Silica: This week, silica market prices remained largely stable. Supply side, some producing regions were affected by rainy weather, limiting the pace of mining and transportation and resulting in a slight tightening of local cargo supply. However, ample inventories accumulated earlier in the industry kept the overall supply base loose, and the short-term disruptions have yet to exert a notable impact on the broader market. Demand side, as the southwest rainy season continued to advance, silicon metal plants resumed production, driving a MoM increase in overall silicon plant operating rates. Consequently, restocking demand from silicon plants for raw material silica improved marginally, supporting a modest improvement in just-in-time procurement for silica. Nevertheless, sentiment for pushing for lower prices remained strong among silicon plant buyers, which prompted silica's upside room. Silicon Coal: This week, silicon coal market prices remained stable. Specifically, silicon granule coal in Gansu was quoted at 1,140 yuan/mt, and silicon mixed coal at 1,060 yuan/mt; silicon granule coal in Inner Mongolia and Ningxia was at 1,340 yuan/mt; Xinjiang non-caking silicon coal was at 855 yuan/mt; and Xinjiang caking silicon coal was at 1,400 yuan/mt. Supply side, the silicon coal market exhibited a clear divergence pattern: driven by production resumptions at silicon metal enterprises during the southwest rainy season, some coal processing plants that produce based on sales slightly raised their operating rates, with production schedules adjusting in tandem with downstream just-in-time procurement. Meanwhile, other plants that had experienced slowing shipments and accumulated high inventories focused primarily on destocking. Demand side, according to July production schedule statistics for silicon metal, silicon metal production increased MoM, and just-in-time procurement for silicon coal is therefore expected to edge up in tandem. Petroleum Coke: This week, trading performance in China's petroleum coke market was mediocre. Sentiment for low-sulphur petroleum coke improved, with prices recovering slightly; mid- and high-sulphur petroleum coke saw sluggish downstream procurement, with prices consolidating lower. The overall market price center edged down slightly. Trading sentiment for Formosa Plastics petroleum coke was subdued, and port spot cargo offers were basically stable, with mainstream transaction prices holding at 1,300-1,350 yuan/mt. According to SMM monitoring, as of Thursday this week, the Shandong 4# petroleum coke price index was reported at 1,868.08 yuan/mt, down 2.14% WoW from last Thursday. Supply side, concentrated refinery maintenance in July was gradually winding down and resuming production, which, coupled with high port inventories, left the overall market supply relatively ample. Demand side, just-in-time procurement from the carbon used in aluminum production sector formed a bottom support, while purchasing enthusiasm from negative electrode material enterprises improved slightly. In the short term, market divergence across petroleum coke grades is expected to persist, with the overall market price center likely to drift lower. Electrode: This week, prices of electrode used in silicon production continued to operate at low levels. Demand side, production resumptions at silicon metal plants during the southwest rainy season continued to advance, with overall operating rates likely to rise further in July, prompting a modest recovery in raw material procurement by silicon plants. However, the silicon metal market remained in a downturn, with silicon plants exhibiting a strong desire to bargain down prices. Supply side, electrode producers faced inventory pressure while contending with intense competition for shipments. Such a supply-demand dynamic is insufficient to support prices. Therefore, in the short term, electrode used in silicon production still lacks upward driving momentum and is expected to continue its low-level operating trend. If you would like more detailed market information and trends, or have other information needs, please call 021-20707889.

In the medium to long term, the reverse-charging invoice policy will reshape the secondary copper circulation system, accelerating industry consolidation, and high-precision copper billet for new energy and AI computing power will become the core growth driver for the copper billet industry in the future.

In H1 2026, the copper rod industry experienced significant divergence amid high copper price fluctuations and limited secondary supply: periodic corrections in copper prices drove a notable YoY rise in copper cathode rod operating rates, while secondary copper output remained constrained by compliance policies, pushing industry operating rates and processing fees into a high-then-low trend. Downstream wire & cable and enamelled wire operating rates were mixed, reflecting differing demand across subsectors. Meanwhile, overseas power infrastructure and the energy transition generated substantial rigid procurement demand, and China’s copper wire rod exports surged, nearly doubling. Looking to H2, high copper prices and overcapacity are expected to persist, widening the gap between copper cathode rod and secondary copper rod. (I) Copper Price Fluctuations and Secondary Supply Shortage Lead to Significant YoY Increase in Copper Cathode Rod Operating Rate in March From the H1 copper cathode price trend, it is clear that the full-year average copper price in 2026 was significantly higher than that in the same period of 2025. Since last year, copper prices have generally drifted higher, and downstream wire and cable enterprises have gradually adapted to high raw material costs, with price acceptance continually increasing. In March this year, copper prices underwent a notable correction. Combined with the prolonged low operating rate of secondary copper rod, market demand was concentrated on copper cathode rod, leading to a concentrated release of purchasing demand that was previously suppressed by high prices. By contrast, in the same period of 2025, copper prices were in a continuous upward channel, and downstream stockpiling willingness was weak. These factors collectively drove the copper cathode rod operating rate in March up by 5.41 percentage points YoY. (II) Compliance constraints suppress secondary copper output, and copper cathode rod operating rate and processing fees rise then fall. Compliance policies for the secondary copper industry continued to be implemented, restricting the circulation of tax-included copper scrap supplies. The price difference between copper cathode and copper scrap swung wildly, and the cost advantages of secondary copper rod disappeared intermittently. Secondary copper capacity could not be fully released; only top-tier compliant enterprises maintained stable production, and operating rates remained low for an extended period. Demand shifted towards copper cathode rod, driving copper rod enterprises’ operating rates to show a high-then-low pattern. From January to March, concentrated downstream stocking by cable and wire companies and the two major power grids kept operating rates above 75%, pushing copper rod processing fees higher YoY. From April to June, copper prices surged again, curbing downstream stocking interest. Copper rod processing fees gradually pulled back from high levels, and the industry average operating rate retreated to the 60%-65% range. Many small and medium-sized processing plants faced insufficient orders and experienced periodic production cuts. (III) Copper Wire and Cable and Enamelled Wire Exhibit Phase-Based Operating Trends, With Clear Divergence in Downstream Demand In H1 2026, both the copper wire and cable and enamelled wire industries experienced an operating pattern of rapid post-Chinese New Year recovery, peaking in the high season, and then pulling back month by month. The monthly operating rate of copper wire and cable recovered from the weekly low during the Chinese New Year to a peak in April, then consolidated and stabilized in May and June, with investment at the start of the power grid’s 15th Five-Year Plan and exports providing core support, while orders from the construction and real estate sectors continued to be a drag. The monthly operating rate of enamelled wire hit its seasonal bottom after the Chinese New Year and surged to the annual high in March, but as home appliance demand weakened more than expected in Q2, the Q2 operating rate declined month by month, with the new energy, industrial motor, and export sectors acting as a floor. Both industries faced the challenges of high copper prices suppressing downstream purchase willingness and pulse-style demand releases causing frequent fluctuations in production schedule pace. (4) Multiple Positive Factors Resonate, H1 2026 Copper Wire Rod Exports Experience Explosive Growth In H1 2026, China’s copper wire rod exports continued their strong growth momentum, emerging as the most outstanding segment in the copper processing industry. In terms of export pace, the first half was characterized by a pattern of “month-on-month climb followed by stabilization at highs.” In Q1, despite the impact of the Chinese New Year holiday, exports maintained consecutive MoM growth. In Q2, driven by the concentrated release of backlog orders and sustained robust overseas demand, monthly exports continued to rise and stayed high. From January to May, China’s cumulative copper wire rod exports reached 134,000 mt, surging 97.93% YoY. Export markets were highly concentrated in Southeast Asia, the Middle East, and South Asia. Countries such as Thailand, Malaysia, Vietnam, and Saudi Arabia, with their power infrastructure upgrades, new energy project construction, and manufacturing relocation, generated rigid import demand for copper wire rod. In terms of trade structure, processing trade with imported materials was the mainstream export model, accounting for over 50%, supplemented by processing trade with supplied materials. Following adjustments to export tax rebate policies, China’s export enterprises have fully shifted to processing trade channels, with related business operating models reaching maturity. (V) High Copper Prices Alongside Overcapacity, with the Landscape of Copper Cathode Rod and Secondary Copper Rod Continuing to Diverge Looking ahead to H2 2026, the copper rod industry is expected to remain in a complex landscape of sustained high copper prices, deepening overcapacity, and continued strong export performance, with the divergence between copper cathode rod and secondary copper rod widening further. Copper cathode rod enterprises are under the dual pressures of elevated raw material costs and insufficient new orders. Prior backlog orders are gradually being delivered and fulfilled, and combined with overseas markets entering a seasonal off-season for consumption, the industry’s operating rate is likely to pull back MoM. However, the core contradiction of overcapacity persists, and overall copper rod processing fees will continue to be in the doldrums. The operating rate on the secondary copper rod side is unlikely to see a sustained uptrend, as the narrowing price difference between copper cathode rod and secondary copper rod has largely eliminated its substitution advantage, with market share continuing to concentrate toward copper cathode rod. Demand continues to shift to copper cathode rod. On the demand side, power grid, new energy, and computing power cables provide stable rigid demand, while demand from real estate and home appliances is weak, limiting overall incremental growth. On the export front, Chinese enterprises continue to develop markets in Southeast Asia and the Middle East, but overseas local capacity expansion and a high base will weigh on subsequent growth rates. Overall, the industry faces multiple contradictions, and the copper cathode rod segment must still rely on expanding both domestic and external demand channels.

West Africa's largest lithium processing plant has officially commenced operations in Nigeria's Nasarawa State. The facility has a designed processing capacity of 6,000 tonnes of lithium ore per day, equivalent to around 30,000 tonnes of lithium carbonate equivalent (LCE) annually. The project is operated by Diamond Energy Group, with Jiuling Lithium and Tianhua New Energy each holding a 50% stake.

I. Full Review of Copper Billet Industry in H1 2026 (I) Policy Side: Strict Control of Reverse Invoicing, Long-Term Restriction on Recycled Raw Material Circulation In H1, fiscal and tax supervision became the core underlying constraint weighing on the copper billet industry. The reverse invoicing policy for recycled resources entered a phase of normalized, high-pressure implementation; natural-person individual sellers had an annual invoicing quota of 5 million yuan, which significantly narrowed circulation channels for domestic unticketed scrap brass. Grassroots recyclers showed low willingness to sell, leading to a persistent shortage of compliant domestic sources of secondary brass. During the policy transition period, corporate compliance costs rose notably. Small and medium-sized processing plants, lacking channels for stable raw materials with invoices, were forced to proactively cut production and undertake maintenance to avoid risks. Large top-tier players leveraged their international trade qualifications and stable import sources to buffer the raw material gap, accelerating the concentration of industry capacity toward compliant large-scale enterprises. The No. 770 policy on secondary copper tax rebates continued to tighten, completely compressing the grey circulation space in the industry. The contradiction of raw materials "having the goods but no invoices available, with invoiced goods at high prices" pervaded the entire H1 cycle. (II) Raw Materials and Imports/Exports: Domestic Secondary Supply Contracted, Premiums on Imported Secondary Brass Rose 1. Domestic Raw Material Bottleneck Intensified The compliant circulation volume of domestic scrap brass fell sharply YoY, weakening the cost advantages of secondary brass over copper cathode. Most brass billet plants faced difficulties in raw material procurement and high credit costs, and with the natural-person quota ceiling constraint, supply could hardly return to the level seen in previous years. Meanwhile, speculation in the brass scrap market further drove up prices, and copper-zinc separation operations raised overall raw material costs. 2. Imported Cargo Became a Mainstream Supplement, but Costs Continued to Rise Domestic enterprises turned to bulk purchasing of imported secondary brass with invoices. In H1, imports of secondary brass maintained YoY growth, however, overseas scrap copper export policy uncertainties and rising international copper prices pushed up procurement premiums. Available overseas scrap brass supply tightened, and import procurement coefficients continued to climb, further raising raw material costs for brass billet. Data Source: SMM From January to May, cumulative imports of brass billet in China were approximately 11,400 mt, down 1.23% YoY, but the cumulative import value reached $105.7079 million, up 23.42% YoY, highlighting a pattern of shrinking volume and rising prices. In terms of import sources, in May, South Korea remained the largest source country (accounting for approximately 40%), with Japan second (at approximately 16%), showing initial signs of regional diversification. (III) Costs and Prices: Copper Prices Swung Wildly at Highs, Industry RC Continued to Decline In H1 2026, copper cathode prices showed a pattern of "retreating after a rapid rise and consolidating at highs." Prices hit an annual peak in January and fell to a periodic low in March. In Q2, the price center stabilized above 100,000 yuan/mt, with the annual average price rising sharply YoY, directly lifting raw material costs for copper billet. As of end-June, the average spot price of Hpb59-1 brass billet in the Zhejiang region had climbed to a historical high of 70,650 yuan/mt. Price transmission had significant blockages: traditional downstream brass demand was sluggish, with end-users possessing strong bargaining power, so raw material price increases could not be smoothly transferred downstream. The industry exhibited a typical pressured pattern of "rising prices with weak volume." From April to May, the overall profitability pressure on the industry climbed to its worst level in the past two to three years. High-precision copper billet used in new energy and AI applications saw stronger RC resilience due to technical barriers and stable rigid demand, making it the only sub-category with relatively stable profits in H1. Coupled with rising logistics, tax, and capital occupation costs, most small and medium-sized brass billet enterprises remained in a state of meager profit or even losses over the long term. (IV) Supply and Demand: Demand Severely Polarized, Operating Rates Stayed Low 1. Supply Side: Operating Rate Weakened Month by Month, Enterprise Polarization Significant The overall copper billet operating rate drifted lower in H1, continuously falling back from 50.86% in January to 46.09% in June, with declines seen both YoY and MoM. The gap in capacity polarization continued to widen: large enterprises with stable raw material channels saw a 52.6% operating rate in June; medium-sized enterprises, squeezed by both raw materials and orders, operated at only 38.76%; small processing plants, facing raw material shortages and order scarcity, saw operating rates fall to 23.44%, intensifying industry polarization. Raw material constraints were the core supply-side constraint; coupled with losses forcing enterprises to control production, the overall industry capacity utilization rate remained in a historically low range in H1. 2. Demand Side: Traditional Sectors Weakened Deeply, Emerging Sectors Strengthened Independently Traditional brass demand (air conditioning, plumbing, valves, general hardware) remained persistently weak in H1. The downturn in the post-property cycle, combined with an early off-season for home appliances, saw downstream users purchasing as needed without concentrated restocking. Meanwhile, the substitution penetration rate of stainless steel in air conditioning parts continued to rise, continuously diverting rigid demand from brass, and brass billet orders shrank month by month. Data Source: SMM Structural demand support was concentrated in the copper billet segment: the three electric systems (power battery, drive motor, and electronic control system) of NEVs, large-power charging piles, energy storage PCS, AI server GPU cooling, and precision pins for optical modules continuously released stable rigid demand. Orders for high-purity oxygen-free copper billet were full, partially offsetting the overall decline in industry demand. However, with copper billet capacity accounting for a limited share, this was not enough to boost the brass segment's recovery. II. Market Outlook for Copper Billet Industry in H2 2026 In Q3, the industry is expected to be under pressure and hit bottom. The traditional off-season, coupled with high temperatures suppressing end-user procurement and the ongoing impact of stainless steel substitution, is expected to weigh on brass demand. SMM expects the overall copper billet operating rate to continue falling to 43.65% in July, hitting an annual low. Policy-side reverse invoicing supervision is unlikely to ease, capping the compliant supply of domestic scrap brass. Combined with continuously tightening controls on overseas scrap copper exports, the pattern of high premiums on imported secondary brass is expected to persist. The raw material bottleneck is set to run through the off-season. Brass billet is anticipated to be dragged down by the triple headwinds of the off-season, substitution, and low RCs, with profitability under sustained pressure in Q3. Only the continued commissioning of NEV and AI computing infrastructure projects is likely to bring rigid demand orders for copper billet, forming the sole demand support. In Q4, prosperity is expected to recover on a QoQ basis. As home appliances and plumbing enter their traditional stockpiling peak season, brass billet orders are expected to rebound MoM. Combined with year-end push for annual targets in PV, energy storage, and NEVs, demand for copper billet is expected to further strengthen, with industry operating rates and transactions both recovering. However, copper cathode prices are highly likely to continue consolidating at highs, with the raw material cost center stay high, putting cost pressure on processing enterprises throughout the year. In the medium and long term, the traditional brass demand center is expected to decline year by year, while AI computing, new energy, and energy storage constitute the core growth drivers of the copper billet industry. Small and medium-sized outdated capacity is expected to continuously exit the market, while top-tier players are simultaneously laying out high-end copper billet capacity. The three major thresholds of raw materials, orders, and compliance continue to widen the gap between enterprises, making the industry's transformation towards scale, compliance, and high-end manufacturing an irreversible trend. In summary: In H1 2026, the core contradictions in the copper billet industry were supply shortages caused by tightening recycled raw material policies, weakening traditional end-use demand, and the squeezing of processing profits by high copper prices. The industry relied on new energy and AI copper billet for structural support, maintaining a generally weak operating environment. In H2, the market is expected to show a pattern of initial weakness followed by later strength: in Q3, the triple negative resonance of the off-season, raw materials, and substitution is expected to keep operating rates and profitability under sustained pressure; in Q4, the combination of the traditional end-user peak season and continuously increasing volumes from emerging sectors is expected to repair industry prosperity on a QoQ basis. In the medium and long term, the reverse invoicing policy is reshaping the secondary copper circulation system, accelerating market clearing. High-precision copper billet for new energy and AI computing infrastructure is expected to become the core future growth line for the copper billet industry.

[SMM Shanghai Spot Copper] Looking ahead to tomorrow, according to the Central Meteorological Observatory, this year's No. 9 typhoon "Bawei" has strengthened into a super typhoon. It is expected to approach the eastern sea areas of China around July 10, with a high probability of making landfall in east China. Affected by this, downstream copper semis processing plants in Jiangsu and Zhejiang are concerned that subsequent strong winds and rainstorms from the typhoon could disrupt logistics and production arrangements. They are therefore concentrating on advance stockpiling purchases, pushing up the overall center of Shanghai spot copper premiums. Observing supplier behavior, market transactions were active, and after low-priced cargoes were quickly absorbed, suppliers' willingness to hold prices firm further strengthened. Overall, under the combined effect of the concentrated release of typhoon stockpiling demand, suppliers holding prices firm, and continuous inventory destocking, Shanghai spot copper prices against the SHFE copper 2607 contract are expected to remain at a premium tomorrow, with the overall center continuing to edge up.