[Middle East Geopolitical Risks Cool Down, Aluminum Prices Under Pressure in the Short Term] On the macro front, Trump announced the cancellation of the originally planned military strike against Iran, as negotiations mediated by relevant countries made progress, easing market concerns over an escalation of Middle East conflicts. High inventory levels in China remain the core factor suppressing significant price rallies. Additionally, weak trading performance in the spot market further limits the upside room for aluminum prices. In the short term, aluminum prices are expected to continue the pattern of LME outperforms SHFE, fluctuating at highs.

[China Domestic Iron Ore Brief] This week, the pre-tax acceptance price for 64-grade alkaline concentrate (dry basis) at mines and beneficiation plants in Shandong was quoted at 909, up 5. Steel enterprises raised prices accordingly. Most miners maintained normal production, with a few experiencing slight inventory buildup, while most sold output as it was produced. Local steel mills currently mainly purchased as needed. Hebei steel mills had a better purchasing pace than local steel mills. Low-grade resources from small mills and traders saw relatively good transactions, and overall market transactions were moderate. However, iron ore futures showed a relatively weak trend recently.

SMM May 18 update: During the morning session, the SHFE aluminum 2606 contract fluctuated downward, with the overall price center moving significantly lower compared to the previous trading day. Today, market purchasing sentiment remained weak. Affected by the sharp decline in aluminum prices, some sellers held back from selling, with strong sentiment to hold prices firm. Mainstream spot quotes ranged from SMMA00 minus 10 yuan/mt to the average price. Today, the east China market shipment sentiment index was 2.9, down 0.1 MoM; the purchasing sentiment index was 2.83, flat MoM. Today, futures aluminum prices continued to pull back. In the central China market, buying sentiment recovered somewhat, and downstream processing enterprises showed stronger purchase willingness. However, some suppliers adopted a wait-and-see attitude, and shipment sentiment weakened. Ultimately, mainstream transaction prices in the central China market ranged from a premium of 10 yuan to a premium of 30 yuan over the central China price, with a trend of continued strengthening. Today, the central China market shipment sentiment index was 2.82, down 0.01 MoM; the purchasing sentiment index was 2.29, up 0.03 MoM. Inventory side, aluminum ingot inventory in major consumption areas rose by 12,000 mt MoM today, with inventory buildup originating from Gongyi and Wuxi.

SMM, May 18: The most-traded SHFE lead 2606 contract opened at 16,429 yuan/mt during the session. From the early to mid-session, SHFE lead prices moved sideways within the range of 16,410-16,470 yuan/mt. Near the end of the session, prices edged up, touching a high of 16,490 yuan/mt, and finally closed at 16,475 yuan/mt, posting a small bullish candlestick, down 35 yuan/mt or 0.21%. After the delivery of lead ingots, the pressure of social inventory buildup gradually eased. On the supply side, primary lead enterprise production edged up last week, while secondary lead smelting operating rates declined slightly, presenting mixed factors on the supply end. The off-season trend in downstream consumption continued, with demand remaining weak. SHFE lead prices are expected to maintain a fluctuating trend in the short term. 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.

SMM May 18 News: Data Brief: As of Monday, May 18, SMM copper inventories in major regions across China decreased by 400 mt WoW to 242,900 mt, with total inventories up 103,700 mt compared to the same period last year (139,200 mt). Specifically, Shanghai saw continued inventory pullback—the only destocking region—due to the dual impact of tightening imported supply and declining domestic arrivals. Jiangsu saw overall stable domestic copper arrivals, but downstream procurement demand remained weak under the pressure of rising copper prices, resulting in a slight inventory buildup. Guangdong saw increased domestic arrivals, coupled with sluggish end-use consumption, leading to a concurrent inventory increase. Market outlook: Supply side, the pace of short-term import arrivals slowed down, while domestic arrivals saw some increase, gradually easing the overall tight supply situation. Demand side, as copper prices gradually pulled back, downstream enterprises' willingness to stockpile improved slightly, but overall market sentiment remained cautious, with most maintaining a wait-and-see purchase pace. Survey data showed that the copper cathode rod operating rate is expected to pull back to 60.84% this week, down 2.81 percentage points WoW. Considering overall supply-demand performance, the current market exhibits slightly looser supply while end-users maintain only just-in-time procurement, and social inventory is expected to show an inventory buildup trend in the short term.

[Easing China-U.S. Trade Tensions Combined with Ex-China Supply Gap — LME Outperforms SHFE in Aluminum Prices] The macro front received positive signals as China-U.S. trade negotiations yielded preliminary results. Both sides agreed to continue implementing prior tariff arrangements and to establish a Trade and Investment Council, which is expected to facilitate tariff reductions on certain products. The marginal easing of trade frictions is set to improve export expectations for aluminum semis and end-use products, providing bullish support for market sentiment. However, inventory at high levels in China remains the core factor suppressing significant price rallies. Coupled with weak spot market trading performance, this further limits the upside room for aluminum prices. In the short term, aluminum prices are expected to continue the pattern of LME outperforming SHFE, fluctuating at highs.

SMM May 15 update: Cobalt product prices remained generally stable this week, with only refined cobalt and cobalt chloride prices edging down slightly, though overall fluctuations were relatively small. Among them, cobalt chloride market activity declined further, with scarce inquiries becoming a common feedback... SMM compiled the spot price fluctuations of cobalt products this week, as follows: : According to SMM spot quotes, spot refined cobalt prices edged down 500 yuan/mt this week before stabilizing temporarily. As of May 15, spot refined cobalt was quoted at 421,500-428,500 yuan/mt, with an average price of 425,000 yuan/mt, down 0.12% from 425,500 yuan/mt on May 8. Fundamentals side, supply side, according to SMM, smelter quotes remained stable, while traders lowered the spot-futures price spread of mainstream brands to a premium of 7,000-8,000 yuan/mt to recoup funds. Demand side, downstream alloy and magnetic material enterprises continued purchasing as needed, strictly controlling raw material inventory levels. Price spread structure side, the metal price spread between refined cobalt and lower-priced cobalt salts continued to stay at a relatively low level, limiting enterprises' enthusiasm for producing refined cobalt through the re-dissolution process. In the short term, SMM expects refined cobalt prices to continue consolidating, with future upside still dependent on effective price boosts from cobalt salts. Cobalt salts ( and): : According to SMM spot quotes, spot cobalt sulphate prices continued to hold stable this week. As of May 15, spot cobalt sulphate remained steady at 93,200-95,800 yuan/mt, with an average price of 94,500 yuan/mt. According to SMM, on the cobalt sulphate supply side this week, mainstream brand quote centers remained in the 93,000-96,000 yuan/mt range. Boosted by the rebound in refined cobalt prices, some smelters and traders that had previously offered discounts to facilitate shipments raised their quotes slightly, and low-priced cargoes below 90,000 yuan/mt decreased significantly. Demand side, downstream enterprises still focused on digesting earlier inventory, with low enthusiasm for purchasing, and only a few with rigid demand restocked small volumes at lower prices. Notably, some Co3O4 enterprises increased their inquiry frequency recently, with purchasing sentiment showing signs of recovery. Production schedule side, both ternary and LCO enterprises saw restorative MoM growth in May production schedules. It is expected that as downstream restocking demand gradually releases going forward, cobalt sulphate prices are likely to see a phased rebound and recovery. : According to SMM spot quotes, cobalt chloride spot prices edged down by 100 yuan/mt at the beginning of the week and then stabilized. As of May 15, cobalt chloride spot prices stood at 114,000–117,000 yuan/mt, with an average price of 115,500 yuan/mt, down 0.09% from May 8. Spot market: According to SMM, cobalt chloride market activity further declined this week, with scarce inquiries being a common feedback. Supply side, some top-tier players notably slowed down their shipment pace recently, with liquidity pressure emerging and quotes slightly softening; meanwhile, small and medium-sized producers had already proactively lowered prices earlier due to capital recovery and shipment pressure, and their current quotes have gradually stabilized with extremely limited room for further reduction. Demand side, downstream Co3O4 enterprises, constrained by their own significant shipment pressure, showed weak willingness to purchase cobalt chloride; in contrast, cathode material and battery cell segments, due to continued inventory depletion, recently began to release some restocking intentions. Overall, the market still lacked directional breakthrough momentum. Although sporadic low-price transactions occurred, they were unlikely to substantially impact overall pricing, constrained by enterprises' performance targets, capital conditions, and shipment volumes. Currently, downward momentum is insufficient, and raw material costs provide relatively strong bottom support. Cobalt chloride market is expected to remain largely stable in the near term, with substantive changes potentially awaiting late May . : According to SMM spot quotes, Co3O4 spot prices continued to hold stable this week. As of May 15, Co3O4 spot prices remained steady at 360,000–367,000 yuan/mt, with an average price of 363,500 yuan/mt. Spot market: According to SMM, the Co3O4 market continued its previously sluggish pattern this week. Top-tier players slightly lowered their quotes, but cost support for Co3O4 remained effective, underpinned by periodically tight supply of cobalt intermediate products and firm cobalt chloride prices. Downstream LCO material enterprises continued to purchase as needed, restocking in small quantities mainly based on orders on hand, with market inquiry activity maintained at a moderate level. Looking ahead, end-use demand performance remains the key variable determining cathode material purchasing intensity. Given that market expectations for May are generally optimistic, attention should be paid to whether demand recovery can break the prolonged stable pattern and bring about periodic fluctuations. As for raw material cobalt intermediate products: According to SMM spot quotes, cobalt intermediate products (CIF China) spot prices held stable at 25.8–26.2 $/lb this week, temporarily unchanged from May 8. According to SMM, on the supply side, most suppliers held an optimistic outlook for the market, with offers continuing to hold firm above $26/lb. The demand side saw little change; as cobalt salt prices lacked upward momentum, the market maintained only small-volume purchasing as needed, with bid prices fluctuating around approximately $25.8/lb. Regarding shipments, DRC-origin cargoes remained stranded at South African ports and in overland transit. Only a few miners completed small-batch vessel bookings in April, with arrivals expected to begin in June; however, due to tight shipping capacity in Africa, the remaining large-volume cargoes may be delayed until July for concentrated arrivals. Looking ahead, as downstream orders gradually become clearer and restocking demand is progressively released, cobalt intermediate product prices still have room for upward recovery. On the news front, on May 13, Hanrui Cobalt released its investor relations activity record. When asked about the company's cobalt powder business, Hanrui Cobalt stated that the company is a major global cobalt powder supplier, ranking among the top three in global market share. It is currently steadily increasing the product share in high-end cemented carbide and battery sectors, with client recognition continuing to strengthen. Cobalt salt gross margins have been continuously improving, and as the market recovers, capacity is released, and the product mix upgrades, profitability is expected to gradually recover. Regarding the outlook for cobalt price trends in 2026, Hanrui Cobalt stated that cobalt price trends are influenced by multiple factors. From a supply and demand perspective, with the implementation of the cobalt export quota system in the DRC, the world's largest cobalt-producing country, cobalt supply has contracted significantly, and overall supply and demand are currently in a tight balance. In addition, on May 12, SMM Vice President Shirley Wang attended the Cobalt Institute annual conference held in Madrid, Spain, and delivered a keynote speech in the opening session on the current status and outlook of China's cobalt market. Regarding cobalt price trends, she stated that although theoretical calculations suggest that in Q2 to Q3 2026, the concentrated arrival of previously backlogged cobalt intermediate products will cause the cobalt raw material supply-demand balance to temporarily reverse into an inventory buildup state, putting downward pressure on cobalt prices, the limited volume of available cobalt intermediate products in the market—constrained by inventory levels and market sales pace—will provide strong support for cobalt prices. Prices are expected to edge up after several months, but with a clear upward ceiling. She also noted that raw material inventory levels, other raw material supply (such as MHP and refined cobalt), and the shipment pace of cobalt intermediate products are the biggest uncertainty factors affecting price trends.

HRC prices fluctuated downward this week, with weekly average prices edging down slightly and overall trading weakening. In terms of supply, more rolling line maintenance occurred this week, and overall HRC production edged down. Demand side, downstream sectors resumed work and restocked this week, traders showed greater purchasing enthusiasm, while stronger macro sentiment and raw material costs resonated, driving apparent demand to warm up. Inventory side, SMM's nationwide 86-warehouse (large sample) HRC social inventory was 4.7134 million mt this week, down 155,100 mt WoW, down 3.19% WoW. By region, inventory in the Northeast, North China, and east China markets declined notably, Central China market inventory decreased slightly, and South China market saw inventory buildup. Cost side, average ore prices edged down slightly, the third round of coke price increases was implemented, and HRC cost support strengthened slightly. Looking ahead, HRC supply-demand imbalance eased, cost support remained, and some fear-of-heights sentiment was released this week, so HRC prices may still strengthen next week. In summary, the most-traded HRC contract is expected to trade in the 3400-3490 range next week.

SMM May 15 update: SMM #1 lead ingot was in the doldrums this week. Smelter offers remained generally firm, and spot prices of secondary refined lead and primary lead became inverted. At the beginning of the week, smelter offers diverged, with premiums shifting slightly from small discounts to marginal premiums. Downstream buyers mainly made just-in-time procurement and relied on long-term contracts. Mid-week, as smelting losses widened, smelters held back from selling and held prices firm, with offers stabilizing at premiums of 50 yuan/mt. Market trading activity turned sluggish. Later in the week, some smelters resumed production and supply increased, weakening the sentiment to hold prices firm. Offers returned to near parity, but downstream sectors were in the off-season with insufficient rigid demand, and overall transactions remained weak. The decline in spot prices exacerbated smelting losses. As of May 14, large smelters posted losses of 249 yuan/mt, while small and medium-sized enterprises posted losses of 452 yuan/mt. Looking ahead to next week, lead ingot inventory buildup and weak downstream consumption are expected to keep lead prices in the doldrums, with smelter losses persisting. On the supply side, production resumptions at some smelters coexist with output cuts and shutdowns triggered by environmental protection and profitability concerns. The tug-of-war between longs and shorts is expected to intensify, and spot premiums are expected to move sideways within the range of parity to premiums of 50 yuan/mt.

As of May 14, the in-factory inventory of major delivery brands for primary lead was 23,300 mt, a WoW increase of 3,000 mt. Recently, production at primary lead enterprises remained relatively stable, while the lead-acid battery market continued in off-season mode, with limited rigid demand from downstream enterprises. Lead prices fell at the beginning of the week, and some downstream enterprises bought the dip on an as-needed basis. However, in the latter half of the week, lead prices pulled back again, and downstream enterprises exhibited strong risk-averse sentiment, leading to inventory accumulation at smelters. Meanwhile, with the conclusion of the current round of SHFE lead delivery, suppliers reduced their inventory transfer activities, which was also one of the reasons for the renewed inventory buildup at primary lead enterprises.