[Secondary Lead Production Update] A secondary lead smelter in east China said that due to market losses compounded with tight raw material supply, it halted production for maintenance starting today, affecting secondary refined lead production by about 300 mt/day.

In H1 2026, Shanghai aluminum prices followed a high-first-then-low trajectory. In Q1, a mix of market expectations for Federal Reserve rate cuts and geopolitical tensions in the Middle East drove aluminum prices to multi-year highs. Entering Q2, confirmation of the US strong-dollar policy stance, easing supply disruptions in the Middle East, and a seasonal lull in domestic downstream consumption combined to push the aluminum price center downward continuously. Looking ahead to H2, persistent strong US dollar sentiment and overseas liquidity concerns will cap non-ferrous metal valuations. On the supply side, elevated aluminum prices have incentivized higher production releases; domestic operating capacity is projected to rise month-on-month, while newly commissioned capacity in the Middle East and Indonesia will ramp up output gradually. On the demand side, domestic consumption recovery is set to remain modest. Existing export order backlogs will still prop up aluminum semi-finished product shipments, yet market expectations for new export orders have softened. All told, Shanghai aluminum’s price center is likely to slide further in H2, delivering a full-year high-first-then-low price pattern. 1. H1 2026 Shanghai Aluminum Price Review by Stage 1.1 Q1: Macroeconomics & Geopolitics Dominate, Aluminum Prices Surge Then Consolidate Shanghai aluminum prices in Q1 2026 were primarily dictated by macro sentiment and overseas supply disruptions, with seasonally weak fundamentals taking a backseat. January: Rate Cut Expectations & Capital Inflows Fuel Price Rally Fundamentals: A seasonal lull ahead of the Lunar New Year created demand weakness, leading to a continuous build-up of social aluminum ingot inventories. By late January, SMM-tracked social inventories hit 782,000 tonnes, the highest level for the period in three years. Sustained high aluminum margins squeezed profit margins for downstream processors, dampening their willingness to operate and curbing primary aluminum purchasing activity. Macroeconomics: Markets priced in an impending Fed rate-cut cycle, sending the US Dollar Index sharply lower and drawing heavy speculative capital into commodity futures. Complementary pro-consumption policies rolled out domestically further underpinned aluminum prices. SMM’s average A00 aluminum price stood at RMB 24,086/tonne in January, the highest monthly average in H1. February: Cooling Rate-Cut Hopes Trigger Range-Bound Weakness Fundamentals: Lunar New Year holidays triggered a sharp collapse in downstream procurement, while smelters ramped up ingot casting, pushing social inventories even higher. Post-holiday SMM social inventories climbed to 1.108 million tonnes, with bloated stock levels failing to provide upward price support. Macroeconomics: Dimming Fed rate-cut bets lifted the US Dollar Index, prompting profit-taking liquidation that dragged aluminum prices lower and locked the market into weak consolidation. The average SMM A00 aluminum price retreated to RMB 23,385/tonne in February, down roughly RMB 700 month-on-month. March: Alternating Middle East Supply Risks & Demand Drags Intensify Volatility March trading centered on alternating forces of Middle East supply disruptions and demand-side headwinds, amplifying long-short volatility and driving aluminum prices through a pattern of rally-correction-rebound. Supply-side developments saw widespread overseas production curtailments: Mozal entered maintenance; Qatalum maintained a 60% operating rate and ruled out further output reductions; Alba shut down Lines 1, 2 and 3 with additional cutbacks rumoured; major damage to EGA facilities stoked fears of large-scale production suspensions. SMM estimates tally nearly 4 million tonnes of overseas primary aluminum capacity subject to cuts, including Mozambique’s smelter. Worries over contracting overseas supply became the core catalyst for periodic price rallies. Geopolitical risks: Escalating conflict in the Middle East raised widespread market concerns over shipping security in the Strait of Hormuz, embedding persistent geopolitical risk premiums into aluminum valuations. Demand-side headwinds: Mounting stagflation fears lifted risk aversion; lofty aluminum prices deterred downstream buying, while surging energy and freight costs crushed processor profitability and restrained demand recovery. SMM’s average A00 aluminum price rebounded to RMB 24,386/tonne in March, the second-highest monthly average in H1, alongside markedly wider price swings. 1.2 Q2: Expanding Supply & Marginal Demand Weakness Push Price Center Lower In Q2, high aluminum prices lifted domestic capacity utilization, while the market gradually priced in the impacts of overseas smelter cutbacks, shifting focus back to domestic fundamentals. Shanghai aluminum’s average price fell from roughly RMB 24,665/tonne in April to RMB 23,769/tonne in June, with prices dipping to an intra-year low of RMB 22,665/tonne in late June. Supply side: Strong prices encouraged primary aluminum smelters to boost operating rates and lift domestic output. The market gradually absorbed the impact of cutbacks in Mozambique and the Middle East, weakening the Shanghai-LME aluminum price ratio. Between June and July, rumours circulated that curtailed Middle East capacity would resume production, coupled with sequential commissioning of new Indonesian smelters, amplifying expectations of rising overseas supply. Industry communications indicate domestic primary aluminum output rose approximately 3.5% year-on-year over the first five months. Demand side: Elevated aluminum prices weighed on domestic end-user consumption, yet a stronger LME premium relative to Shanghai aluminum boosted semi-finished aluminum exports, offsetting weak domestic primary aluminum offtake. General Administration of Customs data records cumulative exports of unwrought aluminum and semi-finished products at 2.685 million tonnes in Jan-May, up 10.4% YoY. April single-month exports hit 598,000 tonnes, a one-year-plus high, followed by May shipments of 632,000 tonnes, up 15.5% YoY. Robust export volumes effectively filled the gap left by muted domestic consumption. Inventory side: Q2 delivered a pronounced destocking cycle. Social inventories peaked at 1.465 million tonnes in early May before falling to 1.165 million tonnes by end-June, a total drawdown of around 300,000 tonnes with an accelerated destocking pace. Weekly inventory drawdowns once surged to 170,000 tonnes, a four-year high for single-week de-stocking volumes. 2. Fundamental Supply & Demand Analysis 2.1 Supply: High Smelting Margins Boost Operating Rates, New Capacity Ramp-Ups Keep H1 Supply Ample Persistently robust smelting profitability in H1 2026 significantly expanded production flexibility, acting as the core driver of loose supply conditions through the first half. On one hand, sustained aluminum price strength maintained healthy per-tonne margins, maximizing smelters’ production incentives. On the other hand, new projects commissioned from late 2025 through H1 2026 entered sequential ramp-up phases, delivering steady monthly output increments. Continuous volume growth from newly commissioned capacity further lifted domestic primary aluminum production. The combined effects drove steady gains in national primary aluminum output, resulting in abundant raw material supply across the market. 2.2 Demand: Muted Domestic Consumption, Exports Act as Key Support Domestic primary aluminum demand in H1 2026 displayed a clear divergence: soft domestic offtake offset by buoyant external demand. Persistently high aluminum prices suppressed downstream purchasing, yet semi-finished aluminum exports benefited from favourable cross-market price differentials and delivered standout performance. General Administration of Customs data shows China exported 1.435 million tonnes of aluminum semi-finished products in Jan-May 2026, up 13.7% YoY, with May single-month exports reaching 320,000 tonnes (+14.7% YoY). Elevated export volumes over the first five months created a vital outlet for domestic primary aluminum digestions. The core driver behind export strength was the LME-over-Shanghai price spread: overseas markets faced tight supply expectations stemming from Middle East production cuts, while bloated domestic inventories depressed Shanghai aluminum, creating lucrative profit windows for semi-finished aluminum exporters. 2.3 Inventories: H1 Inventory Build to Multi-Year Highs Followed by Rapid Q2 Destocking Domestic social primary aluminum inventories traversed three distinct phases in H1 2026: rapid accumulation, consolidation at elevated levels, then steep destocking. Early-year seasonal weakness ahead of the Lunar New Year combined with high aluminum prices curbing demand drove continuous inventory builds, which peaked at a multi-year high of 1.465 million tonnes in early May. Subsequent downstream post-holiday restocking and surging export shipments triggered accelerated inventory drawdowns through Q2. The sharp destocking rate stemmed from concentrated export deliveries paired with a wave of downstream replenishment demand. 3. H2 2026 Outlook 3.1 Macroeconomics: Strong US Dollar Caps Metal Valuations The US will maintain its strong-dollar policy stance, keeping the US Dollar Index elevated and capping valuation upside across non-ferrous metals. Middle Eastern geopolitical risk premiums will gradually fade amid improved shipping outlook for the Strait of Hormuz and easing overseas liquidity jitters, creating long-term bearish pressure on aluminum prices. 3.2 Supply: Overseas Capacity Resumptions & New Commissioning Run Parallel Overseas market developments include incremental production restarts across Middle Eastern smelters, alongside faster ramp-up schedules for newly commissioned overseas capacity. 3.3 Demand: Weakening Support from Export Orders Short-term backlogged orders will continue to underpin semi-finished aluminum export volumes, yet narrowing cross-market price spreads have softened market expectations for new export order intake, pointing to downside risks for export growth over the medium-to-long term. Market participants will closely monitor domestic seasonal peak consumption trends and overseas new order placement momentum. 4. Comprehensive Market Assessment All factors considered, the Shanghai aluminum market will face dual headwinds of macro valuation pressure and expanding supply volumes throughout H2 2026.

In H1 2026, SHFE aluminum prices exhibited a "high-then-low" pattern. In Q1, macro front, expectations for US Fed interest rate cuts intertwined with Middle East geopolitical conflicts, driving aluminum prices to surge to record highs; entering Q2, with the confirmation of the US strong-dollar policy stance, marginal easing of supply disruptions in the Middle East, and China's downstream consumption entering the off-season, the SHFE aluminum price center shifted lower continuously. Looking ahead to H2, macro front, the strong US dollar and liquidity concerns outside China will continue to weigh on nonferrous metal valuations; supply side, high aluminum prices are stimulating capacity release, with China's operating capacity expected to continue to increase MoM and new capacity in the Middle East and Indonesia gradually ramping up; demand side, domestic demand recovery is at a mild pace, and orders on hand for aluminum semis exports can still provide a floor, but expectations for new orders are weakening. Overall, the SHFE aluminum price center in H2 is expected to continue to shift lower, with the full year showing a "high-then-low" pattern.

In H1 2026, the low-grade zinc oxide market was characterized by tight supply, rising costs, demand under pressure, and prices fluctuating at highs. After the Chinese New Year, enterprises gradually resumed operations, but constrained by tight supply of raw materials such as steel dust and electric furnace dust, as well as persistent invoice issues, the industry's operating rate and production release were limited.

In June 2026, the operating rate of secondary copper rod was 14.04%, below expectations of 14.23%, down 0.66 percentage points MoM and down 19.57 percentage points YoY. In June, the secondary copper rod market operated under three main themes: the full-scale implementation of reverse invoicing compliance inspections, copper prices repeatedly testing the 100,000 mark, and the early timing of the Dragon Boat Festival holiday

Entering July, the tungsten industry chain prices remained in the doldrums. A large tungsten enterprise lowered its long-term contract purchase quotes for the first half of July, while the Ganzhou Tungsten Association simultaneously lowered its monthly forecast average prices for all tungsten product categories, with prices across all categories down MoM. The spot market also followed suit and was under pressure. According to SMM quotes, wolframite concentrates (≥65%) have been on a weak decline since mid-to-late June. Looking back at the market trend this year, tungsten prices experienced wild swings. Comparing the two downward cycles, the overall decline in this round of adjustment that started in mid-June has narrowed compared with the first correction from March to May. Currently, the traditional off-season effect is prominent. Factors such as weak downstream demand and raw material inventory awaiting digestion continue to weigh on tungsten price performance; however, the scarcity of low-priced high-grade ore supplies will provide some support for tungsten prices. Industry Long-term Contract Quotes and Association Monthly Forecast Prices All Lowered A tungsten enterprise lowered its long-term contract quotes for the first half of July, as follows: According to Chongyi Zhangyuan Tungsten Co., Ltd. on July 6, its long-term contract purchase quotes for the first half of July are: 1. 55% wolframite concentrates: 448,000 yuan/standard tonne (65%WO3 basis), down 72,000 yuan/standard tonne from the previous round of quotes; 2. 55% scheelite concentrates: 447,000 yuan/standard tonne, down 72,000 yuan/standard tonne from the previous round of quotes; 3. APT (GB Grade 0): 660,000 yuan/mt, down 120,000 yuan/mt from the previous round of quotes. The Ganzhou Tungsten Association released its forecast average prices of tungsten products for July 2026, with 55% wolframite concentrates at 448,000 yuan/standard tonne, down 57,000 yuan/mt from June; APT at 660,000 yuan/mt, down 100,000 yuan/mt from June; and medium-grain tungsten powder at 1,100 yuan/kg, down 200 yuan/kg from June. Wolframite Concentrates Fall 13.93% in Less Than a Month According to SMM quotes, the price of wolframite concentrates (≥65%) on July 7 was 453,000-455,000 yuan/standard tonne, with an average price of 454,000 yuan/standard tonne, down 3.61% from the previous trading day. Looking back at the short-term trend, after the average price of wolframite concentrates rebounded to a previous high of 527,500 yuan/standard tonne in early-to-mid June, weak downstream demand, together with the fact that raw material inventory accumulated from earlier concentrated enterprise stockpiling was still in the digestion cycle, weakened market support, and tungsten prices began a general weak downward adjustment from June 17. Compared with the average price of 527,500 yuan/standard tonne on June 16, the average price of 454,000 yuan/standard tonne on July 7 represents a decline of 73,500 yuan/standard tonne in less than a month, a drop of 13.93%. Taking a longer-term perspective, entering July, the average price trend of wolframite concentrates (≥65%) so far this year has been a dramatic roller coaster. Supported by tight raw material supply at the start of the year, wolframite concentrates (≥65%) began at 453,500 yuan/standard tonne on January 5, before surging to a historic high of 1,050,500 yuan/standard tonne on March 13. At such high prices, market caution and fear of high prices gradually intensified, and coupled with limited acceptance from end-use demand, tungsten prices embarked on an overall downward trajectory, ultimately falling to an intra-year low of 400,500 yuan/standard tonne on May 25. After a deep correction in the preceding period, the market had a demand for an oversold recovery. This, combined with the concentrated release of phased restocking demand, saw tungsten prices start a rebound recovery from May 27, rising to 527,500 yuan/standard tonne on June 10. A comparison of two complete downward cycles so far this year reveals that the first round of correction after the initial-year surge featured a wider range of fluctuation, while the current correction, which began in mid-June, has seen a narrower overall downward magnitude relative to the previous correction. Synthesizing key price periods, it is clear that the wolframite concentrates market has experienced a large magnitude of fluctuations and prominent volatile characteristics this year. Outlook Looking ahead, in the short term, July marks the entry into the traditional off-season for downstream consumption. Purchasing willingness from cemented carbide and mechanical processing enterprises is weak, and market demand is performing mediocrely. However, circulating supply of high-grade tungsten ore is relatively scarce. With bullish and bearish factors checking each other, tungsten prices are expected to maintain narrow sideways consolidation. The pace of improvement on the downstream demand side remains a key focus going forward. In the medium and long term, domestic regulation on primary tungsten mining is continuously tightening, rigid demand support exists from the cemented carbide sector, and the scale of net tungsten product exports is growing steadily, leaving a supply-demand gap for the element tungsten throughout the year. In Q3, the insufficient alignment of mining indicators will create expectations of tightening on the raw material supply side, while the traditional "September-October peak season" is expected to drive a recovery in enterprise restocking demand. Simultaneously, rigid demand in military, high-end equipment, and new energy sectors continues to expand, and the price spread between Chinese and overseas markets is also expected to continuously boost export orders. Multiple favorable factors provide strong support for the medium and long-term central price range of tungsten. However, vigilance is needed regarding the risk of rapid market rises squeezing downstream processing enterprises' profits, which could force end-user production cuts and create negative feedback. Overall, the tungsten market is expected to follow a mild and orderly upward trajectory thereafter. Recommended Reading: