As of March 17, the operating rate of 50 electric-furnace steel mills nationwide mainly producing construction materials was 38.64%, up 3.26% WoW; the capacity utilization rate was 39.87%, up 10.53% WoW; and daily average production of construction materials was 88,800 mt, up 23,500 mt WoW.

【SMM Scrap Aluminium Market Analysis】Southeast Asia's Secondary Aluminum Industry Trapped in "Margin Squeeze": Raw Material Surge Forces ADC12 Plant Cuts, Industry May Enter "Lunar New Year Mode" Early February 2026 marked a period of unprecedented regulatory volatility for the global secondary aluminum and scrap markets. Driven by a confluence of tariff upheavals, aggressive decarbonization mandates, and stringent environmental crackdowns, the traditional flow of aluminum scrap is being fundamentally redrawn. As the United States implements sweeping new import surcharges, the European Union weighs restrictive export measures, and Southeast Asian hubs like Malaysia tighten their borders against contaminated materials, market participants are facing mounting compliance costs and disrupted arbitrage windows. This review examines the key policy shifts that defined the ex-China aluminum recycling sector this month and their immediate implications for global trade flows. The United States: How the 10% Surcharge Disrupts Secondary Aluminum Following the United States Supreme Court’s ruling, which invalidated Trump’s IEEPA tariffs on February 20, 2026, many trade goods found themselves navigating a complicated and chaotic new regulatory landscape. Within hours of the ruling, President Trump pivoted to Section 122 of the 1974 Trade Act, levying a 10% blanket global import surcharge that went into effect on February 24, replacing the former country-based tariffs. There have also been threats made by President Trump to raise this surcharge to the statutory maximum of 15%, which could further disrupt global trade and U.S. imports. Even though most primary aluminum products will not see a huge change due to already being burdened by the 50% Section 232 tariffs, the secondary aluminum market, which formerly enjoyed a 0% tariff under Section 232, might now be caught in the newest 10% blanket import surcharge. The US Geological Survey’s Mineral Commodity Summaries 2026, published in February 2026, estimated an increase in imported scrap into the US in 2025, reaching roughly 890,000 metric tons, which is approximately a 27% increase compared to 2024. Even though scrap imports only make up roughly 20% of the US’s total scrap consumption, a blanket import surcharge will likely affect a significant portion of total scrap imports for the active period of the Section 122 policy. This is especially true as the policy remains highly volatile and faces the risk of being increased or challenged in the near future. Europe: The "Scrap Leakage" Debate and Impending Export Controls The EU aluminum recycling sector is also on edge following the closure of the EU’s public consultation in late January. Currently, trade measures are widely expected to be unveiled and launched during Spring 2026, aimed at curbing what the EU terms "aluminum scrap leakage." European Aluminum, as one of the biggest supporters of trade measures to control scrap leakage, cites outflows exceeding 1.3 million tons annually that could instead be utilized domestically to meet decarbonization and net-zero targets. In February, the Bureau of International Recycling (BIR) released statements opposing these trade measures, stating that "the imposition of export restrictions or trade barriers is fundamentally unnecessary and risks producing significant unintended consequences for the entire value chain." BIR also explained how its own monitoring fails to identify scrap leakage issues, noting that the EU currently has insufficient domestic smelting capacity to absorb the extra scrap that is being exported out of Europe. In the same statement, BIR warned of a probable reduction in domestic aluminum scrap prices and a decline in the overall quality of waste management systems. Similarly, in 2025, the European Recycling Industries' Confederation (EuRIC) published stark warnings against the possible restriction of aluminum scrap exports. In a scenario where all grades of aluminum scrap are restricted from being exported, or if exports are hit with a significant surcharge, the Asian market, especially China, India, and Southeast Asia, all of which are large importers of EU scrap would be heavily impacted. Supply would see significant decreases, and prices outside Europe might climb to new highs as markets adjust to fill the gap, while secondary prices within the EU could drop to new lows due to localized oversupply. Malaysia: The E-Waste Crackdown and Stringent SIRIM Enforcement Following the success of "Ops Metal" in 2025, Malaysia has seen a massive volume of illegal scrap imports seized, amounting to a total value of RM 7 billion. In response to the influx of illegal scrap imports frequently mixed with electronic waste, the Malaysian government implemented an absolute e-waste import ban effective February 4, 2026, in order to curb these environmental violations. While aluminum scrap is still legally allowed to be imported into Malaysia, albeit under strict SIRIM purity requirements, the absolute e-waste ban will inevitably affect certain secondary grades. Notably, Zorba imports will likely see significant increases in transit and processing times, as customs officials are now far more likely to detain such cargoes for exhaustive inspections due to the high probability of e-waste contamination. In the broader picture, the volume of aluminum scrap legally entering Malaysia will likely decrease. Coupled with escalating processing delays at customs, this friction increases the probability that businesses will actively divert their aluminum scrap trade elsewhere in Southeast Asia, such as to Thailand. Conclusion Looking ahead to the second quarter of 2026, the secondary aluminum market will likely remain in a state of flux as these regional policies take full effect. The era of frictionless global scrap trade is rapidly giving way to a localized, highly regulated environment. For remelters and traders, navigating this landscape will require extreme supply chain agility and a hyper-focus on material compliance. As European supply risks being politically landlocked, U.S. raw material imports become suddenly more expensive, and Southeast Asian quality barriers rise, we expect to see continued volatility in regional premiums and a widening decoupling of traditional scrap-to-LME pricing mechanisms in certain regions. Adapting to this fragmented reality will be the defining challenge for the industry in the months to come.

On April 18, the AICE 2025 SMM (20th) Aluminum Industry Conference & Expo, hosted by SMM Information & Technology Co., Ltd. (SMM), co-organized by Zhongyifeng Jinyi Technology (Suzhou) Co., Ltd. and Lezhi County Qianrun Investment Promotion Service Co., Ltd., and sponsored by Shangli County Keyuan Metallurgical Materials Co., Ltd., Press Metal International Ltd., Delta Metal (Holdings) Limited, Jinqiao Light Alloy Technology (Jiangmen) Co., Ltd., and other entities as forum title sponsors, Sunstone Development Co., Ltd. and Shanghai Jialang Industrial Co., Ltd. as forum co-organizers, and supported by various specially invited supporters, conference supporters, conference acknowledgment units, and media partners, successfully concluded at the Suzhou International Expo Center in Jiangsu!

On April 18, at the AICE 2025 SMM (20th) Aluminum Industry Conference & Aluminum Industry Expo - Global Secondary Aluminum Industry Development Forum, co-hosted by SMM Information & Technology Co., Ltd., SMM Metal Trading Center, and Shandong Aisi Information Technology Co., Ltd., and co-organized by Zhongyifeng Jinyi (Suzhou) Technology Co., Ltd. and Lezhi County Qianrun Investment Service Co., Ltd., Zhang Limin, Senior Analyst of Secondary Aluminum at SMM, shared insights on the 2025 China secondary aluminum market analysis and price assessment methodology. 1. Overview of the Aluminum Scrap Industry Chain Supply Side - Explosive Growth in Old Scrap in Recent Years ► SMM Analysis: • The recycling of old aluminum scrap is influenced by multiple factors. Currently, the recycling of old aluminum scrap mainly comes from social scrap collected over an average period of 10-20 years, involving fields such as construction, transportation, power, packaging, and durable goods. Among these, construction and transportation sectors dominate the recycled materials. In recent years, with more aluminum scrap gradually entering the recycling cycle and the introduction of policies like "trade-in," old scrap has entered a phase of explosive growth. • New aluminum scrap mainly comes from aluminum and downstream rolling and casting processes, including off-cuts and defective products. Additionally, some scrap generated during the use of end-use industries is also high-quality aluminum scrap. This portion of aluminum scrap is primarily influenced by the annual aluminum consumption. Supply Side - Increasing Supplement of Imported Raw Materials Since the implementation of the new standards in 2020, with traders' increasing adaptation to the new standards, aluminum scrap imports have been recovering year by year. ► SMM Analysis: • In 2018, other aluminum scrap (760200090) was adjusted to the "Catalog of Solid Wastes Restricted from Import as Raw Materials." From July 1, 2019, the import of aluminum scrap was completely banned. • In 2020, secondary cast aluminum alloy raw materials that comply with the "Secondary Cast Aluminum Alloy Raw Materials" (GB/T 38472-2019) standard are not considered solid waste and can be freely imported. This has been in effect since November 1, 2020. • On October 24, 2024, the Ministry of Ecology and Environment, the General Administration of Customs, and four other departments issued the "Announcement on Regulating the Import Management of Secondary Copper and Copper Alloy Raw Materials, Secondary Aluminum and Aluminum Alloy Raw Materials." Secondary copper and aluminum raw materials that meet the annex requirements are not considered solid waste and can be freely imported. The announcement has been in effect since November 15, 2024. According to customs data, the total imports for 2024 were 1.785 million mt, up 1.65% YoY. • In January-February 2025, aluminum scrap imports were 323,000 mt, up 12% YoY. Driven by relaxed policies and increased demand, imports are expected to show a mild growth trend for the year, but the growth rate may be constrained by international market competition and the inversion of domestic and overseas price spreads. Supply Side - Aluminum Scrap Import Policies from Standardization to Optimization ► SMM Analysis: The "Announcement on Regulating the Import Management of Secondary Copper and Copper Alloy Raw Materials, Secondary Aluminum and Aluminum Alloy Raw Materials" has removed the barriers to the import of secondary aluminum raw materials in China, providing a policy basis for legal and compliant imports. SMM expects that aluminum scrap imports in 2025 may show a restorative growth. However, with the growth of domestic old and new scrap production, the domestic aluminum scrap supply will play a significant role, reducing dependence on overseas aluminum scrap. In addition to the increase in domestic aluminum scrap supply, overseas secondary aluminum processing capacity has also shown a growth trend in recent years, with overseas aluminum scrap resources entering a period of high demand growth. Some overseas aluminum scrap resources are being consumed locally, and the opportunity for them to enter China is expected to decline. Demand Side - Secondary Aluminum Alloy Demand Slows Down, Plate/Sheet and Extrusion Become New Engines ► SMM Analysis: The downstream demand for aluminum scrap in China is mainly for the production of secondary aluminum alloys, the manufacture of remelting billets for extruded aluminum profiles, and the addition of some aluminum scrap in the aluminum plate/sheet and strip industry. In recent years, the capacity expansion in the domestic secondary aluminum industry has been significant, and the supply of aluminum scrap has been tight. According to SMM data, the domestic demand for secondary aluminum in 2024 was approximately 12.79 million mt, with an expected annual compound growth rate of 13% from 2020 to 2025. The growth rate of aluminum scrap consumption for secondary aluminum alloy ingots has slowed down, while the demand for secondary wrought alloys has been increasing year by year, continuing to drive the growth rate of the entire aluminum scrap industry. According to SMM data, in 2024, the consumption of aluminum scrap in the domestic secondary aluminum alloy industry accounted for 59% of the total consumption, down 17 percentage points from 2019, while the consumption of aluminum scrap for remelting billets accounted for about 24%, up 6 percentage points from 2019, and the consumption of secondary plate/sheet increased significantly by 11 percentage points. Policy Empowerment for Green Development, China's Secondary Aluminum Industry Enters a Golden Development Period Since the beginning of the "14th Five-Year Plan," the development of China's secondary aluminum industry has entered a policy golden period, with relevant policies being intensively introduced. The national low-carbon process has accelerated, promoting the carbon peak in the non-ferrous metal industry and accelerating the development of the secondary aluminum industry, while also injecting new momentum into the green and sustainable development of the aluminum industry. It also reviewed some of the secondary aluminum industry promotion policies from 2021 to 2025. 2. Current Status of the Secondary Aluminum Alloy Market Increasing Concentration of Secondary Aluminum Alloy Industry Capacity Enterprises are mainly concentrated in east China, south China, and south-west China. Rising Supply Pressure, Slowing Growth in New Secondary Aluminum Alloy Capacity ► SMM Analysis: According to SMM statistics, in 2024, there were 28 planned and newly built secondary cast aluminum alloy projects in China, involving a capacity of 2.05 million mt. Among them, 16 projects were actually put into production, with a new capacity of 1.32 million mt, and the total existing capacity in the industry reached 17.62 million mt. In terms of the distribution of new capacity, Anhui, Sichuan, and Yunnan ranked in the top three. Among them, Anhui, due to its active development of the NEV industry, has attracted many OEMs and parts companies, leading to the establishment of new secondary aluminum plants and potentially shifting the production center in east China from Jiangsu and Zhejiang to Anhui. Surge in New Secondary Aluminum Projects in Q1 2025, Limited Actual Volume ► SMM Analysis: In Q1 2025, the domestic new secondary aluminum capacity totaled 2.66 million mt, including approximately 560,000 mt of new secondary cast aluminum alloy capacity and 1.7 million mt of new secondary wrought aluminum alloy capacity, with secondary wrought aluminum products being favored. Compared to the same period last year, the number of new projects has increased, but most are in the environmental assessment or new construction phase, with limited actual new capacity. As projects are gradually completed and put into production, the supply in the secondary aluminum market is expected to continue to increase significantly. Raw Material Constraints and New Capacity Expansion Lead to Another Decline in Secondary Aluminum Alloy Operating Rate ► SMM Analysis: Due to factors such as high capacity and insufficient raw materials, the overall operating rate in the secondary aluminum industry has remained low for a long time. According to SMM statistics, the production of secondary aluminum alloys in 2024 is expected to reach 7.05 million mt, with the operating rate dropping by 2 percentage points to 40.0% compared to the previous year. The demand for secondary aluminum alloys in fields such as NEVs is expected to increase in the future, and with the gradual improvement of policies, those secondary aluminum plants that rely excessively on tax incentives may face elimination. In addition, the speed of new capacity expansion may slow down, thereby promoting a rebound in the operating rate of the secondary aluminum alloy industry. Significant Increase in NEV Market Share, Secondary Aluminum Alloy Demand Rises ► SMM Analysis: Automobiles are the largest downstream application of secondary aluminum alloys. In 2024, China's automobile production was 31.282 million units, up 3.7% YoY. Among them, the annual production of NEVs exceeded 10 million units for the first time, up 34.4% YoY, with the market share increasing to 40.9%. Although secondary aluminum alloys are currently mainly used in traditional internal combustion engine vehicles, in recent years, automotive parts companies have accelerated the transition from core components of internal combustion engine vehicles to the three electric systems of NEVs, driving secondary aluminum companies to develop aluminum alloy products that meet new demands. Driven by the "dual carbon" goals, cost control, and technological advancements, the demand for low-carbon secondary aluminum materials continues to rise. According to SMM estimates, the demand for secondary aluminum alloys for automobiles in 2024 increased by 2.3% YoY. In Q1 2025, China's automobile production cumulatively reached 7.561 million units, up 14.5% YoY, with NEV production increasing by 50.4%, continuing the strong production and sales momentum. The demand for secondary aluminum alloys for automobiles in 2025 is expected to grow to 4.46 million mt. Steady Growth in the Motorcycle Industry Drives Slight Increase in Secondary Aluminum Alloy Demand ► SMM Analysis: The application of aluminum alloys in motorcycles is already very extensive, with aluminum castings occupying a core position. The main application components include cylinder heads, cylinder blocks, shock absorbers, brakes, handle covers, and side covers. According to data from the China Chamber of Commerce for Motorcycles, the total production of motorcycles in 2024 was 19.9708 million units, up 2.82% YoY. In addition to complete vehicles, the export of motorcycle engines increased by 22% YoY to 1.15 million units. Overall, the demand for secondary aluminum alloys from motorcycles in 2024 increased by 3.4% YoY to 760,000 mt. With policy support, steady growth in exports, and the development of electrification, the demand for secondary aluminum alloys from motorcycles is expected to further increase. Demand for Secondary Aluminum Alloys in Other Fields Also Grows ► SMM Analysis: Secondary aluminum alloys are also widely used in fields such as communications, machinery equipment, consumer electronics, and appliances. ADC12 Cost Breakdown ► SMM Analysis: The cost of ADC12 is mainly composed of five parts. Specifically, ① Aluminum scrap raw material cost: the largest proportion, with differences in composition and yield rate leading to varying aluminum scrap prices. Additionally, the pre-treatment methods and equipment processes of enterprises also affect the cost of aluminum scrap. ② Silicon raw material cost: enterprises mainly use 553# grade with or without oxygen. ③ Copper raw material cost: for cost reduction, secondary aluminum plants usually add bare bright copper wire and other copper scrap. ④ Natural gas cost: secondary aluminum plants mostly use natural gas as fuel in the smelting process, with 60-80 m³ of natural gas consumed per ton of ADC12 production. ⑤ Other costs: mainly include additives and other auxiliary materials used in the smelting process, hydropower, labor, three expenses, and depreciation. Rising Aluminum Prices Drive Up Aluminum Scrap Cost Proportion, Falling Silicon Prices Lead to Significant Decline in Proportion ► SMM Analysis: According to SMM estimates, the national weighted average cost of ADC12 in 2024 was 19,776 yuan/mt (including tax), up 6.9% YoY, with the proportion of aluminum scrap cost increasing by 1.1 percentage points to 88.5%; in 2024, silicon prices continued to decline unilaterally, with the cost proportion continuously decreasing. In Q1 2025, the national weighted average cost of ADC12 reached 20,494 yuan/mt (including tax), with the proportion of aluminum scrap cost increasing by another 0.7 percentage points to 89.2%, continuing to expand in the total cost. Imported Aluminum Alloy Ingots Increased by 7% YoY in 2024, Rebounding Above 1.2 Million mt The import window for aluminum alloy ingots opened after 2020 ► SMM Analysis: Before 2020, China was a net exporter of aluminum alloy ingots, but after 2020, the import window gradually opened. In 2024, imported aluminum alloy ingots were 1.213 million mt, up 7.1% YoY. Policy changes may affect the import situation in 2025. In terms of import sources, Malaysia remained the top source of imported aluminum alloy ingots for the year, reaching 521,300 mt, with the proportion increasing from 42% in 2023 to 43%. The other top sources were Thailand, Vietnam, Russia, and South Korea, with proportions of 14.2%, 7.9%, 7.7%, and 6.1%, respectively. The proportion of the top five import countries increased from 75% in 2023 to 79%.Imports from Thailand saw the largest increase, up 59,000 mt YoY to 172,000 mt. In January-February 2025, aluminum alloy imports exceeded 100,000 mt consecutively, with price inversion and exchange rate impacts leading to shrinking profits. ►SMM Analysis: Cumulative imports in January-February 2025 reached 191,500 mt, down 1.0% YoY. After mid-November last year, domestic aluminum prices began a continuous decline, with ADC12 prices following suit. Meanwhile, overseas prices fluctuated relatively little, and the RMB exchange rate weakened continuously, quickly turning profits into losses, which persisted until mid-January. Additionally, during the Chinese New Year holiday, market activity decreased, and demand declined. Multiple unfavorable factors combined, reducing monthly imports to below 100,000 mt in January and February. Imports in March are expected to rebound slightly to above 100,000 mt, with a potential decline after April. 3. Supply-Demand Balance in the Secondary Aluminum Market. Aluminum Scrap Supply-Demand Balance. Increased imports of aluminum scrap are filling market gaps, potentially balancing aluminum scrap supply and demand. The analysis of the annual aluminum scrap balance (2023-2027E) was conducted from perspectives including domestic new material, domestic old material, imports (aluminum scrap + remelting ingots), secondary aluminum alloy demand, remelting billet demand, secondary aluminum plate/sheet and strip demand, and other demands (cables, aluminum powder, etc.). Secondary Aluminum Alloy Supply-Demand Balance. Slowing capacity release combined with a slight increase in demand maintains a tight balance in the secondary aluminum alloy market. 4. Secondary Aluminum Market Price Outlook and Methodology Introduction. ADC12 Price Trend. ►SMM Analysis: In terms of A00 prices, domestic supply in 2025 is gradually approaching its ceiling, with production growth narrowing to around 2.1%. Meanwhile, the development of new energy and other sectors continues to drive primary aluminum consumption, although traditional construction sector aluminum use is expected to decline. SMM forecasts a 1.5% increase in aluminum consumption for the full year of 2025, maintaining a tight supply-demand balance. Recent unexpected tariff policies have sustained a bearish trading sentiment, putting pressure on future prices. For ADC12, the aluminum scrap market remains tight, and more comprehensive policies may increase cost pressures for companies. Downstream consumption is growing slightly, but the demand rebound in March-April fell short of expectations, intensifying cut-throat competition and dragging down ADC12 prices. On the supply side, new capacities in 2025 continue to expand, increasing supply pressure, while imports may decline, reducing their impact on domestic prices. Overall, aluminum scrap costs still strongly support ADC12 prices, but rising supply and weaker-than-expected demand may limit price increases. SMM strictly adheres to IOSCO price collection standards, facilitating international clients' use of prices. The International Organization of Securities Commissions (IOSCO) is an international cooperative organization of securities and futures regulatory bodies. SMM releases price points through a comprehensive price collection system and price assessment methodology. SMM Secondary Aluminum Price System. SMM secondary aluminum prices cover aluminum scrap and quotes from three major downstream sectors. • Aluminum Scrap: Aluminum scrap prices broadly cover major production and consumption regions in China, involving multiple categories, as well as overseas imports and imported remelting ingot quotes. • Remelting Billet: Covers multiple regions and various models. • Secondary Aluminum Alloy: Common domestic and international alloy grades, such as ADC12, A380, etc. • Secondary Aluminum Plate/Sheet and Strip: Quotes for 1, 3, 5, and 6-series secondary aluminum plate/sheet and strip. SMM ADC12 Price Formation. Click to view the AICE 2025 SMM (20th) Aluminum Industry Conference and Aluminum Industry Expo Special Report.

Recently, the daily performance of SHFE copper has not been outstanding, but the futures price has been steadily climbing, continuously refreshing its stage highs, and is now not far from its historical peak. What has enabled copper prices to be so stable? Is the "engine" behind it still powerful? The US Tariff Hike Expectation on Copper Continues, Driving Domestic Market with Strong US Copper Performance The anticipation of the US imposing tariffs on imported copper can be traced back to early February, when the US announced plans to impose a 25% tariff on steel and aluminum products, sparking market expectations that the US might subsequently impose tariffs on copper. This would increase the import cost of US copper and potentially push up US inflation. As a result, US copper prices have been significantly stronger than LME and SHFE copper prices, although the market initially expected the tariff rate on copper to be around 10%-15%. Later, the new US President signed an executive order directing the Department of Commerce to investigate whether copper imports and foreign copper production pose risks to the US economy and national security. Some officials hinted that the US tariff on copper could reach 25%, significantly higher than previous expectations, which would further increase future copper import costs. The center of US copper prices continues to rise, and the premium over LME copper has recently stabilized above $1,000. Mid-week, there were reports that the US government is rapidly conducting a review, and the US might impose tariffs on imported copper within weeks, several months earlier than expected. The US copper rally reignited, hitting a high of $5.374, a record since its listing, and the premium over LME copper also reached a historical high. The exceptional strength of US copper has created more arbitrage opportunities and boosted SHFE copper prices. Additionally, in anticipation of potential high tariffs, copper from around the world has been flowing into the US recently, leading to a continuous decline in LME copper inventories and persistently high cancellation rates. Meanwhile, domestic refined copper exports in February showed signs of recovery, which might reduce domestic supply and also support SHFE copper prices. Currently, the premium of US copper over LME copper remains high, indicating that the market is still trading on related expectations. However, the recent pullback in US copper prices suggests that as the tariff policy approaches implementation, market divergence has increased, and uncertainty has also risen. Caution is needed regarding the potential impact of sentiment pullback and possible expectation gaps after the policy is implemented. Tight Ore Supply Extends to Smelting Sector, Focus on Domestic Smelter Operations During Maintenance Season The long-term contract processing fees agreed between domestic smelters and overseas miners at the end of last year were only slightly above $20/dmt, already hinting that the tight supply of domestic copper ore would continue this year. From the production guidance of major overseas miners for 2025, the new copper ore production is also lower than previous expectations. Since the beginning of this year, the spot processing fees for domestic copper concentrates have continued to decline, falling into negative territory in early February and failing to stabilize, instead continuing to drop, recently reaching below -$20, repeatedly setting record lows. Under such extremely low processing fees, domestic smelters face increasing production pressure, and the profits from long-term contract benchmarks are also very limited, exacerbating the difficulties for smelters. Mid-month, news from Tongling indicated that its smelters have taken measures such as production cuts, early and extended maintenance, and unplanned major repairs, leading to expectations of reduced domestic refined copper supply, which once boosted copper prices. Recently, there have been many disruptions in the ore sector. Early last week, Freeport Indonesia announced that it had obtained an export permit for 1.27 million mt of copper concentrates, and further attention is needed on whether Indonesian copper ore exports to China will increase. The restart of First Quantum's Cobre Panama mine, which the market is closely watching, remains difficult. Regardless, as of now, the negative spot processing fees for copper concentrates continue, and Q2 is traditionally the period for concentrated maintenance of domestic smelters. Further attention is needed on the trend of processing fees and the maintenance schedules and production arrangements of other smelters. If more supply disruption news emerges, copper prices will still have upward momentum. Compared to domestic smelters, overseas smelters have higher costs, and some companies are facing tight cash flow. Recently, Glencore announced that its Altonorte smelter in Chile has declared force majeure on copper shipments, and it is reported that the smelter has suspended production. Chile is one of the main sources of US copper imports, and with global copper flowing into the US, supply disruptions from Chilean smelters could lead to tighter copper supply and demand in other regions. Domestic Refined Copper Social Inventory Declines, but the Pace of Decline Slows "Golden March and Silver April" is traditionally the peak demand season for the domestic copper market, and with recent favorable domestic policies and a stable start to the national economy, as an industrial base metal, domestic refined copper social inventory has been continuously declining since early March. Along with the continuous rise in copper prices, the decline continues, and current social inventory levels are lower than the same period last year. However, it is worth noting that the decline in inventory is not only due to downstream rigid demand but also to increased exports from smelters. As mentioned earlier, overseas copper prices have been relatively stronger than domestic prices recently, and there is a trend of copper flowing into the US, leading to increased export momentum from domestic smelters. Therefore, the decline in inventory cannot be entirely attributed to robust downstream demand. Recently, SHFE copper has been on a continuous upward trend under multiple factors, with futures prices steadily breaking through the 80,000 yuan mark. High prices have made downstream procurement more cautious, and spot prices have shifted from a slight premium to a slight discount, with the price difference between primary metal and scrap widening, potentially increasing the substitutability of copper scrap consumption. The latest institutional data shows that the decline in domestic refined copper social inventory has slowed, and even SMM data shows a slight increase in social inventory compared to Monday. The acceptance of high prices by downstream companies still needs attention. Overall, the expectation of the US imposing tariffs on imported copper has made US copper prices exceptionally strong, greatly driving SHFE copper prices. The copper market's own supply and demand fundamentals also provide strong support, with tight ore supply already affecting smelters, and downstream demand remains resilient during the peak season. Copper prices have been steadily breaking through. Now, as the tariff policy is about to be implemented, market uncertainty has increased, with US copper prices consolidating at high levels and SHFE copper prices pulling back. However, unless the US tariff on copper is significantly lower than expected, copper prices are still more likely to rise than fall.

This week, the ferrous metals series showed a trend of first declining and then rebounding. On the news front, a flurry of "short articles" was released, reporting that Shanxi may represent state-owned coal mines in reducing this year's task volume, and that detailed rules for crude steel production cuts may soon be officially issued. The market's bullish sentiment quickly surged...