SMM, July 18: Metals market: Overnight, base metals in the domestic market nearly all rose. SHFE copper increased 0.15%, SHFE aluminum rose 0.22%, SHFE lead gained 0.69%, SHFE zinc fell 0.85%, and SHFE tin jumped 1.57%. SHFE nickel edged down 0.28%. In addition, the most-traded alumina futures rose 1.64%, and the most-traded foundry aluminum contract climbed 0.67%. Overnight, ferrous metals mostly fell. Stainless steel dipped 0.3%, iron ore declined 0.46%, rebar dropped 0.35%, and HRC slipped 0.36%. For coking coal and coke: the most-traded coking coal contract rose 1.34%, and the most-traded coke contract increased 0.56%. Overnight in the overseas market, LME base metals broadly fell. LME copper edged down 0.11%, LME aluminum dipped 0.33%, LME lead rose 0.96%, LME zinc fell 1.48%, LME tin edged up 0.73%, and LME nickel declined 0.38%. Overnight, precious metals : COMEX gold rose 0.77%, with its weekly line falling as it dropped 2.2% for the week; COMEX silver inched up 0.06%, with its weekly line declining for a second straight week, down 6.56% for the week. Overnight, the most-traded SHFE gold contract rose 0.67%, with its weekly line falling for a second straight week, down 3.07% for the week; the most-traded SHFE silver contract gained 1.05%, declining for two consecutive weeks with a weekly loss of 7.85%. Data from the World Gold Council showed gold prices weakened in June, erasing earlier gains, leaving H1 ending with a decline. Despite outflows in June, China's gold ETFs still recorded significant inflows in H1, pushing total assets under management (AUM) slightly higher to 243 billion yuan and total holdings up by 29 mt to 277 mt. In June, China's gold ETFs saw outflows of 15 billion yuan, the weakest monthly performance on record. (From Wall Street CN APP) As of 8:45 am, July 18, overnight closing prices: Macro front Domestic: [Ministry of Finance, Two Other Departments Adjust Consumption Tax Policy for Certain Batteries] On July 17, the Ministry of Finance announced that, starting September 1, 2026, a 2% consumption tax will be levied on mercury-free primary cells, nickel-metal hydride batteries, lithium primary cells, lithium-ion batteries, and all-vanadium flow batteries; from September 1, 2027, a 4% consumption tax rate will apply to these battery products. Starting April 1, 2027, a 2% consumption tax will be levied on solar cells; from April 1, 2028, the rate on solar cells will rise to 4%. From September 1, 2026 to December 31, 2028, consumption tax will be exempted for sodium-ion batteries, solid-state batteries, fuel cells, as well as for perovskite cells, tandem cells, and gallium arsenide cells among solar cells. [MIIT: Automotive Producers Required to Firmly Resist Irrational Competition and Strengthen Product Testing, Verification, and Safety Assessment] On July 17, the Equipment Industry Department I of the Ministry of Industry and Information Technology (MIIT) convened a symposium for key automotive producers, deploying efforts to further regulate competition order in the automotive industry, enhance production conformity and quality safety levels of automotive products, and carry out key tasks such as safety risk and hazard investigations and inspections and supervision of automotive products. (from Wall Street CN app) [Ministry of Housing and Urban-Rural Development: Advance Urban Renewal with High Quality and Intensify the Implementation of the Renovation of Old Urban Residential Communities] On July 17, the Party Leadership Group of the Ministry of Housing and Urban-Rural Development held an expanded study session of the theoretical study center group. The meeting stressed that carrying out urban work in the new era and on the new journey is a glorious mission with arduous tasks. It called for advancing urban renewal with high quality, promoting urban governance with high efficiency, and building “four-good” construction of good houses, good residential communities, good neighborhoods, and good urban districts to high standards. It emphasized intensifying efforts to implement livelihood-related projects such as the renovation of old urban residential communities, the construction of complete communities, the improvement of property service quality, the environmental remediation of back alleys and lanes, the development of pocket parks, and the opening and sharing of green spaces. It called for making great efforts to solve the most pressing difficulties and problems faced by the people, such as the installation of elevators, parking, and charging, striving to make people’s urban life more convenient, comfortable, and beautiful, and seizing the momentum to open up a new landscape in the modernization and construction of people-oriented cities. (China Construction News) [The “Several Measures to Further Promote the Development of ‘AI+Manufacturing’ in Shanghai” Issued] The Shanghai Municipal Commission of Economy and Informatization has issued the “Several Measures to Further Promote the Development of ‘AI+Manufacturing’ in Shanghai.” It mentions promoting breakthroughs in key and core technologies. Support will be provided for breakthroughs in technologies such as knowledge graph integration and text-to-3D parts design, focusing on frontier fields including industrial vertical large models, AI programming large models, physical AI, industrial agents, industrial software, and the industrial Internet, with a maximum support of 20 million yuan. For the R&D of comprehensive security solutions for industrial large models and agents, a maximum support of 10 million yuan will be provided. The measures aim to reduce the cost of using intelligent elements. Industrial intelligent computing cloud platforms are encouraged to provide manufacturing enterprises with low-code agent development platforms and free trials of industrial agents, distribute platform token trial coupons, and introduce computing power benefit packages for enterprises. Support will be given for renting non-affiliated intelligent computing resources to carry out the R&D and application of industrial large models and industrial agents, with a maximum subsidy of 40 million yuan. Supports using third-party large models or private deployment of third-party large models to advance industrial vertical applications, with a maximum subsidy of 5 million yuan. Supports purchasing high-quality corpora for the R&D and application of industrial vertical large models and industrial agents, with a maximum subsidy of 5 million yuan. (Jin10 Data APP) On the dollar: The US dollar index edged up 0.03% overnight to 100.76. On the weekly chart: The US dollar index fell for the week, down 0.2%. According to the latest survey, US consumer sentiment surged to a five-month high in early July, boosted by falling gasoline prices. The survey results released on Friday showed that the University of Michigan's preliminary consumer sentiment index for July rose to 54.4 from 49.5 in June, compared with market expectations of 51. Gasoline prices fell steadily from June through early July, effectively easing household budget pressures. However, renewed tensions in the Middle East have since begun to push oil prices higher and cloud the inflation outlook further. The survey covered the period from June 23 to July 13, but the report noted that over 70% of responses were completed before the US airstrikes against Iran in early July. The improvement in consumer sentiment was broad-based across age, income groups, and political affiliations. (from Wallstreetcn APP) US housing starts surged in June after a sharp drop the previous month, driven by a rebound in apartment construction. Official data released Friday showed that housing starts increased 19% to an annualized rate of 1.43 million units, the highest since March and exceeding economists' expectations. Starts for multifamily housing jumped over 76% to an annualized rate of 532,000 units, following a plunge of nearly 40% in the prior month. Meanwhile, single-family starts slipped 0.2%, declining again after builders experienced a sluggish spring. The rebound in multifamily construction underscores the volatility of monthly data, especially in the apartment sector. However, high home prices and elevated mortgage rates have been weighing on demand for single-family homes, factors that may be supporting apartment demand. At the same time, single-family builders have generally faced high inventory and weak demand. This has forced many builders to attract buyers through sales incentives. Simona Mocuta, chief economist at State Street Global Advisors, said that the dollar has been supported this year by safe-haven inflows and market pricing of Fed rate hikes, but these factors are already reflected in the exchange rate, so the dollar is set to resume its multi-year depreciation trend. Her baseline forecast is that the US Fed will keep interest rates unchanged throughout the year, but Mokuta said the risk of a rate hike remains. Even if a hike occurs, it has already been priced into the dollar and would therefore not have much additional impact; whereas if a rate hike fails to materialize, it would weaken the dollar. As concerns over the US fiscal outlook persist, the dollar will return to its long-term depreciation trend. (from Wallstreetcn APP) On the macro front: Next week will see the release of China’s one-year Loan Prime Rate (LPR) for July 20, Germany June PPI MoM, Canada June CPI MoM, US June Conference Board Leading Index MoM, Switzerland June trade balance, UK May three-month ILO unemployment rate, UK June public sector net borrowing, UK June unemployment rate, UK June claimant count change, Germany July ZEW Economic Sentiment Index, Eurozone July ZEW Economic Sentiment Index, US ADP employment change for the week ending July 4, UK June CPI MoM, UK June RPI MoM, China’s June SWIFT share of the Chinese yuan in global payments, Australia June seasonally adjusted unemployment rate, UK July CBI industrial orders balance, Eurozone ECB deposit facility rate decision on July 23, Eurozone ECB main refinancing rate decision on July 23, Canada May retail sales MoM, US initial jobless claims for the week ending July 18, Eurozone July consumer confidence preliminary, UK July GfK consumer confidence, Japan June core CPI YoY, Germany August GfK consumer confidence, UK June seasonally adjusted retail sales MoM, France July manufacturing PMI flash, Germany July manufacturing PMI flash, Eurozone July manufacturing PMI flash, UK July manufacturing PMI flash, UK July services PMI flash, US July S&P Global manufacturing PMI flash, US July S&P Global services PMI flash, and US June new home sales annualized, among other data. Also next week, attention will be on: the ECB interest rate decision; ECB President Lagarde’s monetary policy press conference. Crude oil: Overnight, both crude oil futures surged, with WTI up 4.46% and Brent up 4.78%. Weekly: WTI futures gained for a second straight week, up 14.51% for the week; Brent futures gained for two consecutive weeks, up 16.12%. On Friday, the Middle East situation deteriorated further, and the escalation of geopolitical conflicts drove a sharp rally in crude oil. Data released by Kpler, an international market service provider, on the 17th showed that vessel traffic through the Strait of Hormuz continued to weaken on the 16th, with confirmed transits falling to 8 vessels, the lowest in nearly three weeks. (From Wallstreetcn APP) IEA Executive Director Birol Fatih warned on the 16th that if oil shipments via the Strait of Hormuz are not restored within weeks, global energy security will be in jeopardy. According to UK sources, Birol said at an event held by the Council on Foreign Relations that oil supply security remains a key concern, and if the situation in the Strait of Hormuz does not improve in the coming weeks, the world should be worried. He said the measures taken by some countries "cannot last forever"; even if the US significantly increases oil production, it will be far from enough to offset the supply gap caused by the blockage in the Strait of Hormuz. (CCTV News) Oilfield services company Baker Hughes said US energy firms this week added oil and natural gas rigs for the fifth consecutive week, the first such streak since early June, bringing the total count to its highest since April 2025. As an early indicator of future output, the total rig count rose by 7 to 588 in the week to July 17. Baker Hughes said this week's increase pushed the total rig count up by 44 rigs, or 8%, compared to the same period last year. Baker Hughes said oil rigs rose by 7 to 452 this week, the highest since May 2025; natural gas rigs were unchanged at 126, and miscellaneous rigs were unchanged at 10. (From Wallstreetcn APP) Notably: NYMEX WTI August crude oil futures will be affected by contract rollover, with the final floor trading completed at 2:30 on July 22 and the final electronic trading completed at 5:00 AM. Please pay attention to the exchange's expiry and rollover announcements to manage risks. In addition, for some trading platforms, the WTI contract expiry is typically one day earlier than the official NYMEX expiry; please be attentive. Recommended Reading:

The global overseas primary aluminum spot market faced overall downward pressure this week, with spot premiums in Japan, Southeast Asia, South Korea and the US all falling week-on-week. The Asian market was weighed down by weak downstream purchasing sentiment amid the traditional consumption off-season. Ample circulating supply stemming from concentrated cargo arrivals in the US compounded the bearish sentiment. Meanwhile, the LME curve briefly flipped into a Backwardation (B) structure this week. Elevated capital costs prompted traders to step up sell-downs, pushing spot offers lower across regions and dragging down transaction benchmarks. I. Weekly Comparison of Key Global Spot Premiums II. Regional Spot Transaction & Market Commentary (I) Asian Market: Sluggish Off-Season Buying, Wide Disparity Between Long-Term Benchmark QMJP and Spot Prices Japan Market Japan’s spot market remained sluggish this week, with downstream buyers only placing sporadic orders to meet immediate operational needs and no large-scale restocking activities. The Q3 QMJP benchmark price was set at USD 395/mt, sharply diverging from actual spot transaction prices ranging from USD 330–350/mt, resulting in steep discounts against the quarterly benchmark across the market. Southeast Asia, South Korea and Indonesia Spot premiums in Thailand and South Korea retreated in tandem as traders showed strong willingness to offload inventories. Overseas end-user demand for Indonesian primary aluminum stayed muted, while downstream players remained reluctant to accept high prices, driving down local ex-factory offers and concluded transaction prices. Across Asian trading channels, the temporary Backwardation structure on the LME aluminum curve, paired with higher capital costs and inventory pressure, encouraged holders to cut offers to liquidate stocks. Coupled with feeble downstream demand, spot prices faced additional downward pressure. (II) US Market: Concentrated Cargo Arrivals from Multiple Regions Weigh on Premiums Easier spot prices in Europe previously diverted some Canadian aluminum ingots to the US, alongside a portion of Indonesian primary aluminum shipments. Concentrated cargo arrivals boosted market supply substantially. Despite rigid underlying demand in the US, the surge in available supply kept DDP premiums under mild week-on-week downward pressure. III. Core Macro Drivers Shaping Overseas Spot Markets End-User Demand: Off-Season Drags on Asian Buying Sentiment Southeast Asia and Japan entered their traditional demand off-season. Downstream fabricators only purchased materials on an as-needed basis without proactive stockpiling, and market acceptable price levels kept sliding, leaving spot transactions without solid support. Trading Flows: High Capital Costs Fuel Traders’ Inventory Liquidation The temporary Backwardation structure on the LME aluminum curve lifted holding costs for metal traders. Most market participants opted to cut prices to sell stocks and recover capital, flooding the market with available material and further depressing spot premiums. IV. Brief Market Outlook In the near term, the off-season in Asia is far from over, and traders retain strong incentives to liquidate inventories, which will keep overseas primary aluminum spot premiums subdued. Market participants will closely monitor the commissioning timeline of Indonesian aluminum projects and restocking activities among overseas downstream manufacturers going forward.

Overseas rare earth markets diverged this week between light and heavy types. Driven by the uptrend in China, terbium oxide and terbium metal prices rose, while light rare earths remained stable. Trading-wise, heavy rare earths saw few transactions due to export controls. On the industrial front, U.S. companies accelerated domestic recycling and purification, while European and Japanese firms advanced R&D on magnetic material recycling and rare-earth-free alternative technologies. Meanwhile, Indo-Pacific and South Korean players actively restructured supply chains, and resource development and processing projects were intensively launched in locations such as Malaysia, Thailand, and Brazil. The global “de-risking” layout for rare earths continued to deepen.

Japan’s Green Investment Promotion Organization has released the final results of its 28th utility-scale solar auction, selecting 29 projects with a combined capacity of 89.2MW, slightly below the planned 91MW. The selected projects range from 350kW to 29.5MW. The lowest bid was JPY 0/kWh, submitted for eight projects between 400kW and 2MW, likely reflecting projects that had secured private PPAs and participated in the auction mainly to obtain grid connection. The highest bid was JPY 7.89/kWh, while the average final price came in at JPY 6.74/kWh, below the JPY 9.60/kWh ceiling.

First Quantum Minerals is considering selling a minority stake in its Taca Taca copper mine project in Argentina. The move comes as major global mining companies and strategic investors race to secure future copper supply.According to US media reports, the company has initiated this potential sale process.Potential bidders include Japan's Mitsubishi Corp. and Mitsui & Co., among others.

[SMM Aluminum Express News] Australia, Japan, the US and Alcoa have reached a final investment decision to develop a gallium production facility at Alcoa's Wagerup alumina refinery in Western Australia. The project will recover gallium from the existing Bayer process without requiring additional bauxite mining, supporting supply diversification for the critical mineral while adding value to the refinery's existing alumina operations.

Rio Tinto released its production results for the second quarter of 2026. According to the report, Rio Tinto’s lithium production in Q2 stood at 14,600 tonnes of lithium carbonate equivalent (LCE), up 20% year-on-year and 15% quarter-on-quarter. By product, lithium carbonate output reached 13,900 tonnes, lithium hydroxide output was 5,300 tonnes, and other specialty lithium products stood at 1,100 tonnes on an LCE basis. Rio Tinto noted in the announcement that, as its lithium business is vertically integrated, the production volumes of different lithium products should not be directly added together. In terms of production changes, Rio Tinto’s Q2 lithium output growth was mainly driven by the ramp-up of the Rincón starter plant in Argentina, as well as the earlier-than-scheduled first production from the Sal de Vida and Fénix 1B projects. The Rincón starter plant produced 385 tonnes of LCE in the second quarter. Year to date, Rio Tinto’s lithium production declined 7% year-on-year, mainly due to the Mt Cattlin mine being placed on care and maintenance at the end of March 2025, which weighed on hard-rock lithium output. On project progress, construction of the full-scale Rincón lithium plant is advancing and remains in the early execution stage. Current work is focused on key infrastructure, including camp facilities, utilities and pipelines, while site earthworks, early preparation works and supporting infrastructure construction are also underway. The Sal de Vida project achieved first production ahead of schedule in Q2 and is currently in the commissioning stage. The Fénix 1B expansion project also delivered first production ahead of schedule in Q2 and has entered commissioning. Rio Tinto previously disclosed that Sal de Vida has a planned capacity of 15,000 tonnes of LCE per year, while the Fénix 1B expansion has a planned capacity of 10,000 tonnes of LCE per year. In terms of prices, the average CIF China, Japan and Korea price stood at US$22,043/tonne in the second quarter of 2026. Meanwhile, Rio Tinto’s average realised lithium product price in the first half of 2026 was US$18,960/tonne LCE. In addition, the Nemaska Lithium project is planned to deliver first production in 2028. Following an in-depth review initiated in the first quarter, the construction pace of its Bécancour processing plant will slow in 2026. The plant is currently more than 70% complete. Necessary activities such as asset preservation and site integrity works will continue, while other activities will be paused or deferred and the contractor workforce will be temporarily reduced. Rio Tinto previously disclosed that the Nemaska Lithium project is located in Quebec, Canada, with Rio Tinto holding a 50% interest. The project has a planned capacity of 28,000 tonnes of LCE per year, producing integrated lithium hydroxide. SMM believes Rio Tinto’s year-on-year and quarter-on-quarter growth in Q2 lithium output mainly reflects the gradual production ramp-up of its Argentine brine assets, particularly as Sal de Vida and Fénix 1B achieved first production ahead of schedule. This indicates that the execution progress of the company’s brine lithium project portfolio is slightly ahead of previous expectations. In the short term, as these new projects remain in the commissioning and ramp-up stages, their actual contribution to global lithium supply still requires further observation. In the medium to long term, as Rincón, Sal de Vida and the Fénix expansion continue to advance, Rio Tinto’s capacity weighting in South American brine lithium resources is expected to increase further. However, the care and maintenance status of Mt Cattlin and the slower construction pace at Nemaska also suggest that, under the current lithium price environment, mining companies are continuing to adjust development priorities across different assets based on project economics and capital expenditure pressure.

[EU] As the clearance and settlement for the EU's new round of safeguard quotas looms, surging import uncertainties have forced the cancellation of some overseas orders. The tightening of available purchasing channels has sparked buyer anxieties over supply for the second half of the year. Against this backdrop, major domestic European mills have capitalized on the situation to firm up their pricing, successfully pushing benchmark offers for September delivery to 710–720 EUR/tonne. On the import front, only tariff-advantaged Egyptian material is currently conducting tentative negotiations into Southern Europe, while high-priced resources from regions like Japan no longer offer any arbitrage windows. With potential summer restocking demand gradually releasing, EU HRC offers are expected to remain firm with limited downside risk in the near term.

Itochu Metals and Daikin have formed a resource recycling partnership to recover high-purity aluminium and copper from used commercial air conditioners across Japan. Daikin estimates that a small mass-produced commercial air conditioner contains around 8 kg of copper and 7 kg of aluminium. If scaled to 300,000 units annually, the system could recover around 2,300 tonnes of copper scrap and 2,000 tonnes of aluminium scrap.

[SMM Analysis] In H1 2026, the core conflict in the LFP cathode material market was not just a simple shift in the supply-demand relationship, but rather a profound tussle involving the top-down transmission of cost pressure and the reshaping of the benefit distribution pattern across the industry chain.