[SMM Aluminum Weekly Review: Macro Sentiment Remains Lackluster, Aluminum Prices in the Doldrums]

SMM February 12 News: This week, domestic aluminum fluoride enterprises focused on order deliveries, with aluminum fluoride prices largely stable. The SMM aluminum fluoride price closed at 10,480-10,750 yuan/mt; cryolite prices remained stable, with the SMM cryolite quote at 7,000-9,000 yuan/mt. Raw material side: Prices of core raw materials for aluminum fluoride were largely stable. Specifically, delivery-to-factory prices for 97% fluorite powder were mainly steady, currently concentrated in the range of 3,100-3,400 yuan/mt. Supply side, conventional shutdowns occurred in north China due to low temperatures and the Chinese New Year holiday, leading to a decline in market supply; coupled with normalized environmental protection and safety supervision, operations at small and medium-sized mines were unstable. Imports were mainly medium and low grade, with limited supplementation of high-grade sources, prolonging structural tightness. Although the supply side contracted, social inventory remained high and shipments were sluggish, exerting some downward pressure on prices. Demand side performance was weak, with operating rates in the core downstream hydrofluoric acid industry remaining low, resulting in weak digestion capacity for fluorite powder and difficulty forming strong momentum. Market transactions were currently sluggish, and prices saw no major adjustments. Aluminum hydroxide prices stopped falling and stabilized, with the SMM weighted average price reported at 1,611 yuan/mt, flat MoM. The sulphuric acid market maintained a fluctuating and consolidating trend at highs, providing some support for aluminum fluoride costs. Overall, rigid cost support from the aluminum fluoride raw material side remains. Supply-demand side: In terms of supply, lower raw material prices effectively alleviated some cost pressure for enterprises, but due to strict constraints from environmental protection and energy consumption policies, dual restrictions from raw material costs and profit margins, as well as impacts from maintenance and production cuts at some enterprises, industry supply declined. On the demand side, operating aluminum capacity remained basically stable, providing solid rigid demand support for aluminum fluoride, but enterprises maintained a cautious procurement attitude, mainly restocking based on demand. Brief Review: Recently, raw materials such as fluorite and sulphuric acid on the cost side operated largely steadily, still providing rigid support for aluminum fluoride prices. The supply side has ample spot cargo, and coupled with expectations of production resumptions after the holiday, market supply is expected to further release; the demand side saw only a slight recovery relying on rigid restocking by aluminum enterprises, with insufficient incremental support. Under the interplay of multiple factors, aluminum fluoride prices are expected to fluctuate rangebound in the short term. Subsequent attention should remain on dynamic changes in raw material costs and marginal adjustments in the procurement pace of downstream aluminum enterprises.

SMM Feb. 12: SHFE aluminum 2602 fluctuated upward in the morning session, with the price center rising from the previous trading day. Affected by the approaching Chinese New Year, overall market trading sentiment was weak, with mainstream transaction prices concentrated at the average price to a premium of 10 yuan/mt. Today, the shipment sentiment index in the east China market was 2.21, down 0.08 WoW; the purchasing sentiment index was 2.33, up 0.04 WoW. SMM A00 aluminum closed at 23,350 yuan/mt, up 90 yuan/mt from the previous trading day, at a discount of 160 yuan/mt against the 2602 contract, up 30 yuan/mt from the previous trading day; at a discount of 220 yuan/mt against the 2603 contract. Trading in the central China market remained sluggish today. As the Chinese New Year approaches, pre-holiday stockpiling by downstream processing enterprises has basically ended, with only minimal just-in-time procurement. Major suppliers have also gradually entered the Chinese New Year break, leading to limited spot aluminum availability in the market. However, some traders bought the dip and stockpiled, driving transaction prices higher. Ultimately, actual transaction prices in the central China market ranged from a premium of 20 yuan/mt to a premium of 60 yuan/mt against the central China price. Today, the shipment sentiment index in the central China market was 2.43, down 0.14 WoW; the purchasing sentiment index was 2.09, down 0.05 WoW. SMM central China price closed at 23,260 yuan/mt, up 100 yuan/mt from the previous trading day, at a discount of 250 yuan/mt against the 2602 contract, up 40 yuan/mt from the previous trading day; at a discount of 310 yuan/mt against the 2603 contract. The price spread between Henan and Shanghai was -90 yuan/mt, narrowing 10 yuan/mt from the previous trading day. Inventory side, aluminum ingot inventories in major consumption areas increased by 28,500 mt WoW, with all three regions showing inventory buildup. In the short term, high aluminum prices may continue to suppress end-use demand, coupled with the impact of the Chinese New Year break on downstream sectors. Aluminum ingots still face inventory buildup risks, and spot premiums/discounts are expected to remain under pressure.

[SMM Aluminum Morning Meeting Minutes: Overall Warm Macro Front Contends with Inventory Buildup Reality, Aluminum Prices Under Pressure and Fluctuating in the Short Term] In summary, aluminum prices are expected to continue their fluctuating trend under pressure in the short term, constrained above by the reality of inventory buildup and supported below by macro expectations. They are anticipated to remain in the doldrums with limited room for a rebound.

Metal materials are widely used in automotive components, and their price fluctuations significantly impact cost structures. According to SMM estimates, a typical NEV's cost breakdown is as follows: power battery (35%-40%), traction motor and motor controller (10%-20%), body/chassis/interior (30%), and other electronics (7%). This analysis focuses on the traction motor system, as SMM has extensively covered batteries elsewhere. Within the motor system (10%-20% of total vehicle cost), raw materials account for the largest share. Key metal inputs include rare earth-neodymium iron boron (NdFeB) magnets (30%-35%) , copper-enameled wires (15%) , and aluminum-structural components (20%) . The simultaneous surge in these metals from late 2025 to early 2026 has placed immense cost pressure on motor manufacturers and NEV OEMs . 1. Rare Earth Metals: Supply Squeeze and Demand Resilience Drive Prices Up ​ Rare earth prices, particularly for praseodymium-neodymium (PrNd) metal, have risen sharply. As of February 9, 2026, PrNd prices reached 975,000–985,000 RMB/ton , a year-to-date increase of 33.1% . This acceleration stems from tight supply ​ (limited upstream output, weak production activity, and reduced spot availability due to long-term contract deliveries) and robust demand ​ (steady overseas orders for magnetic materials and growing expectations for NEVs and e-bikes in 2026). These factors collectively pushed prices upward . Motor manufacturers face greater challenges than magnetic material suppliers. They must absorb not only soaring rare earth costs but also high copper prices. Compounding this, motor makers struggle to pass cost increases downstream . NEV OEMs, grappling with fierce market competition, resist price adjustments. Consequently, motor producers are caught between expanding losses ​ (if they continue production) and losing market share ​ (if they halt operations). Their weak bargaining power, due to proximity to concentrated downstream customers, exacerbates the strain . 2. Copper: Structural Supply-Demand Imbalance and Financial Factors ​ Copper prices rose sharply from 87,000 RMB/ton in late 2025 to 105,000 RMB/ton in early 2026 , a gain of over 20% , and have remained elevated. This rally was driven by: Supply-chain constraints : Production disruptions in major copper-producing countries (e.g., Chile, Peru), geopolitical tensions, and logistics bottlenecks limited short-term supply. Financial influences : Global liquidity conditions and inflation expectations attracted speculative capital, amplifying price volatility. Strong demand : Sustained optimism regarding data centers and cable demand further supported prices . The impact on motors is direct and significant. Copper, critical for stator and rotor windings, constitutes a substantial portion of motor raw material costs. The price surge adds hundreds of RMB to the cost per motor , translating to billions of RMB in additional annual expenses ​ for large-scale OEMs. This pressure cascades through the supply chain, squeezing margins for material suppliers, motor makers, and vehicle manufacturers. While some industrial motor firms have raised prices, NEV OEMs have so far absorbed the costs, further straining their profitability . 3. Aluminum: Tight Fundamentals Amid Energy Transition Demand ​ Aluminum prices climbed nearly 10% ​ from December 2025 to January 2026, primarily due to structural supply-demand tightness . Demand is bolstered by global energy transition trends (e.g., NEV bodies, battery trays, and e-drive casings) and solar PV growth. On the supply side, aluminum production—highly energy-intensive—faces pressure from elevated global power prices, leading to unstable operational rates. Financial investors' focus on "green metals" has also contributed to price gains . Although aluminum's cost sensitivity is lower than copper's, it is widely used in motor housings, end covers, and cooling systems. Price increases directly raise motor manufacturing expenses, costing hundreds of millions of RMB ​ for producers at million-unit annual scales and eroding margins for motor suppliers and OEMs . 4. Path Forward: Technology and Supply Chain Adaptation ​ The concurrent rise in rare earth, copper, and aluminum prices has created unprecedented cost pressure. Motor and vehicle manufacturers urgently seek cost reductions, but technological solutions (e.g., flat-wire motors , material recycling ) require time. Short-term strategies include long-term supply contracts ​ and futures hedging ​ to manage risks. Long-term success will hinge on material innovation ​ (e.g., reducing rare earth content, optimizing aluminum-for-copper substitution) and vertical supply chain integration ​ to navigate resource constraints . SMM advises industry players to closely monitor policy shifts and alternative technologies, adapting procurement and production strategies dynamically

[SMM Cast Aluminum Alloy Morning Comment: Overnight Futures Slightly Lower, Spot Prices Hold Steady Amid Wait-and-See Attitude] On Wednesday, the A00 aluminum price edged down by 30 yuan/mt to 23,260 yuan/mt compared with the previous trading day, while the SMM ADC12 price remained stable at 23,650 yuan/mt. As the Chinese New Year approaches, upstream and downstream enterprises in the secondary aluminum industry chain have entered a concentrated holiday period, leading to a noticeable decline in market liquidity. Actual transactions continue to be sluggish, with spot quotations largely making minor adjustments around the futures market.

Futures: Overnight, LME lead opened at $1,965/mt, fluctuating downward during the Asian session; it dipped to $1,948.5/mt upon entering the European session, but then rose due to a weakening US dollar index, touching a high of $1,976.5/mt before finally settling at $1,974.5/mt. Overnight, the most-traded SHFE lead 2603 contract opened at 16,665 yuan/mt, briefly touched a low of 16,560 yuan/mt early in the session, then rebounded as bears reduced positions, reaching a high of 16,680 yuan/mt before finally settling at 16,665 yuan/mt, up 0.48%, forming a doji star. On the macro front: As markets awaited a series of US economic data, a weaker US dollar made dollar-denominated commodities more attractive to overseas buyers; spot gold extended gains. The White House's Hassett predicted worsening employment: AI boosts productivity, reduces labor demand. Alphabet planned to raise about $15 billion by issuing US dollar bonds. China's Ministry of Commerce held a symposium with automakers: Multiple measures to promote the expansion and quality improvement of auto consumption. The Shanghai, Shenzhen, and Beijing Stock Exchanges announced a package of measures to optimize refinancing. Seven departments including the Ministry of Human Resources and Social Security provided administrative guidance on employment to leading platform companies and courier firms. Three departments including the Ministry of Finance issued an announcement on tax incentives for re-exported cross-border e-commerce goods. : SHFE lead stopped falling and stabilized, but as the Chinese New Year holiday approached, logistics vehicles halted in some regions, leading to reduced shipments and quotations from suppliers. Only some cargoes self-picked up from primary lead smelters were quoted at premiums of 0-50 yuan/mt against the SMM #1 lead average price ex-works. In the secondary lead sector, more smelters were on holiday and reluctant to sell at low prices, with most enterprises suspending quotations; a few secondary refined lead offers were at discounts of 25 yuan/mt to premiums of 50 yuan/mt against the SMM #1 lead average price ex-works. Downstream enterprises generally entered the year-end wrap-up phase, with minimal inquiries, resulting in thin trading in the spot market. Inventory: On February 9, LME lead inventory decreased by 100 mt to 232,750 mt. As of February 9, SMM lead ingot social inventory across five regions rose to a five-month high. Today's lead price forecast: With previously in-transit lead ingots by rail concentratedly arriving at warehouses, social inventory of lead ingots increased significantly, mainly reflected in Jiangsu and Zhejiang region warehouses. Last week, lead prices fell, prompting lead-acid battery enterprises to conduct relatively concentrated stockpiling of lead ingots, leading to a noticeable decline in lead smelters' in-factory inventory. This week being the last before the Chinese New Year, the final batch of lead-acid battery enterprises will enter the holiday state, further weakening lead consumption. Meanwhile, with the start of the Spring Festival travel season, migrant workers have returned to their hometowns, and the number of vehicles in operation has gradually decreased. Currently, some regions no longer support road transportation. It is expected that the growth momentum of social inventory for lead ingots will slow down, and the inventory buildup of lead ingots is anticipated to be more reflected in the smelters' plant inventories. Overall, lead prices are in the doldrums ahead of the holiday. Data Source Statement: Except for publicly available information, other data are processed by SMM based on public information, market communication, and SMM's internal database model, for reference only and do not constitute decision-making advice.

Today, the most-traded BC copper 2603 contract opened at 92,420 yuan/mt, hit an intraday high of 92,420 yuan/mt at the beginning of the session, then fluctuated downward with its center touching a low of 90,440 yuan/mt. Copper prices later maintained a sideways fluctuating trend, finally closing at 90,840 yuan/mt, up 0.43%. Open interest fell to 3,481 lots, down 1,004 lots from the previous trading day, while trading volume rose to 6,479 lots, up 3,066 lots from the previous trading day. On the macro front, US non-farm payrolls added 130,000 in January, and the unemployment rate dropped to 4.3%, both figures beating expectations, cooling market expectations for interest rate cuts. US Fed officials struck a hawkish tone, favoring maintaining restrictive interest rates, while Trump continued to pressure the Fed. Armed attacks in Papua, Indonesia targeted a Freeport company convoy, resulting in 1 death and 2 injuries, raising safety risks at the mine. On the fundamentals side, supply side, due to earlier import arbitrage windows opening, locked price ratio cargoes continued to arrive, keeping supply loose. Demand side, as the holiday approaches, downstream enterprises have generally started holidays, leading to continuously weakening procurement demand. Inventory side, as of Thursday, February 12, SMM nationwide copper inventories in mainstream areas increased 5.3% WoW, with total inventories up 27,400 mt YoY. SHFE copper 2603 contract closed at 102,330 yuan/mt. Based on the BC copper 2603 contract price of 90,840 yuan/mt, its post-tax price is 102,649 yuan/mt, resulting in a price spread of -319 between SHFE copper 2603 and BC copper. The spread remained inverted and narrowed compared to the previous day.

[SMM Magnesium Weekly Review: Magnesium Market Remained Stable Pre-Holiday, Prices Steady in Major Production Areas, Overseas Inquiries Increased but Trading Remained Sluggish] This week, the domestic magnesium industry chain market operated steadily overall. As the Chinese New Year holiday approached, market trading activity gradually slowed, with participants generally adopting a wait-and-see attitude. The dolomite market remained stable overall; the suspension of production by top-tier enterprises in the Wutai region led to tight supply of high-quality resources, but other major production areas promptly compensated for the gap, ensuring stable supply. Steady operations at primary magnesium enterprises in Shaanxi, Shanxi, and Inner Mongolia generated rigid demand, coupled with rising pre-holiday freight costs pushing up expenses, supporting relatively strong prices. The magnesium ingot market held steady, as smelters in major production areas saw eased funding pressure and maintained firm offers, while downstream pre-holiday stockpiling concluded, resulting in sluggish spot trades. In the Tianjin Port FOB market, overseas new orders were scarce, mostly for forward delivery, with the Chinese New Year holiday impacting the progress of actual transactions. Magnesium powder enterprises slowed their production pace after completing raw material stockpiling, as both domestic and international procurement neared completion, leading to a cooling trading atmosphere. Magnesium alloy enterprises operated normally, but downstream die-casting and end-user companies gradually began holiday breaks, resulting in subdued orders. The tight supply-demand balance supported firm processing fees.

February 12, 2026: Today, warrant prices were $26-42/mt, QP February, with the average price flat from the previous trading day; B/L prices were $28-46/mt, QP March, with the average price flat from the previous trading day; EQ copper (CIF B/L) was $13-21/mt, QP March, with the average price flat from the previous trading day. Quotations referred to cargoes arriving in mid-to-late February. The spot market remained sluggish during the day, with both inquiries and offers inactive. Warrant was heard closed at $35-45, with QP covering February-March; cargoes for late February delivery were heard traded at $30-35/mt, QP March. A small amount of pyrometallurgy B/L for late February arrival was offered at $35-45/mt, QP March; EQ B/L for late February arrival was offered at $15-25, while EQ B/L for mid-to-early February arrival was offered at $10-20/mt, QP March.