian 6063 aluminum billet processing fees, but it will raise market requirements for differentiating “product status” and “raw material attributes.” In the future, price spreads between liquid aluminum direct-cast billets, remelted aluminum ingot billets and remelted aluminum scrap billets, price spreads between homogenized and non-homogenized aluminum billets, and differences between CIF imported aluminum billet premiums and local ex-works processing fees are all expected to become key areas of market attention. As the aluminum processing industry in Southeast Asia continues to expand, the 6063 aluminum billet market may gradually develop from relatively broad trade quotations in the past toward a more segmented price system differentiated by country, alloy grade, homogenization status, raw material attribute and trade term. SMM Price Points Against the backdrop of regional processing expansion and low-carbon trends, Southeast Asian 6063 aluminum billet processing fees have gradually become one of the key price indicators followed by the market. To help enterprises better track price changes in the Southeast Asian 6063 aluminum billet market, SMM, after market research and improvement of its pricing methodology, will add a series of Southeast Asian 6063 aluminum billet processing fee, calculated reference price and CIF premium/discount price points starting from 3rd July 2026 (Friday) onward for market reference. The Southeast Asian 6063 Aluminum Billet Premium price points will be updated on a weekly basis every Friday at 12:00 noon Kuala Lumpur time, Malaysia, which is the same as Beijing time, GMT+8. Due to differences in settlement methods among enterprises, the full aluminum billet price may vary. For reference, it can be estimated using the following formula: 【LME Official Cash Settlement Price + Quarterly MJP + 6063 Aluminum Billet Processing Fee】. Details of the relevant price points are as follows: Cambodia 6063 Aluminum Billet (Homogenized) Premium, ex-works Cambodia, USD/tonne Malaysia 6063 Aluminum Billet (Homogenized) Premium, ex-works Malaysia, USD/tonne Thailand 6063 Aluminum Billet (Homogenized) Premium, ex-works Thailand, USD/tonne Thailand 6063 Aluminum Billet (Non-homogenized) Premium, ex-works Thailand, USD/tonne Vietnam 6063 Aluminum Billet (Non-homogenized) Premium, ex-works Vietnam, USD/tonne The SMM Southeast Asian 6063 Aluminum Billet price points will be updated on a daily basis every working day at 12:00 noon Kuala Lumpur time, Malaysia, which is the same as Beijing time, GMT+8. The SMM calculated reference price will be derived using the formula: 【LME Official Cash Settlement Price (D-1) + Quarterly MJP + Latest 6063 Aluminum Billet Processing Fee】. Based on this, SMM will publish low-end, high-end and average calculated reference prices. Details of the relevant price points are as follows: SMM Cambodia 6063 Aluminum Billet (Homogenized), ex-works Cambodia, USD/tonne SMM Malaysia 6063 Aluminum Billet (Homogenized), ex-works Malaysia, USD/tonne SMM Thailand 6063 Aluminum Billet (Homogenized), ex-works Thailand, USD/tonne SMM Thailand 6063 Aluminum Billet (Non-homogenized), ex-works Thailand, USD/tonne SMM Vietnam 6063 Aluminum Billet (Non-homogenized), ex-works Vietnam, USD/tonne At the same time, to provide a reference comparison for the Southeast Asian 6063 aluminum billet processing and trading market, SMM will also launch CIF Southeast Asia 6063 Aluminum Billet Premium price points for market reference. The CIF Southeast Asia 6063 aluminum billet premium/discount price points will be updated on a weekly basis every Friday at 12:00 noon Kuala Lumpur time, Malaysia, which is the same as Beijing time, GMT+8. Due to differences in settlement methods among enterprises, the full imported aluminum billet price may vary. For reference, it can be settled using the following formula: 【LME Official Cash Settlement Price + Quarterly MJP + 6063 Aluminum Billet Premium/Discount】. Details of the relevant price points are as follows: CIF Thailand 6063 Aluminum Billet (Non-homogenized) Premium Summary Overall, the Southeast Asian 6063 aluminum billet market is currently at a stage where regional processing capacity expansion, trade flow adjustments and price system segmentation are taking place simultaneously. In the short term, Middle East geopolitical conflicts, changes in overseas primary aluminum and aluminum billet supply, and fluctuations in energy and ocean freight costs will continue to affect Southeast Asian aluminum billet processing fees and import premiums/discounts. At the same time, changes in the SHFE/LME price ratio will also continue to periodically affect the willingness of Chinese aluminum processed products and related aluminum billet resources to flow into the Southeast Asian market. From the perspective of market structure, Malaysia, Thailand and Vietnam remain the core markets for 6063 aluminum billet production, consumption and trade circulation in Southeast Asia. Among them, Malaysia and Thailand have relatively mature pricing systems for homogenized aluminum billet, while Vietnam still requires separate differentiation in price basis due to the relatively high share of non-homogenized cast billet quotations. Going forward, as local processing capacity develops in markets such as Indonesia, the Philippines and Cambodia, changes in regional imported aluminum billet, secondary aluminum billet and local processing fees will also become areas worth continuous tracking. In the medium to long term, CBAM and overseas low-carbon procurement requirements will further increase the importance attached by the Southeast Asian aluminum processing value chain to raw material structure, homogenization capability, carbon emission data and supply chain traceability. Although CBAM may not necessarily drive an immediate one-sided increase in 6063 aluminum billet processing fees, it will prompt the market to more clearly distinguish between different product bases, including liquid aluminum direct-cast billets, remelted aluminum ingot billets, remelted aluminum scrap billets, as well as homogenized and non-homogenized products. Against this backdrop, the launch of SMM Southeast Asia 6063 aluminum billet processing fee, calculated reference price and CIF premium/discount price points will help the market more clearly track changes in regional aluminum billet costs, import substitution space, trade flow adjustments and price differentiation trends under the low-carbon transition.