Entering Q3, the battery-grade nickel sulphate spot market appears to be "losing vitality," with reduced transaction frequency and relatively weak price trends. SMM believes this is primarily driven by a combination of three factors: weakening cost support, a gradually loosening supply-demand pattern, and a shift in market structure. This article will discuss these three factors in detail. I. Cost Side: Weakening Nickel Prices and Raw Materials Together In terms of nickel prices, August marks the period for the release of additional quotas in Indonesia, which has tempered market expectations of a significant shortage of Indonesian nickel ore. Coupled with the ongoing "shadow" of macroeconomic interest rate hikes, nickel prices have weakened. On the MHP payables front, following the concentrated arrival of sulphur in Indonesia, the supply of Indonesian intermediate products is expected to continue rising. According to SMM data, Indonesia's MHP supply-demand balance turned positive in July for the first time in a month. Meanwhile, downstream nickel and cobalt salt prices (especially cobalt salts) remain relatively weak, and downstream players are under pressure from losses, showing lower acceptance of high payables. Consequently, MHP payables remain under pressure overall. The market availability of high-grade nickel matte remains tight, and its payables are expected to hold steady. With both nickel prices and raw material payables declining, the spot production cost of nickel sulphate in August is expected to weaken overall from a spot cost perspective. II. Supply Side: High Raw Material Flexibility, Production Schedules Expected to Rise Since Q2, although MHP production schedules fell sharply at one point, nickel sulphate supply levels remained relatively stable, and no prolonged undersupply emerged. In Q3, as intermediate product production schedules gradually recover, this trend is expected to become more pronounced. According to SMM data, while battery-grade nickel sulphate production in July dipped 2% MoM due to production cuts or maintenance at some salt plants, August output is expected to rise over 8% MoM, returning supply to high levels. Total battery-grade nickel sulphate production from January to August 2026 grew 33% YoY. Behind this steady output lies strong supply flexibility in nickel salt raw materials. In addition to the adjustments using refined nickel raw materials and the substitution between high-grade nickel matte and MHP discussed in previous articles, recycled materials have also contributed a significant supply scale for nickel sulphate this year. On the one hand, after China opened up imports of lithium battery black mass last year, recycled raw materials have been able to be imported steadily, providing incremental raw material for recycled nickel sulphate. On the other hand, as the scale of ternary battery decommissioning gradually expands, and with some companies launching new recycling projects this year, the overall supply scale of black mass in the industry has risen. According to SMM data, the output from pulverising scrap ternary batteries in July doubled compared to the same period last year, providing significant flexibility for nickel sulphate supply. III. Demand Side: NMC Demand Supports Overall Consumption Volume but Fails to Directly Drive External Spot Purchases NMC demand exceeded expectations this year, serving as a key reason nickel sulphate maintained a relatively high premium. Consumption of nickel sulphate by downstream enterprises is expected to remain elevated in Q3. On one hand, with the September-October peak season for auto sales approaching, top-tier downstream players hold favorable demand expectations for mid-to-high nickel materials, driving higher production schedules at associated precursor plants. On the other hand, overseas high-nickel orders secured by leading firms have also stayed at high levels, supported by robust demand in Europe and other regions and by installation rush strategies triggered by adjustments to battery cell export tax rebate policies. According to SMM data, demand for battery-grade nickel sulphate in the new energy sector rose 1.55% MoM in July and is expected to grow a further 0.9% in August. However, the top-tier precursor enterprises with relatively strong orders are highly integrated, with several possessing refined nickel production capacity and ample flexibility to adjust in-house nickel sulphate output. As a result, the downstream demand increase provides limited direct stimulus to spot nickel sulphate procurement. According to SMM data, the combined production schedule of the five leading integrated and semi-integrated enterprises rose 11% MoM in August, and in-house output can meet over 80% of their raw material needs, meaning the incremental demand for externally purchased nickel sulphate was not significant. IV. Market Structure: Expanding Long-Term Contract Scale Squeezes Spot Order Space A notable structural shift in the Q3 nickel sulphate market is the expansion in the scale of long-term contracts. SMM estimates show that monthly spot orders for nickel sulphate stood at roughly 3,500-4,500 mt in metal content in 2025 and Q1 this year. Against the backdrop of rising NMC demand, this scale has shrunk to around 2,000 mt in metal content in Q3. At the start of the quarter, spot orders were expected to gradually retreat from monthly just-in-time procurement to a supplementary role for long-term contracts in corporate purchasing strategies, with additional purchases made only when clear downstream demand increments or raw material supply disruptions occur. This has suppressed market activity in August and early September. Moreover, with no significant decline in nickel sulphate supply, downstream acceptance of spot prices remains generally low. The expansion of long-term contracts stems from two factors. First, the high volatility in nickel prices and raw materials this year has intensified decision-making pressure on enterprises for spot orders, prompting a tendency to lock in demand through long-term contracts. Second, after persistent overcapacity, few new entrants have emerged, and industry supply chains have stabilized, with upstream and downstream enterprises gradually forming steady cooperative relationships. In the long term, the overall scale of long-term contracts is still expected to trend upward. V. Market Outlook As mentioned above, the supply and demand of nickel sulphate spot orders has shifted from relative tightness in Q2 to a slight surplus. From August to early September, prices are expected to be generally in the doldrums; after the downstream demand for the 'September-October peak season' becomes clear in September, the spot order market activity may recover to some extent, driving a rebound in nickel sulphate prices.

In 2017, China used a hard “June 30” deadline to purge roughly 140 million tonnes of “ground-strip steel” (ditiaogang) capacity. But the furnaces did not disappear. Customs data tells the rest: after the ban, Southeast Asia's share of China's electric-furnace equipment exports climbed as high as 40.6%, and Indonesia's imports rose roughly 19-fold over eight years to become the world's No. 1 destination. The collapse of the State Audit Office tower in Bangkok sounded the first alarm.

[SMM Silicon-Based PV Morning Meeting Summary] Silicon metal: Yesterday, SMM oxygen-blown #553 silicon in east China was at about 9,100-9,200 yuan/mt, and #441 silicon was at about 9,200-9,400 yuan/mt, with the price center edging up WoW. In the futures market, the most-traded contract showed strength, with the most-traded SI2609 contract consolidating near 8,600 yuan/mt. Futures prices rose, which, combined with silicon enterprises’ reluctance to sell at low prices, reduced cheap supply in the silicon market. Suppliers’ offer centers firmed, while downstream users remained largely in a wait-and-see sentiment, resulting in subdued trading. Wafers: Market prices were 0.798-0.827 yuan/piece for 18X wafers, 0.896-0.915 yuan/piece for 210RN wafers, and 1.097-1.113 yuan/piece for 210N wafers. The upper end of the wafer price range inched up. Yesterday afternoon, a leading specialized wafer enterprise also suspended quoting, planning to increase prices by over 10%. As of now, three enterprises have stopped quoting or suspended shipments.

According to SMM data, artificial graphite anode material production in July maintained steady growth, up 6% MoM and a significant 70% YoY.

Under the EU Battery and Waste Battery Regulation, the digital battery passport system will come into force on February 18, 2027. Domestic manufacturers exporting lithium‑ion batteries to the EU will face stringent ESG compliance constraints. ESG compliance requirements raised by downstream enterprises have been passed to the upstream of China’s lithium‑ion battery industrial chain, covering tasks such as ESG data collection and supply‑chain due diligence. Relevant manufacturers have built data‑collection systems and driven suppliers to upgrade compliance to help the industrial chain adapt to new market rules. Meanwhile, balancing compliance standards with supply‑chain resilience, improving data‑governance mechanisms and safeguarding data security constitute common challenges for lithium‑ion‑battery practitioners.

[India] Indian HRC offers held at around 515 USD/tonne CFR Vietnam, against bids near 500 USD/tonne CFR, as weak downstream demand and competitive local supply kept Vietnamese buyers cautious. Indian mills resisted lower bids, supported by domestic HRC prices at around 598 USD/tonne (57,000 INR/tonne) EXW Mumbai. Export indications stood at 510-520 USD/tonne FOB India, while freight of 120-130 USD/tonne implied 630-650 USD/tonne CFR Europe, where a large Indian producer was heard to be active recently. Indian billet offers were around 455 USD/tonne FOB East Coast, versus domestic prices of 441 USD/tonne (42,100 INR/tonne) EXW Mandi Gobindgarh. Meanwhile, a deal for 20,000 tonnes of billets was heard at 450 USD/tonne FOB Indian Port for delivery in West Asia.

According to SMM, in July, the operating rate of copper cathode rod enterprises was 67.01%, down 1.7 percentage points MoM, up 0.84 percentage points from expectations, and up 0.5 percentage points YoY. Among them, the operating rate of large enterprises was 78.83%, medium-sized enterprises 48.73%, and small enterprises 58.05%. In July, the operating rate of copper cathode rod enterprises stood at 67.01%, down 1.7 percentage points MoM but up 0.5 percentage points YoY (the operating rate in July last year was 66.51%). Overall, copper prices sustained an upward trend in July, compounded by the persistently high premium on spot copper cathode earlier. As the market entered the traditional consumption off-season, downstream end-user orders were already weak; high copper prices further suppressed purchase willingness, causing new orders for copper cathode rod enterprises to keep weakening. Against this backdrop, many copper cathode rod plants voluntarily arranged maintenance and production cuts, the industry-wide operating level pulled back, and output of copper cathode rod declined. By downstream sector, the two major consumption areas of wire and cable and enamelled wire also bore the impact of high copper prices; enterprises grew more cautious in stockpiling and proactively controlled raw material inventory, while industry orders contracted in tandem, and overall demand exhibited a clear seasonal pullback. In July, days of raw material inventories for copper cathode rod enterprises stood at 2.04 days, while days of finished product inventories were 3.66 days. Copper prices kept rising this month, making enterprises generally more cautious in raw material procurement. Most adopted a strategy of purchasing as needed and restocking only for rigid demand, with days of raw material inventories up 0.1 days MoM. Meanwhile, sluggish downstream wire & cable and enamelled wire demand and lackluster production enthusiasm impeded finished product destocking, pushing days of finished product inventories up 0.22 days MoM. The operating rate of copper cathode rod enterprises is expected to be 64.75% in August. Looking ahead to August, the copper cathode rod operating rate is expected to decline 2.26 percentage points MoM to 64.75%, and drop 3.62 percentage points YoY. Copper prices stay high, downstream fear of high prices continues to ferment, wait-and-see sentiment in the market remains thick, new orders are unlikely to recover significantly, and the industry's August operating may continue to trend weakly. On the foreign trade side, imported copper premiums have pulled back. Affected by July orders falling short of expectations, some copper cathode rod enterprises lowered their quotes and accelerated the delivery pace of long-term contracts, which is expected to drive a MoM rebound in August exports. However, incremental new orders from outside China are limited, making it difficult to reverse weak domestic demand.

According to SMM, the operating rate of copper cathode rod enterprises in July was 67.01%, down 1.7 percentage points MoM, up 0.84 percentage points from expectations, and up 0.5 percentage points YoY. Among them, the operating rate of large enterprises was 78.83%, that of medium-sized enterprises was 48.73%, and that of small enterprises was 58.05%. In July, the operating rate of copper cathode rod enterprises was 67.01%, down 1.7 percentage points MoM and up 0.5 percentage points YoY (66.51% in July last year). Overall, copper prices continued to rise in July, coupled with the long-term high premium pattern of spot copper cathode earlier. The market entered the traditional consumption off-season, and downstream end-user orders were already weak; high copper prices further suppressed purchase willingness, leading to a continued weakening of new orders for copper cathode rod enterprises. Against this backdrop, many copper cathode rod plants proactively arranged maintenance and production cuts, the industry's overall operating level pulled back, and copper cathode rod output declined. By downstream sector, the two main consumption sectors, wire and cable and enamelled wire, also bore the impact of high copper prices. Enterprises became more cautious in stockpiling, actively controlled raw material inventories, and industry orders contracted simultaneously, with overall demand showing a clear seasonal pullback. In July, the days of raw material inventories for copper cathode rod enterprises were 2.04 days, and days of finished product inventories were 3.66 days. With copper prices rising continuously this month, enterprises were generally cautious in raw material procurement, mostly adopting a strategy of purchasing as needed and rigid restocking, with days of raw material inventories increasing by 0.1 days MoM. Meanwhile, demand from downstream wire and cable and enamelled wire was sluggish, production enthusiasm was insufficient, and finished product destocking was hindered, driving days of finished product inventories up by 0.22 days MoM. The operating rate of copper cathode rod enterprises in August is expected to be 64.75%. Looking ahead to August, the operating rate of copper cathode rod is expected to fall by 2.26 percentage points MoM to 64.75%, and decline by 3.62 percentage points YoY. Copper prices stayed high, downstream fear of high prices continued to ferment, market wait-and-see sentiment was strong, and new orders were unlikely to recover significantly. The industry's operating rate in August may continue the weak pattern. On the foreign trade front, imported copper premiums pulled back. Affected by July orders falling short of expectations, some copper cathode rod enterprises lowered their quotes and accelerated the delivery pace of long-term contracts. Exports in August are expected to rebound MoM, but the growth in new overseas orders is limited, making it difficult to reverse weak domestic demand.

DeepSeek V4 Pro triggered a global price war among large language models with its ultra-low pricing. OpenAI slashed prices by 80%, Anthropic pulled back from markets outside China, Microsoft is evaluating integration, and Nvidia’s share of the Chinese GPU market plunged from 95% to 8%. Chinese models accounted for 60% of total call volume on OpenRouter, leading US models for 14 consecutive weeks.

In accordance with the Measures for the Administration of Delivery Warehouses of Shanghai Futures Exchange and other relevant regulations, it is hereby decided that: 1. Approve the reduction of the approved storage capacity of copper futures at the storage location of Minmetals Wuxi Logistics Park Co., Ltd. at No. 1 Tangang Road, Huishan District, Wuxi City, Jiangsu Province, from 20,000 mt to 15,000 mt; the approved storage capacity of tin futures from 2,000 mt to 1,000 mt; and the approved storage capacity of stainless steel futures from 70,000 mt to 60,000 mt. 2. Approve the storage location of Minmetals Wuxi Logistics Park Co., Ltd. at No. 8 Xinsha Road, Machong Town, Dongguan City, Guangdong Province, to become a delivery warehouse storage location for copper futures, with an approved storage capacity of 5,000 mt and no regional premium. All relevant entities shall attach great importance and effectively carry out all tasks to ensure the normal and orderly progress of delivery operations. Hereby announce. Shanghai Futures Exchange August 10, 2026