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.

According to an SMM survey, the total building materials social inventory buildup slowed slightly this period. As of July 9, 2026, SMM building materials social inventory stood at 5.5594 million mt, up 74,200 mt WoW, an increase of 1.35%.

According to an SMM survey, the total building materials social inventory buildup slowed slightly this period. As of July 9, 2026, SMM building materials social inventory stood at 5.5594 million mt, up 74,200 mt WoW, an increase of 1.35%.

In H1 2026, the aluminum scrap market faced the dual pressures of tightening policies and weak demand, which weighed on production growth. Coupled with falling primary aluminum prices, an early indicator of a "high opening, low ending" pattern for the year had already emerged. 1. Price Difference Between Primary Aluminum and Scrap In H1 2026, the primary-scrap price difference went through four phases: starting at lows, rapidly widening, consolidating at highs, and then sharply narrowing, falling to a multi-year low by end-June. Phase 1: The price difference was at a relatively low level at the start of the year, with the Shanghai machinery aluminum tense scrap spread ranging between 2,267 and 2,690 yuan/mt. Before Chinese New Year, downstream enterprises gradually entered their holiday break, terminal restocking willingness was low, and the market was marked by "prices without substantial trading." Phase 2: After the holiday, scrap yards gradually resumed operations. Coupled with the US-Iran geopolitical conflict driving up primary aluminum prices sharply, A00 aluminum prices surged from around 23,100 yuan/mt to 25,590 yuan/mt. Aluminum scrap followed the uptrend but at a slower pace, causing the primary-scrap price difference to widen passively. On March 12, the Shanghai machinery aluminum tense scrap spread hit its H1 peak of 3,848 yuan/mt, while the aluminum extrusion scrap spread reached 3,338 yuan/mt. Phase 3: Primary aluminum prices pulled back from highs. Scrap aluminum, affected by policy compliance requirements, saw tighter supply of invoiced material and thus declined by a smaller margin, allowing the price difference to gradually narrow from elevated levels. Moreover, during the "Golden March and Silver April" peak season, demand fell short of expectations, and downstream scrap utilization enterprises mainly purchased as needed. Phase 4: In late June, A00 aluminum prices accelerated their decline, but scrap aluminum showed resilience due to cost support from the reverse invoicing policy, resulting in a rapid narrowing of the price difference. As of July 7, the Shanghai machinery aluminum tense scrap spread stood at 2,080 yuan/mt, and the aluminum extrusion scrap spread had narrowed to 1,588 yuan/mt. Some cast aluminum alloy producers had already begun to consider substituting A00 aluminum ingots for scrap. 2. Scrap Yard Inventories and Warehouse Withdrawals At the start of the year, after environmental protection-driven production restrictions were lifted in central China, inventories of wrought aluminum scrap approached saturation. However, downstream enterprises had extremely low willingness to stockpile due to high aluminum prices, and some planned to shut down early. The overall domestic scrap market showed resistance to high prices and a "price without market" situation, with scrap yard withdrawals continuing to decline alongside downstream production cuts. Around the Chinese New Year period, scrap yards and scrap utilization enterprises gradually closed for the holiday. Outbound shipments were completely suspended, with only a small amount of delayed arrivals contributing minor inbound volumes, and market trading activity was nearly frozen. After the holiday, as scrap yards fully resumed operations, the release of supply increased somewhat. Downstream restarts accelerated, and restocking demand was slowly released. However, constrained by the reverse invoicing policy, overall trading remained relatively sluggish, with withdrawals dominated by small, need-based orders. Meanwhile, at high aluminum prices, scrap yards held back from selling, and warehouse inflows rose with climbing scrap production, causing social inventories to shift from destocking to accumulation. Following the crackdown on invoice-related irregularities and the tightening of the reverse invoicing policy, YoY inflows at mainstream yards in some regions declined, and inventories showed a mild buildup trend. In contrast, inventories of aluminum tense scrap actually decreased. Over the same period, downstream sectors entered the traditional consumption off-season. Operating rates at scrap utilization enterprises stayed low, end-user orders lacked momentum, and the procurement pace turned more conservative. 3. Policy Since the "reverse invoicing" policy was rolled out in 2025, its enforcement was continuously tightened in H1 2026, but local implementation standards diverged significantly — regulatory oversight was relatively stringent in Anhui, Jiangxi, Hubei, and other regions. Some provinces saw the cancellation of tax refunds and intensified tax audits. Shandong also saw reports that reverse invoicing would be suspended from July, with the overall tax burden reaching up to 10.5%. This policy environment has directly led to persistently high tax compliance costs in the aluminum scrap recycling segment. Moreover, under the invoice-based economy norms, traders' invoicing quotas generally declined, causing a structural shortage of compliant invoiced scrap cargoes and notably tightening aluminum scrap liquidity. For scrap utilization enterprises, the impact has propagated along a chain of "tighter raw materials/rising costs — production cuts/suspensions — substitution risks": first, rising prices of invoiced raw materials directly pushed up procurement costs; subsequently, many small and medium-sized scrap utilization enterprises in regions such as Anhui, Jiangxi, and Hubei suffered losses and cut or suspended production; ultimately, the price difference between primary metal and scrap narrowed rapidly to historical lows as aluminum scrap held firm while primary aluminum fell, sharply eroding the cost advantage of scrap over primary aluminum. Some cast aluminum alloy enterprises are already considering using A00 aluminum ingots to replace aluminum scrap in production, posing a risk that the market demand base for aluminum scrap could be eroded. 4. Aluminum Scrap Production In terms of total volume, China's cumulative aluminum scrap production in January-June 2026 was 4.2928 million mt, up approximately 11.58% YoY from 3.8472 million mt in the same period of 2025. January production stood at 765,700 mt, surging 48.97% YoY, primarily due to the later Chinese New Year, leading to far more effective production days than the same period last year, coupled with front-load orders caused by the phase-out of auto industry policies. Affected by the Chinese New Year break, February production seasonally pulled back to 541,200 mt, but still grew by 10% YoY. March-April entered the traditional peak season, with production rebounding to 753,400 mt and 781,200 mt, posting YoY growth of 5.14% and 12.81%, respectively. The peak of the season was in April, and capacity release and the pace of work resumption remained normal. However, May production pulled back to 739,300 mt, with YoY growth narrowing to only 4.13%, indicating that the squeeze from the reverse invoicing policy on small and medium-sized scrap utilization enterprises began spreading from isolated cases to a broader scale. This trend accelerated in June, as production further dropped to 712,000 mt, turning negative YoY at -1.4% and down 3.69% MoM from May, making it the only month in H1 with negative YoY growth. The key reasons for the June decline were: the rising compliance costs caused by the reverse invoicing policy had already driven many small and medium-sized scrap utilization enterprises in Anhui, Jiangxi, Hubei, and other areas into losses and production cutbacks, while the price spread between primary metal and scrap narrowed to historical lows, sharply diminishing the cost advantage of aluminum scrap. This dampened collection enthusiasm and caused a supply contraction at the source. Therefore, beneath the surface of "total volume growth but a front-loaded, then decelerating pace" in H1 aluminum scrap production, the reality is that the policy shock is rapidly transmitting from the cost side to the supply side, and the downward pressure on H2 production cannot be underestimated. 5. Aluminum Scrap Imports China’s cumulative aluminum scrap imports from January to May 2026 stood at approximately 849,300 mt, edging down 0.84% YoY from 856,500 mt in the same period of 2025. On the surface, the total volume was almost flat, but the monthly trend showed a pronounced “high-then-low” pattern, and the driving force shifted from ample overseas supply in Q1 to a combination of multiple bearish factors in Q2. Q1 cumulative imports grew 3.9% YoY, with Thailand as the largest source country maintaining steady shipments. At the beginning of the year, relatively ample overseas aluminum scrap supply and active stockpiling by domestic secondary aluminum enterprises together supported the high imports. Entering Q2, the situation took a sharp turn for the worse: April imports were 171,000 mt, down 10.4% YoY, and May imports further dropped to 152,000 mt, down 4.8% YoY and 10.9% MoM, forming a contraction pattern of declining volumes and prices. The bearish factors behind this were multidimensional and mutually reinforcing. First, the US-Iran geopolitical conflict drove LME aluminum prices sharply higher, and overseas spot aluminum scrap prices rose accordingly. The overall landed cost for domestic import traders was significantly higher than domestic aluminum scrap prices, and the persistent inversion of the price spread between Chinese and overseas markets directly dampened procurement enthusiasm. Second, high energy prices in Europe intensified competition among local secondary aluminum enterprises for aluminum scrap raw materials, and shipments to China from traditional source countries such as the UK, Spain, Belgium, and France all pulled back to varying degrees. A more far-reaching impact came from policy tightening in exporting countries: the UAE imposed a four-month temporary ban on aluminum scrap exports starting June 3, and the EU also plans to impose an additional 15% tariff starting September. Both factors tightened the availability of high-quality scrap in the Asian region from both immediate and expected aspects. In addition, aluminum scrap imports typically have a shipping lead time of 1-3 months. The significant reduction in purchases by traders in Q2 will be reflected in landing data in Q3, creating a “lagged impact.” Overall, although the total imports from January to May only edged down slightly, the driving structure has reversed from “stable volumes and rising prices” in Q1 to “declining volumes and prices” in Q2. Moreover, the contraction in overseas supply has only just begun to materialize, and the import outlook for H2 faces greater downward pressure. 6. H2 Outlook The aluminum scrap market is expected to continue consolidating on a subdued note in H2, but with significant bottom support. The price difference between primary metal and scrap has narrowed to a historic low, and the reverse invoicing policy constraint continues to establish a floor for aluminum scrap prices. If primary aluminum prices stabilize and rebound, there is room for a slight recovery in the spread, but the extent is limited; if primary aluminum continues to decline, the substitution effect of aluminum scrap will materialize at a faster pace, putting further pressure on the spread, and an extreme scenario of price inversion between scrap and primary aluminum may even emerge. The reverse invoicing policy is unlikely to see substantive easing in the near term, and the tightness of compliant, invoiced supply is expected to persist. Close attention should be paid to the policy implementation standards in newly joined provinces such as Shandong, changes in local tax inspection intensity, and whether there will be a window for optimizing and adjusting policy details. Overall, the core tension in the aluminum scrap market in H2 remains the tug-of-war between "supply contraction driven by policy tightening" and "consumption weakness caused by sluggish demand." Close attention also needs to be paid to progress in US-Iran negotiations and navigation conditions in the Strait of Hormuz, the pace of aluminum scrap arrivals from outside China and enforcement of the UAE ban, the compliance progress pace of the reverse invoicing policy and differences in local implementation, changes in aluminum ingot inventories, and when the inflection point for secondary aluminum alloy ingot inventory will appear. [Data source statement: Data other than public information is derived from public information, market communication, and SMM's internal database models, processed by SMM for reference only and does not constitute decision-making advice.]

Nickel Ore " Indonesia Officially Issues Presidential Decree Requiring Designated State-Owned Enterprises to Monopolize Strategic Resource Exports Starting This June " 1. Price Dynamics and HMA Revisions The Indonesian nickel ore price remained stable this week. The Ministry of Energy and Mineral Resources (ESDM) has officially released the Nickel Mineral Benchmark Price (HMA) for the second half of May 2026. Nickel HMA: $18,849.3/dmt (up $1047.15 or 5.88% from $17,802.14 in early May). Cobalt HMA: $55,854/dmt. Iron Ore HMA: $1.58/dmt. Chrome Ore HMA: $6.37/dmt. Current port-delivered prices for 1.6% grade pyrometallurgical ore (saprolite) stand at $77.8-80.8/wmt. In contrast, 1.2% grade hydrometallurgical ore (limonite) is priced at approximately $28-33/wm.. 2. Supply-Demand Fundamentals and Weather Impacts For pyrometallurgical ore, unseasonal, abnormally heavy rainfall in the Central and South Sulawesi regions (Morowali and surrounding mining areas) has severely disrupted land transportation and barge transshipment. A series of micro-earthquakes (reaching up to magnitude M$1.9$) that occurred near Morowali between May 17 and 18 further exacerbated this impact. The combination of highly saturated soil moisture and minor crustal tremors has significantly increased the risk of landslides and slope instability, forcing mines to slow down their extraction and heavy-truck transportation pace for safety reasons. Therefore, even though the approval rate of regulatory quotas (RKAB) has reached approximately 90%, the spot supply of high-grade ore remains tight. To cope with exorbitant costs and tight supply, smelters are actively adopting cost-reduction strategies. These include blending low-grade ores into raw materials to lower the overall grade, promoting a unified premium pricing model of "HPM + USD $7–$10/wmt," and implementing standardized benchmarks for the chemical specifications of pyrometallurgical ore (Cobalt 0.05%, Iron 20%, Chrome 1%) to eliminate additional premiums for individual ore components. Meanwhile, the hydrometallurgical nickel ore market continues to suffer a severe disconnect from official pricing. The price of low-grade hydrometallurgical ore is under severe pressure and has completely failed to follow the upward trend of the new HPM. This price depression is primarily driven by the dual contraction of smelter operating rates and immediate raw material demand, with the core trigger being a potential production cut in Mixed Hydroxide Precipitate (MHP) caused by a sulfuric acid supply shortage in May. Against a backdrop of relatively stable inventory levels, MHP refineries are leveraging this low-capacity operating environment to aggressively suppress procurement bids, causing hydrometallurgical ore prices to continue hovering at low levels. 3. SMM Internal Estimates The new pricing formula has led to increased price divergence and amplified volatility, particularly influenced by higher associated cobalt content in certain ores. SMM calculations show that the new HPM for 1.2% grade limonite is approximately $49.95, significantly higher than current market assessments. The new HPM for 1.6% grade saprolite is $70.83; the inclusion of higher cobalt content in the new formula has markedly amplified price fluctuations. While actual market transaction prices currently remain above this benchmark, the gap is steadily narrowing. 4. Regulatory Quotas (RKAB) and Market Outlook According to the ESDM, RKAB approvals for 2026 have reached approximately 90%. SMM statistics indicate that the total approved quota for Indonesian nickel ore stands at roughly 240 million wmt. The macroeconomic and policy focus of the market has recently shifted, primarily concentrating on the following two major export and contract regulatory policies: DSI's Full Takeover of the Export Mechanism: The Indonesian government has confirmed that starting January 1, 2027, DSI will fully take over the export business of coal, palm oil, and ferroalloys. This policy will facilitate a smooth transition of the export mechanism in two phases. Since ferroalloys (including ferronickel, NPI, etc.) fall within the scope of this takeover, the market is closely evaluating the impact of this transition period on the export logistics and compliance costs of Chinese-funded smelters. Crackdown on Under-Invoiced Long-Term Contracts: The Indonesian government emphasized that it will honor existing, valid long-term export contracts to maintain commercial credit. However, at the same time, the government will strictly investigate and punish long-term contracts suspected of "under-invoicing" (low-price customs declarations). It is reported that relevant Indonesian departments will soon hold consultations with major industry associations to ensure a smooth policy transition while plugging loopholes that lead to tax revenue losses from underpricing. Nickel Pig Iron " Supply-Demand Price Gap Widens; Short-Term Prices to Fluctuate within a Range " The average price of SMM 10-12% NPI average price fell by RMB 5.7 per nickel unit week-on-week to RMB 1140.3 per nickel unit (ex-works, tax included), while the Indonesia NPI FOB index dipped by USD 1.37 USD per nickel unit to an average of USD 146.52 per nickel unit. Downstream purchasing sentiment dropped even more visibly, intensifying the divide in market mindsets between buyers and sellers. On the supply side, existing NPI production cutbacks, coupled with recent disruptions from Indonesian export policy updates, have gradually tightened spot availability. Consequently, upstream producers are holding back cargo to defend their asking prices, generally keeping their offers firm. Sellers only slightly softened their quotes under the weight of weak futures markets, and their willingness to offload cargo at lower price levels remains low. This expectation of tighter market supply provides a solid floor for prices. On the demand side, pressure remains acute. The stainless steel market lacks upward momentum, forcing steel mills to adopt a highly cautious procurement stance centered strictly around hand-to-mouth restocking. Furthermore, as the price-to-performance advantage of stainless steel scrap expands, downstream buyers are pushing hard for discounts. Target buying prices remain heavily clustered between RMB 1,120 and 1,130/mtu, leaving a massive spread against upstream asking prices that makes reconciling the two sides very difficult. Market Outlook: While expectations of tightening supply will support spot prices, the weak futures market and competitive pricing from alternative raw materials will continue to cap upside gains. Accordingly, high-nickel pig iron prices are expected to exhibit a high-level, range-bound volatile trend next week.

On April 24, the SMM Imported Copper Concentrate Index (weekly) stood at -81.44 USD/dmt, down 2.83 USD/dmt from the previous reading of -78.61 USD/dmt. The deeply negative TC reflects the tightness in the global copper concentrate market, which has already shifted from market expectations to an actual rigid contraction in supply. In the first quarter of 2026, the world's leading mining companies frequently revised down their production guidance, with supply-side disruptions far exceeding early-year forecasts. Freeport significantly lowered its full-year 2026 copper production forecast from 1.542 million tonnes to approximately 1.406 million tonnes, with an expected recovery rate of only 65%, due to slower-than-expected mine recovery at its Grasberg site in Indonesia, affected by mudslides and ore moisture. In addition, road blockades caused by strikes at BHP's Escondida and Zaldivar mines have led to actual production impacts that remain to be monitored. According to SMM exclusive data, the global copper concentrate deficit in 2026 is estimated at 317,000 metal tonnes, a situation that may ease somewhat in 2029. In stark contrast to the persistently falling TC, domestic smelter operating rates remained high in Q1 2026. According to SMM data, China's electrolytic copper output in March 2026 reached 1.2061 million tonnes, up 5.58% month-on-month and 7.49% year-on-year. In Q1 2026, total electrolytic copper output was 3.5278 million tonnes, up 4.60% quarter-on-quarter and 10.45% year-on-year. SMM survey data shows that 11 smelters have confirmed maintenance schedules for Q2 2026. This means that domestic electrolytic copper output is expected to decline in Q2, with spot supplies likely tightening temporarily in May and June. However, some smelters have reported that due to high sulfuric acid prices, maintenance completion times may be brought forward. Sulfuric acid is currently the most important by-product revenue source for the copper smelting industry. According to SMM data, on April 24, 2026, China's copper smelting acid index stood at 1,660.5 RMB/ton, up 31.5 RMB/ton from the previous period. As sulfuric acid revenues have risen steadily from 890 RMB/ton at the start of 2026 to 1,660.5 RMB/ton in April 2026, based on the co-production of 3–4.5 tonnes of sulfuric acid per tonne of electrolytic copper, sulfuric acid income can now cover the copper concentrate procurement cost and part of the processing cost for smelters. The upward slope and magnitude of this increase exceed the deterioration in spot TC. The substantial boost in sulfuric acid profitability allows smelters to tolerate lower TC, creating a cycle of "higher sulfuric acid prices, lower TC." Meanwhile, rising gold and silver prices have further expanded smelters' comprehensive profit margins. Although the copper smelting segment is deeply loss-making, driven by the hefty profits from sulfuric acid, gold, and silver, domestic copper smelters have been able to maintain high operating rates without large-scale production cuts caused by deeply negative TC. Additionally, about 20% of the world's electrolytic copper comes from hydrometallurgical processes, with the DRC and Chile together accounting for nearly 80% of that. Hydrometallurgical copper production consumes large amounts of sulfuric acid, and sulfur is a key raw material for sulfuric acid. The current disruption in the Strait of Hormuz has cut off approximately 50–60% of Middle Eastern sulfur shipments by sea, pushing up sulfur and sulfuric acid prices. Worth noting is that as late April 2026 progresses, sulfuric acid export restrictions combined with increased domestic production have shown signs of price softening. If sulfuric acid prices continue to decline, it will directly squeeze the comprehensive profit margins of domestic smelters. At that point, the dual pressure of persistently low TC and falling sulfuric acid prices could trigger real production cuts on the smelting side. Although gold and silver prices do not directly determine TC trends, their macro-pricing logic as part of the non-ferrous metals sector is worth attention. The market has largely priced in the expectation that the Federal Reserve will not cut interest rates at all in 2026, with the first rate cut possibly delayed until July 2027. For copper, a delayed rate cut means no near-term easing of macro liquidity, but copper's core pricing logic remains the ongoing tug-of-war between tightening supply on the mining side and rigid demand. In other words, precious metals are under pressure, but industrial metals' pricing center remains in real supply-demand fundamentals, which explains why weaker gold and silver prices have not dragged copper prices lower. According to SMM, for Chinese smelters, domestic copper concentrate spot TC transactions are feasible in the range of -81 USD/dmt to -88 USD/dmt. Some holders have attempted to offer TC at -100 USD/dmt, while some smelters are willing to accept deliveries at the lower end around -90 USD/dmt. The downward trend in TC has not yet stopped, and smelter purchasing activity may have weakened slightly, but not significantly. Key areas to watch moving forward: Sulfuric acid side: The price trend will depend on the interplay of multiple factors. First, China's sulfuric acid export policy direction: if export restrictions continue, domestic sulfuric acid supply will be relatively abundant, and prices may fall from highs; if exports are temporarily allowed, overseas hydrometallurgical copper supply risks will rise, but domestic sulfuric acid prices may find support. Second, the recovery of sulfur supply: when shipping through the Strait of Hormuz returns to normal will directly affect the pace at which Middle Eastern sulfur can supplement global markets. Third, seasonal demand changes for downstream products such as phosphate fertilizers will also cause periodic price volatility for sulfuric acid. Mining side: Focus on the progress of the Grasberg conversion project, labor negotiation results at Chilean mines, and logistics stability at mines such as Las Bambas in Peru. Any new supply release will effectively ease TC pressure. Macro side: Monitor the Federal Reserve's monetary policy path, the U.S. dollar index, the actual driving effect of China's pro-growth policies on copper consumption, and whether the growth rate of copper demand in global new energy sectors is slowing marginally.

War damage to Iran’s key steel mills threatens ~14 Mt of capacity, sharply reducing crude steel output and exportable supply. While domestic demand remains relatively stable, energy shortages and logistics disruptions amplify losses, tightening regional supply, supporting semi-finished steel prices, and reshaping trade flows.

[Strong Macro Front but Weak Fundamentals, Silicon Metal Market Stagnant with Fluctuations]: This week, spot silicon metal prices continued to hold steady with consolidation, while futures prices fluctuated near 8,600-8,800 yuan/mt. As of January 15, SMM oxygen-blown #553 silicon in east China was at 9,200-9,300 yuan/mt, #441 silicon at 9,300-9,500 yuan/mt, and #421 silicon at 9,500-9,800 yuan/mt, flat WoW. In the futures market, the most-traded contract closed at 8,730 yuan/mt on Thursday, down 25 yuan/mt from Monday. Silicon metal fundamentals remained weak, with both supply and demand declining. Supply side, new production cuts were added at some silicon furnaces in Sichuan and Inner Mongolia this week, with a major plant in Sichuan completing cutbacks, driving the local operating rate down to 0%; the overall operating rate trended weaker. Demand side, reduction expectations were mainly in the polysilicon sector. Affected by poor downstream demand expectations, coupled with continued inventory accumulation at silicon enterprises, market sentiment was neutral or slightly negative, and downstream procurement activity was moderate.

On November 18th, Rio Tinto announced it will reduce alumina production at its Yarwun refinery in Queensland by 40% starting in October 2026, a move aimed at extending the plant’s operating life to 2035. The company said constructing a second tailings facility would require a level of investment that is currently not economically viable. The scale-back will trim roughly 1.2 Mt of annual alumina output—about 3% of ex-China supply—though Rio confirmed that customer deliveries will not be affected. The reduction will impact around 180 jobs at Yarwun, which employs approximately 725 people. The decision comes amid persistently high energy and labour costs in Australia, while global alumina prices have fallen to two-year lows. Analysts note that rising Indonesian supply continues to pressure margins for Australian processors. Rio’s bauxite mines and aluminium smelters will continue operating at full capacity. The company will determine whether to market excess bauxite from Weipa or reduce mine output once the cutback takes effect.

Recently, bidding and annual long-term contract negotiations in the African refined-copper market have heated up. Driven by shifts in the global supply-demand structure, geopolitical tensions and tariff policy shocks, intense bidder competition has pushed the market into an early phase of resource scrambling and contractual bargaining. Especially from Q3 2025 onward, clear signals have emerged — such as upward revisions to FCA long-term contract premium in the DRC and Zambia, and sharp spikes in tender bids for spot lots.