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LME Zinc: At the beginning of the week, the US dollar fell to a four-month low, supporting nonferrous metals, while natural gas prices in Europe and the US surged due to cold weather, increasing overseas smelting costs, which pushed LME zinc higher. Subsequently, LME zinc briefly pulled back, but the US dollar continued to decline to a nearly four-year low, coupled with ongoing overseas destocking and geopolitical risks, driving zinc prices up again. Thereafter, tensions in the international situation and rising precious metals lifted zinc prices, but the US Fed did not cut interest rates this month, and the US dollar rebounded, causing LME zinc to shift into a fluctuating trend. Later, high crowding in futures and the suspension of a Chinese-invested zinc ore project in Bolivia disrupted supply, combined with a decline in overseas inventories, leading to a rapid surge in LME zinc. Then, hawkish signals from the US Fed prompted a US dollar rebound, causing LME zinc to give up gains and move lower. As of 15:00 this Friday, LME zinc recorded $3,397/mt, up $128/mt, an increase of 3.92%. SHFE Zinc: At the beginning of the week, SHFE zinc continued last week's fluctuating trend. Subsequently, driven by LME and precious metal prices, SHFE zinc opened higher with a gap. However, weak domestic fundamentals, as downstream sectors gradually entered the off-season, put SHFE zinc under pressure and caused it to drop back slightly. Thereafter, due to a slight reduction in social inventory and LME zinc maintaining high levels, SHFE zinc strengthened again. But sluggish trading in the spot market, affected by high prices and the Chinese New Year break, indicated significant resistance, and with support from futures funds, SHFE zinc shifted into sideways movement. Later, disruptions in overseas zinc ore supply, combined with an overall rise in the nonferrous metals sector, led SHFE zinc to follow with a significant surge, eventually syncing downward as LME zinc pulled back. As of 15:00 this Friday, SHFE zinc recorded 25,835 yuan/mt, up 1,250 yuan/mt, an increase of 5.08%.

LME Zinc: At the beginning of the week, LME zinc had weak fundamental support. However, influenced by Trump's threat to impose additional tariffs on Europe, a softer US dollar index, and China's 2025 GDP meeting expectations, it stopped falling, stabilized, and maintained a fluctuating trend. Subsequently, as macro news was gradually digested, nonferrous metals fell broadly coupled with a continued increase in LME zinc ingot inventory, leading LME zinc to pull back. Then, a lower US dollar drove a slight rise in LME zinc, but Trump's agreement framework on Greenland caused the US dollar to rebound, shifting LME zinc's center lower. Afterwards, US inflation data largely met expectations, and coupled with Nexa suspending production at the Atacocha San Gerardo open-pit mine due to community blockades, indicating mine supply disruptions, LME zinc rose from low levels, with the overall center moving higher. As of 15:00 this Friday, LME zinc recorded $3,246.5/mt, up $37.5/mt, a gain of 1.17%. SHFE Zinc: At the beginning of the week, continued inventory buildup of domestic zinc ingots, coupled with some end-user enterprises being about to take holidays and weak demand, pressured zinc prices on the upside. However, China's 2025 GDP data meeting expectations boosted market sentiment, and with support from LME, SHFE zinc maintained a fluctuating trend. Subsequently, influenced by LME's decline, SHFE zinc opened lower with a gap. The weak fundamental structure persisted, and SHFE zinc traded with fluctuations. Then, a rise in LME prices drove SHFE zinc higher, but as terminal galvanizing and other enterprises successively began holidays, demand support weakened, and prices pulled back. Afterwards, a decline in domestic zinc ingot social inventory, combined with overseas supply-side disruptions, pushed SHFE zinc higher again. However, constrained by weak domestic fundamentals, upward momentum was insufficient, leading to a pullback. As of 15:00 this Friday, SHFE zinc recorded 24,585 yuan/mt, down 165 yuan/mt, a loss of 0.67%.

This week, precious metal prices fluctuated at highs. Both lead smelters and mining enterprises have raised their silver price expectations for 2026 to above 20,000 yuan/kg. Consequently, the payable indicator for silver contained in lead concentrates of certain silver-lead ore types with low price adjustment frequency (annual or quarterly adjustments) was increased in Q1 2026. According to SMM, regional quotations for lead concentrates still show significant differences. In regions like Yunnan and Hunan, the mainstream payable indicator for lead concentrates containing 1,000g of silver per mt in physical content has risen to 0.91-0.92, while in north China, this coefficient remains at 0.90-0.91. A smelter in Yunnan indicated that it is difficult to obtain offers above 100 yuan/mt in metal content for low-silver lead concentrate TCs (containing less than 300g of silver per mt in physical content). Overall market offers are stabilizing, but due to factors like recovery rates, the payable indicator for silver in such ores has not seen a significant increase. In the domestic import concentrate trade market, market offers have gradually increased, but lead concentrate TCs for January remained at -$150 to -$160/dmt. Due to the recent trend where the domestic market outperforms the overseas market for silver, purchasing interest from some smelters has increased. Furthermore, SMM learned that as silver prices stabilized at highs, the payable indicator for silver contained in zinc concentrates also increased by nearly 10%.

SMM January 21 news: Dealers in Hunan reported that as temperatures drop, replacement demand for automotive batteries has relatively improved, and battery sales have also rebounded. Current battery inventory is about one and a half months. Considering subsequent Chinese New Year logistics suspensions and enterprise holidays, they plan to stockpile appropriately before the Chinese New Year. Manufacturers in Zhejiang reported that domestic demand in the automotive battery market is moderate, and due to seasonal demand improvement, dealer purchasing enthusiasm is slightly better. However, exports are hindered by factors such as tariffs. Currently, the plant operating rate is maintained at 80-90%. Manufacturers in Jiangxi reported that overall demand in the automotive battery market is average, especially because the price spread between domestic and overseas markets for lead has resulted in higher battery production costs compared to overseas, leading to greater pressure on battery exports. To avoid inventory accumulation, the current plant operating rate is 70-80%. Additionally, recent lead ingot price fluctuations have been significant, so short-term lead ingot procurement is mainly based on long-term contracts.

LME Zinc: At the beginning of the week, uncertainty intensified as the Trump administration launched a criminal investigation into Fed Chairman Powell, raising market concerns over the US Fed's independence and the long-term outlook for the US dollar. Combined with elevated geopolitical risks, the US dollar index came under pressure and declined, allowing LME zinc to rise accordingly. Subsequently, an unexpected cooling in the US core CPI for December led traders to increase bets on a US Fed interest rate cut in April, prompting a rebound in the US dollar index and a slight pullback in LME zinc. Later, despite retail sales data exceeding expectations, political uncertainty surrounding the US Fed's independence persisted, causing the US dollar index to close lower. Along with geopolitical risks, precious metals continued to rally, driving LME zinc higher. Afterwards, US initial jobless claims unexpectedly fell, weakening expectations for an interest rate cut, but geopolitical uncertainties remained and capital activity was relatively high, leading LME zinc to maintain a fluctuating trend. As of 15:00 Friday, LME zinc recorded $3,254/mt, an increase of $105/mt, up 3.33%. SHFE Zinc: At the beginning of the week, domestically, overall fundamentals saw relatively small changes, but macro sentiment remained positive with high capital enthusiasm, pushing SHFE zinc continuously higher. Subsequently, high prices led to relatively average demand in the spot market, with sluggish end-use consumption, but bulls remained relatively active overall, causing SHFE zinc to maintain a fluctuating trend. Later, as overseas macro sentiment stayed positive, domestic capital remained active with high crowding, coupled with the LME's announcement that it would stop accepting registrations for KZ-SHG 99.995 and YP-SHG warrants effective April 14 this year, SHFE zinc was affected and continued to surge higher. Afterwards, domestic social inventory increased slightly, and some capital exited, leading SHFE zinc to edge lower. However, the overseas market trend remained strong, and SHFE zinc recovered some losses driven by the external market. Later, insufficient support from domestic fundamentals caused the price center of SHFE zinc to continuously decline. As of 15:00 Friday, SHFE zinc recorded 24,750 yuan/mt, an increase of 735 yuan/mt, up 3.06%.

SMM January 13 news: In South China's aluminum ingot market, the average SMM A00 aluminum (Foshan) price on January 13 was 24,310 yuan/mt, down 80 yuan/mt on the day, at a discount of 45 yuan/mt against the front-month contract, unchanged from the previous day. Market sentiment turned bearish. Suppliers actively sold off goods to cash in while prices and the spot-futures price spread remained at relatively high levels. Offers were steadily lowered from -30 to -10 yuan/mt, leading to ample spot supply. Downstream buyers maintained just-in-time procurement. Traders shifted from a wait-and-see stance and pushing for lower prices to purchasing discounted goods to fulfill orders, stabilizing the bottom of transaction prices. Later, futures prices surged, prompting a few buyers to rush to buy amid continuous price rise. Overall transactions showed a supply-demand mismatch. In South China's aluminum billet market, on January 13, the processing fees for SMM 6063 aluminum billets (Guangdong) of various specifications rebounded significantly. The average processing fee for Φ90/100 was -40 yuan/mt, while that for Φ120 and above was 10 yuan/mt, up 120 yuan/mt from the previous day. Processing fees were generally raised with price differences observed. After the base price fell, futures prices surged sharply during the session, stimulating some downstream buyers to rush to buy amid continuous price rise for restocking. Market offers fell first and then rose. However, overall purchasing momentum was limited, and the day's transactions were overall satisfactory.

LME Zinc: At the beginning of the week, supported by tightening geopolitical tensions internationally and boosted by the strong rally in base metals such as copper and aluminum, continuous inflows of bullish funds into futures drove the price center steadily higher, extending a four-day winning streak into a five-day winning streak. During this period, US Fed Governor Milan signaled a dovish outlook, indicating the need for interest rate cuts exceeding 100 basis points in 2026, further bolstering LME zinc's rise. Subsequently, as the US dollar index fluctuated higher, the market gradually digested previous macro disturbances, bullish profit-taking sentiment intensified, and overseas zinc inventory increased, weakening fundamental support. LME zinc ended its upward trend, and the price center declined accordingly; then LME zinc edged higher. As of 15:00 this Friday, LME zinc recorded $3,159.5/mt, up $32.5/mt, an increase of 1.04%. SHFE Zinc: At the beginning of the week, driven by the continuous rise in LME zinc, SHFE zinc prices broke through the high since February last year, with the daily candlestick's center significantly higher. Although fundamentals showed no significant change, macro tailwinds coupled with spillover effects from other base metals provided sufficient bullish momentum, driving SHFE zinc higher. Subsequently, expectations of a slight increase in domestic supply emerged, end-use consumption showed mediocre performance, social inventory continued to accumulate after the holiday, and spot transactions were mostly for rigid demand, resulting in insufficient fundamental support for prices. Combined with the transmission effect of weaker LME zinc, SHFE zinc came under pressure and turned weaker, with the price center declining; then SHFE zinc edged higher driven by overseas markets. As of 15:00 this Friday, SHFE zinc recorded 23,970 yuan/mt, up 695 yuan/mt, an increase of 2.99%.

I. Titanium Concentrate Market: Domestic and Imported Ore Prices Weaken Simultaneously, Supply Surplus Pattern Persists Throughout the Year Domestic Titanium Ore: Supply Surplus Pattern Unlikely to Change This Year As of December 31, the price of domestic titanium concentrate (TiO₂ ≥ 46%) is quoted at 1,580–1,630 yuan per ton, with an average price of 1,605 yuan per ton, down 21.7% from the beginning of the year. The price of TiO₂ ≥ 47% specification is quoted at 1,900–2,050 yuan per ton, with an average price of 1,975 yuan per ton, down 14.13% from the beginning of the year. This year, domestic titanium ore prices broke the seasonal fluctuation pattern of previous years, showing a continuous downward trend. Specifically: January–March: Prices Stabilized The Panzhihua region entered the Spring Festival maintenance period, with low operating rates and low inventory levels among miners. At the same time, downstream titanium dioxide market orders were strong, and new production capacities were gradually released, supporting ore prices in a consolidation phase. March–July: Accelerated Decline After March, the supply of ore increased significantly, with both raw ore mining and shipments rising simultaneously. However, the demand side of the titanium dioxide market remained persistently weak, and overall end-use industries were sluggish. The titanium ore market gradually shifted to a supply surplus, and prices continued to decline under demand pressure. August–December: Weak Stabilization Followed by Another Decline With the Panxi region controlling raw ore shipments, the market’s decline slowed, entering a phase of weak stability at low levels. However, demand showed no signs of improvement, mine inventories gradually accumulated, and prices lacked upward momentum. By the end of the year, the market once again faced downward pressure. Overall, the continuous weakening of titanium ore prices this year was mainly due to weak demand from the titanium dioxide market and its downstream coatings industry, which account for a significant share. Coupled with generally high ore supply, the supply surplus pattern persisted throughout the year, making it difficult to reverse. Outlook: In the short term, as post-holiday mine maintenance and downstream demand are expected to stage a recovery, transaction prices may see a slight increase at the higher end. However, this will depend on the inventory digestion situation in the Panxi region. In the long term, according to SMM research, mining output in the Panxi region is expected to significantly decline by 2026, with stricter shipment controls. The titanium ore market is likely to gradually return to its historical seasonal fluctuation pattern. Imported Titanium Ore: Narrowing Price Gap May Lead to Structural Reshaping As of December 31, the price of imported titanium concentrate (Mozambique, TiO₂ ≥ 46%) is quoted at 1,700–1,800 yuan per ton; imported titanium concentrate (Nigeria, TiO₂ ≥ 50%) at 1,800–1,900 yuan per ton; imported titanium concentrate (Australia, TiO₂ ≥ 50%) at 1,850–1,959 yuan per ton; imported rutile (Sierra Leone, TiO₂ ≥ 90%) at 5,500–6,000 yuan per ton; and imported rutile (Sierra Leone, TiO₂ ≥ 95%) at 6,500–6,800 yuan per ton. As of November, the cumulative import volume of titanium concentrate this year has reached 4.656 million tons, a year-on-year increase of 3.38%. The price of imported ore has also continued its downward trend since the second quarter. The main reasons include persistently weak demand for major titanium products such as titanium dioxide and sponge titanium, a sharp decline in titanium dioxide prices leading to cost-price inversion, and widespread price pressure from buyers. At the same time, the price of domestic ore (from the Panxi region), as a major competitor, has continued to fall, forcing importers to adjust their quotations downward accordingly. Although the supply of imported ore tightened somewhat in the second half of the year, with weaker market willingness to sell, transaction prices still followed the overall market downtrend. Looking ahead, the price of imported titanium ore is expected to continue adjusting in line with the trend of domestic ore, and the profit margins for ore traders may further shrink. As terminal demand gradually recovers slightly, the sluggish state of the titanium ore market is expected to ease. In the long term, the price gap between imported and domestic ore is projected to narrow gradually. II. Titanium Dioxide Market: Sulfuric Acid Cost Transmission and Industry Challenges Sulfuric Acid: Year-Long Price Surge Leading to Widespread losses in Sulfate-Process Titanium Dioxide Industry As of December 31, the price of smelting acid (sulfuric acid) in the Anhui region (ex-factory price) is reported at 870–960 yuan per ton, an increase of 181.5% compared to the beginning of the year. In the Henan region, the smelting acid (sulfuric acid) price (ex-factory price) is 840–900 yuan per ton, up 222% year-on-year. In the Yunnan region, the smelting acid (sulfuric acid) price (ex-factory price) is 840–880 yuan per ton, an increase of 72% compared to the beginning of the year. Throughout 2025, especially in the fourth quarter, the sulfuric acid market experienced sustained price surges, placing significant cost pressure on the sulfate-process titanium dioxide industry. The persistently high prices of sulfuric acid are primarily driven by multiple international and domestic factors: International Market: The demand for sulfur from Indonesia's nickel mining projects has increased significantly, creating new demand support; Russia implemented an industrial sulfur export ban in November, substantially tightening global sulfur supply. Domestic Market: In the fourth quarter, the fertilizer industry entered its concentrated winter stocking phase. Chemical enterprises' winter fertilizer reserves led to a sharp rise in sulfuric acid demand. Coupled with tightening supply, the market faced a supply-demand imbalance, collectively driving the rapid increase in sulfuric acid prices. As a key raw material for sulfate-process titanium dioxide production, the high price of sulfuric acid has placed significant cost pressure on titanium dioxide manufacturers, further exacerbating the operational burdens of related producers. Since mid-December, sulfuric acid prices have entered a phase of consolidation at high levels, showing a slight downward trend. The government has taken measures to regulate sulfur and sulfuric acid market prices, such as restricting exports in the phosphorus chemical fertilizer industry from mid-December to August next year. After the winter fertilizer stocking period ends, it is expected that the operating rates in the fertilizer industry will gradually decline, thereby reducing demand for sulfuric acid. Although sulfuric acid prices are anticipated to decrease after the start of the year, they are unlikely to return to the low levels seen at the beginning of 2025. In the long term, guided by national policies and with the leadership of large state-owned enterprises, sulfuric acid prices are expected to gradually return to a rational range. Titanium Dioxide: Prices Rose First Then Fell in 2025, with Losses and Export Pressure Throughout the Year As of December 31, the domestic price of anatase titanium dioxide is quoted at 12,100–12,500 yuan per ton, with an average price of 12,300 yuan per ton, a decrease of 6.5% compared to the beginning of the year. The price of rutile titanium dioxide is quoted at 12,800–14,200 yuan per ton, with an average price of 13,300 yuan per ton, down 6.9% from the start of the year. The domestic price of chloride-process titanium dioxide is quoted at 13,600–17,000 yuan per ton, with an average price of 15,300 yuan per ton. This year, China's titanium dioxide production reached 4.178 million tons, a year-on-year decrease of 6.98%, while the production capacity expanded to 5.25 million tons, an increase of 6.84% compared to the previous year. The titanium dioxide industry issued a cumulative total of seven price adjustment notices this year, but price and cost pressures continued to intensify. Specifically: January–March: Prices Remained Stable At the beginning of the year, titanium dioxide prices remained high, driven by strong domestic stocking demand and the anticipation of India imposing additional tariffs starting in April, which led to a significant rush in export orders. Meanwhile, maintenance work at some manufacturers before the Spring Festival resulted in supply contraction and continuous inventory reduction, prompting the industry to issue two rounds of price increase notices. April–August: Accelerated Decline Titanium dioxide production capacity continued to expand, but actual demand remained weak. Export markets saw price declines due to anti-dumping policies in multiple countries, while domestic terminal consumption remained sluggish. Many companies were forced to lower prices and initiate production cuts to alleviate high inventory pressure. September–October: Slight Rebound The traditional "Golden September and Silver October" peak season drove a temporary recovery in domestic demand, prompting titanium dioxide companies to issue two rounds of price increase notices aimed at halting the decline and stimulating the market. However, exports continued to be suppressed by anti-dumping policies in regions such as India, Brazil, and the European Union. October–December: Weak Consolidation Starting in October, a sharp rise in sulfuric acid prices led to losses across the entire sulfate-process titanium dioxide industry. Leading companies lowered their chloride-process product prices under competitive pressure, while overall market demand remained weak and competition intensified. As earlier production cuts and sales efforts progressed, industry inventory pressure eased somewhat. From late November, companies once again issued price increase notices to mitigate losses, followed by further price adjustments at the end of December to consolidate the gains. In terms of product structure, the price gap between chloride-process and sulfate-process titanium dioxide continued to narrow this year. Meanwhile, the quoted price range for domestic chloride-process products significantly widened, with a notable divergence between high-end and mid-to-low-end product prices. On whether chloride-process can form long-term competition with sulfate-process: From a cost perspective, chloride-process technology has certain cost support, while sulfate-process currently relies on high sulfuric acid prices to maintain its quotations. If sulfuric acid prices gradually decline under policy regulation in the future, sulfate-process prices will also adjust downward. From a demand perspective, end-users' habits regarding product types are relatively stable, making a large-scale shift from sulfate-process to chloride-process unlikely in the short term, especially amid frequent price fluctuations. Existing sulfate-process users are unlikely to easily adjust their procurement structures. Overall, it is expected that the price gap between the two will remain stable or slightly widen in 2026. From the export market perspective, the foreign trade situation was challenging this year. Major consumer countries such as India and the European Union continued to implement anti-dumping policies on titanium dioxide. To maintain export shares, companies often had to resort to methods such as rebates when selling to related end-users, significantly squeezing profit margins. Additionally, China's sulfate-process titanium dioxide faced intense competition in overseas markets, with quoted prices gradually being compressed. In mid-December, India announced the cancellation of anti-dumping measures against Chinese titanium dioxide, providing positive support for exports to regions such as Southeast Asia and alleviating market pressure. Looking ahead to 2026, the titanium dioxide export industry is expected to continue its trend of survival of the fittest, with companies needing to consolidate their market shares and enhance competitiveness amid fierce competition. In terms of prices, after a year of low-price operations, titanium dioxide prices saw a gradual increase in market optimism toward the end of the year, supported by the issuance of two rounds of price increase notices. Additionally, some regional companies are scheduled for pre-Spring Festival maintenance in January, with current production focused on fulfilling previous orders. After the Spring Festival, as demand recovers, titanium dioxide prices are expected to rise slightly. In the long term, sulfate-process product prices will still depend on raw material cost support, and terminal demand is unlikely to see significant growth. If raw material prices decline in the future, coupled with continuous industry capacity expansion, the titanium dioxide market may continue to operate at low levels with a weak trend. III. Titanium Metal Market: Market Dynamics Amid Capacity Expansion and Structural Demand Sponge Titanium: Prices Rose First Then Fell, Consolidating Under Capacity Expansion and Export Constraints As of December 31, the price of Grade 0 sponge titanium is quoted at 46,000–48,000 yuan per ton, an increase of 3.2% compared to the beginning of the year. China's annual sponge titanium production reached 270,000 tons, a year-on-year increase of 4.42%. The price trend of the sponge titanium market throughout the year followed a pattern of rising first and then falling: Accelerated Rise in the First Half: Driven by the International Titanium Expo, demand experienced a temporary boost. Additionally, significant project growth in high-end sectors such as military and aerospace led to supply shortages, with enterprise inventories remaining consistently low. Gradual Decline in the Second Half: Demand in the civilian sector weakened, industry inventories gradually accumulated, and the traditional off-season further subdued market activity. Although some enterprises announced production controls in the third quarter, the actual demand response was limited, failing to reverse the downward trend. Simultaneously, foreign trade orders significantly decreased compared to the first half, collectively causing sponge titanium prices to continue adjusting downward. By the end of the year, the overall industry had entered a state of consolidation at low levels. In 2025, the sponge titanium industry experienced significant capacity expansion. However, amid ongoing export restrictions on titanium products, the market supply-demand structure failed to improve correspondingly. As a result, sponge titanium prices have remained in a consolidation phase, supported primarily by cost factors. Titanium Materials: Structural Divergence in the Market with Strong High-End Demand but Pressure on Civilian and Export Sectors As of December 31, the prices of major titanium material products are as follows: TA1 titanium ingot at 55–56 yuan/kg, TA2 titanium ingot at 53–54 yuan/kg, TC4 titanium alloy at 60–61 yuan/kg; hot-rolled titanium plate (3–8mm) at 62–63 yuan/kg, titanium welded pipe at 115–125 yuan/kg, pure titanium bar at 100–105 yuan/kg, and pure alloy bar at 115–125 yuan/kg. This year, titanium material prices generally followed the trend of upstream sponge titanium, showing a pattern of rising first and then falling. High-end market demand remained robust, particularly with significant growth in sectors such as military and aerospace. However, in civilian sectors such as chemical and marine equipment, project progress was slow, limiting demand release. Although the nuclear power sector holds some potential, its overall consumption remains relatively small, providing limited support to the market. In terms of exports, the inclusion of titanium products in the dual-use items control list and strengthened customs enforcement have resulted in overall subdued performance in titanium material exports, without generating significant incremental growth. On the cost side, rising tungsten prices toward the year-end led to price increases for processing tools such as drill bits, indirectly driving slight price increases for products like titanium plates. Overall, the future trend of the titanium materials market will depend on the progress of civilian projects and the export policy environment. The market is currently in a consolidation phase, with significant breakthroughs unlikely in the short term.

SMM January 5: Dealers in Anhui reported sluggish consumption in the end-use market for e-bike lead-acid batteries, with no improvement in battery sales. Due to active sales promotions by manufacturers around the year-end, battery inventory exceeded one month. The main model, 48V12Ah, was priced at 300 yuan per unit. Manufacturers in Jiangxi reported weak replacement demand in the e-bike lead-acid battery market. After completing the previous year's sales plan, dealers restocked less following the holiday. Currently, factories produce based on sales, with operating rates ranging from 70% to 80%. Manufacturers in Zhejiang reported that due to the impact of the new national standard for e-bikes, consumers are still in an adaptation period, resulting in poor orders for complete vehicle supporting. During the New Year's holiday, factories were closed for four days, and production lines resumed operation today. Currently, raw material lead is primarily used to digest existing inventories.

LME Zinc: At the beginning of the week, driven by gains in other metals, LME zinc opened higher with a gap and continued to rise; subsequently, as recent LME inventory increased to over 100,000 mt, the supply-demand imbalance eased somewhat, and LME zinc declined continuously; then, the US December Dallas Fed business activity index recorded -10.9, lower than the previous value and expectations, the market digested the impact of the data, the US dollar index fell, and LME zinc moved higher; subsequently, the US Fed released the December meeting minutes, which showed serious divergence among Fed officials, with most supporting further interest rate cuts, but data showed the US December Chicago PMI recorded 43.5, significantly higher than the previous value and expectations, the US dollar index accelerated its rise, and LME zinc moved lower; then LME zinc rose slightly. As of 15:00 this Wednesday, LME zinc recorded $3,108/mt, up $21.5/mt, an increase of 0.70%. SHFE Zinc: At the beginning of the week, domestic social inventory continued to decline, and driven by the strength of copper and other metals, SHFE zinc continued to rise; subsequently, as overall end-user demand performance was relatively average, and demand in the north pulled back slightly due to environmental protection-driven production restrictions, SHFE zinc's rise was hindered and it fell continuously; then, recent domestic macro sentiment was relatively positive, coupled with the rise in LME zinc, with macro support and the correlation between SHFE and LME, SHFE zinc stopped falling and rose; subsequently, SHFE zinc maintained a brief fluctuating trend; however, looking at smelter conditions next month, domestic refined zinc production is expected to increase slightly, and SHFE zinc was suppressed and fell slightly; then SHFE zinc rose slightly. As of 15:00 this Wednesday, SHFE zinc recorded 23,275 yuan/mt, up 105 yuan/mt, an increase of 0.45%.

LME Zinc: At the beginning of the week, the US dollar index retreated from highs, but the continuous increase in LME zinc ingot inventory suppressed zinc prices, and LME zinc maintained a fluctuating trend. Subsequently, the US dollar index continued to weaken, nonferrous metals generally rose, and LME zinc rose in response. However, the LME market's 0-3 Contango structure persisted, putting LME zinc under pressure and causing it to pull back slightly. Later, the US Q3 real GDP expanded at a rate of 4.3%, the fastest growth in two years. The strong economic data boosted demand prospects, market sentiment was relatively positive, and this pushed LME zinc higher. Then, as overseas inventories continued to increase, breaking through the 100,000 mt mark, upward pressure on prices emerged, and LME zinc moved lower under pressure. Subsequently, the market was closed for the Christmas holiday. As of 3:00 Thursday, LME zinc was recorded at $3,086.5/mt, up $8.5/mt, an increase of 0.28%. SHFE Zinc: At the beginning of the week, SHFE zinc continued last week's fluctuating trend. Subsequently, although increased domestic social inventory and mediocre end-use consumption dragged down the price center of zinc, expectations for domestic zinc ingot production cuts provided support, and prices maintained a fluctuating pattern. Then, driven by the external market, SHFE zinc opened higher with a gap. However, year-end downstream consumption was generally weak, coupled with the closure of the zinc ingot export window, upward momentum was insufficient, and prices turned to a continuous decline. Later, disturbed by persistently low zinc concentrate TCs, the center of SHFE zinc prices rose again. However, under the influence of continuously increasing overseas inventories, LME zinc moved lower, subsequently dragging SHFE zinc down in sync. But market expectations for domestic supply reductions remained, and coupled with a decline in domestic zinc ingot inventory, SHFE zinc continued to rise. As of 15:00 Friday, SHFE zinc was recorded at 23,170 yuan/mt, up 95 yuan/mt, an increase of 0.41%.

I. Import Scale Analysis: Total Volume Growth and Structural Shifts According to data from the General Administration of Customs, China's cumulative import volume of recycled copper raw materials reached 1.8956 million physical tonnes from January to October 2025, representing a year-on-year increase of 1.97% and maintaining a relatively stable overall scale. In October 2025, imports saw a significant surge, rising from 179,000 physical tonnes in September to 196,000 physical tonnes. While import volumes had previously declined between May and July due to trade frictions, particularly affecting supply from the United States. The market recovered steadily from August through October. This rebound was primarily driven by disruptions in copper concentrate supply and high primary copper prices which increased the demand for scrap as a substitute, alongside increased exports from major non-US suppliers such as Japan, Thailand, and South Korea. Furthermore, a slight improvement in China-US trade relations and a bullish sentiment among enterprises leading to aggressive stockpiling contributed to the spike in volume. Although domestic prices did not fully mirror international gains, the inability of overseas consumers to absorb the high supply volume forced international yards to continue exporting to China. However, SMM predicts a pullback in November as downstream inventories reach saturation and processors resist higher prices amid a generally loose supply environment. II. Annual Price Trends of Imported Copper Scrap Throughout 2025, the price of imported copper scrap remained closely linked to LME copper prices, characterized by intense volatility followed by a powerful upward trajectory. During the first quarter, prices experienced a significant rally in February and March fueled by optimistic global macroeconomic expectations and loose liquidity, only to plummet in April as escalating China-US trade tensions triggered panic across the commodities market. By the second and third quarters, the market bottomed out and began an oscillating ascent, with Zhejiang Millberry prices stabilizing between 77,000 and 79,000 RMB per tonne. This recovery was bolstered by positive macro sentiment and expectations of Federal Reserve rate cuts, which enhanced market liquidity and speculative demand. The trend culminated in a during the fourth quarter, where Zhejiang Millberry prices surged from approximately 79,400 RMB per tonne in September to a historic peak of 87,400 RMB per tonne. This cumulative increase of 8,000 RMB per tonne was catalyzed by a combination of frequent mining accidents tightening raw material supply, ongoing macro rate-cut expectations, and anticipated production cuts by Chinese smelters, all of which drove LME copper to new heights and pulled scrap prices up in tandem. III. Future Outlook: Policy Risks and Resource Protectionism Looking toward the future, the landscape of the recycled copper market is being reshaped by significant shifts in international trade policy that introduce long-term uncertainty. The United States has not only imposed tariffs on copper semi-finished products but has also announced a mandate starting in 2027 requiring at least 25% of high-quality recycled copper to remain within its domestic market. Simultaneously, the European Union has begun restricting the export of untreated or "problematic" recycled metals to non-OECD countries, requiring stringent pre-treatment before any cross-border movement. These actions signal a rising tide of resource protectionism as major economies move to secure their internal supply chains, which is expected to accelerate the regionalization of the global recycled copper trade and potentially limit the volume of transoceanic circulation. Under these complex and evolving conditions, many traders are preparing for a volatile and fragmented market in 2026, anticipating a period characterized by heightened confusion and structural uncertainty.

I. Industry Overview: High Growth Momentum Continues in the New Energy Sector, but Growth Logic Shifts In 2025, the global NEV and power battery industries continued to operate with high growth momentum, with the overall industry scale further expanding. From a macro environment perspective, the global new energy sector is simultaneously influenced by multiple factors: first, the NEV penetration rate in major economies has reached a medium-to-high level, leading to a natural slowdown in marginal growth rates; second, rising trade frictions, geopolitical tensions, and industrial security demands are gradually shifting the new energy industry from "prioritizing globalized efficiency" to "balancing security, compliance, and localization"; third, price cyclical fluctuations in the industry chain are becoming more frequent, with ongoing competition between upstream resources and midstream manufacturing segments. Against this backdrop, 2025 marks a critical year for the new energy industry's transition from a "phase of rapid expansion" to a "phase of structural competition." Overall, the NEV market remains highly sensitive to policies. II. Global NEV Market: Overall Growth Continues, with Significant Regional Divergence in Pace From a global perspective, passenger NEV sales continued to grow positively in 2025, but the growth pace and driving factors varied significantly across regions. From the passenger vehicle perspective, the Chinese market remains the "ballast stone" of global NEV demand. Driven by continuous product upgrades and a gradual downward trend in pricing, the penetration rate of NEVs in the Chinese passenger vehicle market further increased, with NEV car models gradually covering mainstream consumer segments. In contrast, the European market, amid subsidy phase-outs, anti-subsidy investigations, and ongoing debates over carbon emission policies, saw positive NEV sales growth compared to the previous year, but the auto sales growth rate fell short of market expectations, making it a year of mild recovery overall. The US market exhibited clear policy-driven characteristics. The IRA Act continued to steer investments in the NEV and power battery industry chain toward localization, with NEV sales growth largely dependent on subsidies, tax incentives, and local supply chain development. However, in July this year, the US government passed the One Big Beautiful Bill Act (OBBBA), which eliminated tax credits for NEVs. The subsequent development of the US NEV market, now lacking policy support, is viewed with considerable pessimism. Overall, the global NEV market has shifted from "synchronized high growth" to "regionally divergent operation," with differences in policies, costs, and product structures across markets profoundly impacting automakers' product and capacity planning. III. Chinese NEV Market: Strong Domestic Demand Resilience and Ongoing Structural Upgrades In 2025, domestic sales of passenger NEVs in China demonstrated overall stability, with notable resilience in market demand. Demand structure-wise, mid- to low-priced new energy car models continued to see volume growth, with new energy vehicles gradually shifting from "policy-driven consumption" to "cost-performance-driven consumption." In terms of model structure, A- and B-segment BEV models remained the core support for new energy sales, while plug-in hybrid electric vehicles (PHEVs) performed particularly prominently throughout the year. PHEV models balance driving range, refueling convenience, and vehicle cost while adapting to more usage scenarios, demonstrating clear advantages especially in regions with underdeveloped charging infrastructure or larger usage radii. From the consumer side, acceptance of new energy vehicles continued to rise in both first-time household purchases and additional purchases, with users paying significantly more attention to battery safety, usage costs, and residual value stability. This has, to some extent, boosted the preference for LFP systems and plug-in hybrid models. IV. New Energy Vehicle Exports: Concurrent Growth in Volume and Restructuring In 2025, China's new energy vehicle exports maintained rapid growth, but the export structure underwent significant changes. Influenced by Europe's anti-subsidy investigations and additional tariffs on Chinese BEVs, automakers proactively adjusted their product mix in export strategies. Specifically, BEV exports faced rising compliance and tariff costs, weakening their price competitiveness in some overseas markets. In contrast, PHEV models, not subject to the relevant anti-subsidy tariffs, encountered relatively smaller export resistance, becoming a key option for automakers' exports. Against this backdrop, China's new energy vehicle exports gradually shifted from "BEV-dominated" to a new pattern of "PHEV and BEV coexisting, with PHEV share increasing." This change not only affected the structure of vehicle exports but also had a profound impact on the demand structure for power batteries. V. Power Battery Demand: Installations Hit a Record High, Demand Center Significantly Shifted Upward Driven by the sustained growth in new energy vehicle sales, power battery installation demand remained high overall in 2025, with the industry's demand center noticeably higher than in previous years. Application-wise, passenger vehicles remained the core source of power battery demand; the commercial vehicle sector, supported by both policy incentives and improved economics, provided an important supplement to power battery demand. Logistics vehicles, urban distribution vehicles, and battery-swapping heavy-duty truck projects showed phased concentrated releases throughout the year, boosting battery capacity per vehicle and providing structural boosts to power batteries. Notably, the rapid growth in ESS battery demand had an "indirect impact" on the power battery industry. Some battery cell capacity shifted toward the ESS sector, leading to a relatively restrained supply pace for power batteries, which, to some extent, alleviated phased supply pressure in the power battery field. VI. Supply-Demand Pattern: Production Schedules Remain High, Industry Competition Becomes More Rational Supply side, the pace of capacity expansion in the power battery industry in 2025 slowed down significantly compared to previous years. After large-scale expansions, top-tier enterprises focused more on capacity utilization rates and order quality rather than simply pursuing scale expansion. Against the backdrop of relatively stable demand and slowing supply expansion, the supply-demand pattern of the power battery industry improved markedly compared to earlier periods. For most of the year, the industry operated with "full production schedules and controllable inventory levels," leading to a more stable price system and a reduction in extreme price competition. VII. Technology Route Evolution: LFP System Dominates Overall, Ternary System Stabilizes Structurally From a technology perspective, LFP batteries remained the absolute mainstay of the power battery market. Their comprehensive advantages in cost, safety, cycle life, and compatibility with plug-in hybrid car models continued to expand their application in passenger and commercial vehicles. As the LFP system continued to improve in energy density and fast-charging performance, its application scenarios extended to higher-end car models, further consolidating its dominant market position. For ternary batteries, although their overall market share was unlikely to return to previous highs, demand remained relatively stable in high-end BEV models, some export models, and applications requiring high energy density. In 2025, the ternary system overall showed signs of "bottoming out and structural recovery" rather than a continued decline. VIII. Industry Chain Prices: Cost Fluctuations Dominate, Battery Cell Prices Show Enhanced Resilience In 2025, the price dynamics of the power battery industry chain were primarily cost-driven. Prices of upstream lithium chemicals saw periodic strength due to supply disruptions, resource-side negotiations, and market sentiment, which gradually transmitted to cathode materials, electrolytes, and other segments, increasing battery cell manufacturing costs. Against this backdrop, power battery cell prices generally held up well. Battery enterprises mitigated raw material price volatility risks through periodic price adjustments, long-term agreement lock-ins, and customer structure optimization, leading to some recovery in industry profit levels compared to earlier periods. IX. Global Policies and Industry Dynamics: Compliance Costs Become a Core Variable In 2025, the global policy environment for the new energy industry became significantly more complex. The implementation of European anti-subsidy investigations, battery passports, carbon emission assessments, along with the US strengthening its local supply chain security through subsidies and tariff policies, profoundly impacted the global layout of the new energy industry. In this context, vehicle manufacturers and battery plants accelerated the layout of overseas capacity and supply chains, reducing trade and policy risks through localized production and compliance investments. The competitive logic of the new energy industry is evolving from "competition based on cost advantages" to a comprehensive competition stage of "cost + compliance + global delivery capability." X. Annual Summary and Outlook: High Growth Momentum Continues, Structural Competition Becomes the Main Theme Overall, in 2025, the power battery and new energy vehicle (NEV) industries remain in a high-growth cycle, but industry growth has clearly entered a phase of "structural competition." The penetration rate of NEVs continues to rise, and power battery demand fluctuates at highs, while differentiation in technology routes, regional markets, and policy environments intensifies. Looking ahead, the industry will enter a new stage characterized by stabilizing growth rates, intensified competition, and deepening global competition. Enterprises with scale advantages, cost control capabilities, and overseas compliance and delivery capabilities are expected to continuously expand their leading advantages in the new round of industrial competition.

As 2025 draws to a close, Indonesia’s nickel ore market remains characterized by tight supply and structural shifts. Despite downward pressure from weak downstream prices, the market has found a floor through stringent RKAB (Work Plan and Budget) controls and escalating production costs. The government’s intensified inspections and the transition toward a more restrictive 2026 quota system have effectively constrained raw material availability, preventing a total price collapse. Section 1: The Regulatory "Squeeze" (The Indonesia Review) In 2025, Indonesia reshaped its nickel sector into a high-value, digitally-controlled industry through four key strategic shifts, which includes: In addition to this regulation, President Prabowo Subianto has intensified enforcement against non-compliant mines, with nickel operations becoming a key focus. Several companies have been sanctioned or temporarily sealed for forestry and permitting violations, while the Forest Area Enforcement Task Force (Satgas PKH) continues inspections across major mining regions to tighten oversight and control supply. Section 2: Indonesian Nickel Ore Price and Supply Demand In the first half of 2025, nickel ore prices were firmly supported by tight supply and strong restocking demand. Prolonged rainfall in Sulawesi and delays in effective RKAB quota execution restricted mine output, keeping saprolite supply particularly tight and pushing premiums to around $22/wmt in Q1, with prices continuing to rise into Q2. Limonite prices also strengthened early in the year, supported by limited spot availability and steady demand. On the demand side, Indonesian NPI smelters entered the year with low inventories and actively restocked after the Chinese New Year. The introduction of the semi-monthly HPM pricing system and the April implementation of higher progressive royalties further reinforced miners’ pricing power, lifting overall ore price levels in H1. In the second half of the year, market conditions gradually shifted as RKAB quota revisions were increasingly approved, leading to a visible improvement in supply. Saprolite prices became more volatile rather than trending higher, with periodic support from smelter procurement, especially ahead of quota resets, but overall upside was capped as supply normalized. Limonite prices, by contrast, moved into a clearer downtrend throughout H2, as abundant supply from approved quotas met relatively flat downstream demand. As a result, while saprolite retained some structural support due to its tighter balance, limonite remained under sustained price pressure, defining a more polarized ore market in the second half of 2025. From a stockpiling perspective, RKEF smelters, remained under pressure for most of the year, with many holding less than two months of ore inventory. Elevated fuel costs and persistent logistical constraints further complicated restocking, and in some regions, procurement efforts were only partially successful. This supply tightness increased the urgency to secure cargoes, prompting buyers to accept higher prices during the quarter, even as overall inventories continued to trend lower on expectations of improved supply conditions in the following quarter. For HPAL smelters, the Then, it began to improve modestly in Q2 as most smelters stepped up replenishment efforts. Saprolite inventories bottomed out in April at around 1.7 months, prompting gradual restocking through May and June despite worsening cost inversion. In the second half of the year, ore inventories became more volatile but generally trended higher, driven by heightened procurement following news of the upcoming RKAB reset. Smelters accelerated stockpiling to hedge against rainy-season disruptions and the continued slow pace of RKAB approvals, providing intermittent support to procurement activity. Section 3: Philippines Nickel Ore Price and Supply Demand In 2025, Philippine nickel ore imports to Indonesia are projected to achieve a 14% year-on-year growth, reached approximately 15+ million tons, primarily driven by a surge in demand from Indonesian smelters for blending purposes. The annual price trend followed a "high-start, low-end" pattern. In Q1, prices peaked as Indonesian smelters increased imports from the Philippines to offset domestic supply shortages caused by RKAB quota delays and heavy rainfall in Sulawesi. This demand coincided with the Philippines’ own rainy season in Surigao, resulting in a supply-demand imbalance that pushed prices to their annual high. From supply perspective, first half of the year the import volume increases significantly and second half of the year showed a more stable By Q2, prices remained elevated despite increased Philippine output as the rainy season ended. This support came from a recovery in China’s NPI and stainless steel markets, alongside higher Indonesian production costs following the implementation of the PNBP policy. However, Q3 marked a significant price correction; Chinese demand for stainless steel underperformed during the "Golden September" period, and Indonesia released supplementary RKAB quotas, reducing the need for Philippine imports. In Q4, market activity slowed as smelters finalized winter stockpiling, leading to price stabilization within a narrow range. Section 4: Outlook for 2026 In 2026, the Indonesian nickel ore market will navigate a complex balance between surging hydrometallurgical demand and tighter government supply controls. During the first half of the year, the market is expected to remain tight as the transition to the 2026 annual RKAB system typically causes administrative bottlenecks in Q1, potentially delaying full-scale mining approvals. This seasonal constraint is intensified by the ongoing rainy season in Sulawesi and Halmahera, which limits ore extraction and logistics. However, as the weather clears in Q2 and new quotas are gradually released, supply is expected to recover just as a wave of new projects, particularly MHP projects, which is ramping up their procurement activities, creating a strong demand floor. The second half of 2026 will be defined by a "supply-demand resonance" as industrial capacity expands further. While Q3 may see another seasonal dip in production due to the returning rains, the government is likely to issue supplementary RKAB approvals for compliant miners who exhausted their initial quotas in the first half. Crucially, the Indonesian government has signaled a plan to reduce the total 2026 quota to prevent global oversupply and stabilize prices. This policy, combined with declining average ore grades that require higher volumes of feed, will likely keep nickel ore prices elevated and volatile as the year closes with even more smelters entering full operational status.

2025 is regarded as the inaugural year of a "mild growth cycle" for the global stainless steel industry. Amid the dual pressures of a sluggish global manufacturing recovery and rising trade protectionism, the center of gravity for industrial supply has accelerated its shift toward Asia. Southeast Asia, in particular, has emerged as the core source of global incremental growth. Concurrently, the advancement of carbon neutrality policies and significant regional disparities in energy costs are driving the global market toward a bifurcated "regionalized" landscape. Industry competition is evolving from simple scale expansion to deep structural optimization and green transformation. I. 2025 Overseas Market Review: Southward Shift and Zero-Sum Dynamics Regional Supply: Indonesia’s Dominance and India’s Rise According to SMM data, in 2025, global crude stainless steel production remained high at approximately 63.26 million tons, with Asia’s share of production further climbing to around 86% of the global total. Leveraging highly competitive raw material costs and the advantages of integrated RKEF (Rotary Kiln Electric Furnace) processes, Indonesia maintained a rapid growth rate of approximately 6.2%. This not only solidified its position as the global source of low-cost stainless steel slabs and hot-rolled coils but also profoundly reshaped global trade flows. Meanwhile, India emerged as another major growth pole. Driven by robust infrastructure investment and domestic manufacturing policies, India’s capacity expanded steadily. By establishing non-tariff barriers such as BIS certification, India successfully built a defensive system, effectively replacing imports with domestic supply and joining Indonesia as a dual engine for Asian growth. The Western Dilemma: High Energy Costs and Capacity Marginalization In contrast to the vibrant Asian market, the stainless steel industries in Europe and North America faced severe survival challenges in 2025. Squeezed by the "triple threat" of high energy costs, elevated labor expenses, and increasingly stringent environmental compliance requirements, high-cost capacity in the West accelerated toward marginalization. Many plants operated at low utilization rates or entered prolonged shutdowns. To protect fragile domestic supply chains, Western nations resorted to high trade barriers, including increased tariffs, anti-dumping investigations, and the early deployment of the Carbon Border Adjustment Mechanism (CBAM). While this defensive posture slowed the shrinkage of domestic markets, it also caused Western stainless steel prices to decouple from global benchmarks, resulting in significant premiums. Macro Environment: The "Scissors Gap" between Rate Cuts and Weak Manufacturing At the macro level, the Federal Reserve entered a rate-cutting cycle in 2025, providing a degree of bottom support for metal prices through improved global liquidity. However, this monetary easing failed to translate quickly into physical demand. Manufacturing PMIs in the U.S. and Europe fluctuated below the expansion-contraction threshold for much of the year. This "loose money, weak demand" pattern led to sluggish consumption growth in high-end manufacturing, appliances, and durable goods. Coupled with persistent supply-side easing, stainless steel prices encountered significant resistance during rallies, resulting in a market characterized by wide fluctuations and narrowing profit margins. Raw Material Performance: Supply Volatility, Cost Pulses, and Strategic Scrap Use The cost side of stainless steel showed extreme sensitivity and uncertainty in 2025, with raw material fluctuations directly defining the survival boundaries of enterprises. As the core supplier, Indonesia’s erratic RKAB (Work Plan and Budget) approval progress became a key variable. Quota shortages triggered rapid surges in ferronickel costs, creating "pulse-like" spikes. Meanwhile, global reliance on South African chrome ore remained high. Limited by local logistical bottlenecks and rising electricity costs, ferrochrome prices fluctuated at high levels, providing a firm floor for stainless steel prices. Notably, the raw material structure in the European market underwent a qualitative change. Despite weak demand for finished products, the price of austenitic scrap (304 grade) remained exceptionally firm. This was driven by leading European mills aggressively increasing scrap ratios to replace primary raw materials and reduce their carbon footprint. In this context, scrap evolved from a simple cost-adjustment tool into a key strategic resource, with its pricing logic increasingly tied to carbon emission reduction values. This heavy reliance on specific regional supplies or low-carbon resources has prompted companies to accelerate the layout of diversified supply chains, making long-term agreements and raw material self-sufficiency core metrics of competitiveness. Demand Analysis: Regional Polarization and Structural Transition Global consumption in 2025 exhibited extreme regional divergence. Under the lingering effects of high inflation and energy costs, consumption of appliances and durables in the West remained depressed. Europe: The market fell into a stalemate. Facing uncertain macro demand, European distributors adopted extremely conservative inventory strategies, maintaining only "hand-to-mouth" procurement. This led to a sharp drop in shipments from major European mills, with order visibility hitting historic lows. While mills attempted to pass on costs via high "alloy surcharges," base prices remained suppressed by fierce competition from low-priced Asian imports, despite trade safeguards. North America: A profound supply chain restructuring is underway. Facing geopolitical uncertainties, North American buyers accelerated the regionalization of their supply chains in 2025. To mitigate transoceanic logistical risks (e.g., the Red Sea crisis) and potential tariff fluctuations, many shifted their procurement focus from Asia to Mexico or Canada. This "near-shoring" trend prompted mills to adjust their capacity layouts and supply priorities within the Americas. Green Premium Reality: Market feedback in 2025 revealed that a "green premium" is not yet universal. The willingness to pay extra is currently concentrated in niche sectors where end-users have clear Scope 3 reduction targets (e.g., EU public procurement, multinational consumer brands). In broader construction and general industrial sectors, price remains the sole deciding factor. As the EU further tightens imports through CBAM and safeguards, products from China, Taiwan (China), and Indonesia originally destined for Europe may flow back into Asia, potentially turning the ASEAN market into a "dumping ground" for low-priced goods. II. 2026 Market Outlook: Rule Changes and Logic Reconstruction Green Trade: The Substantive Impact of the CBAM Charging Period Looking ahead to 2026, the most critical turning point in global trade will be the official commencement of the CBAM charging period. This means Asian suppliers relying on coal power and traditional RKEF processes will face significant carbon tax costs when exporting to Europe. This policy will force factories in Indonesia and elsewhere to accelerate the transition from "black" to "green" energy or seek alternative markets with lower carbon barriers, such as Eastern Europe or parts of Southeast Asia. 2026 will witness the substantive transformation of carbon emission rights from an "environmental concept" into a "production cost." Supply-Demand Pattern: Further Market Fragmentation Global crude stainless steel production is expected to maintain a modest compound growth rate of about 2.5% in 2026. However, this growth will be geographically uneven. The global market will further split into two parallel worlds: High-Price Closed Zones (West): Characterized by high tariffs and carbon taxes, regional prices will remain high, but total demand growth will be stagnant due to the slow return of manufacturing. Intense Competition Zones (SEA, Middle East, Africa): Capacity from Indonesia, China, and India will engage in fierce cost-based competition, significantly increasing market volatility. Pricing Logic: External Drivers for Steady Recovery SMM believes that global stainless steel prices will enter a steady and moderate recovery track in 2026. This recovery will not be driven by explosive terminal demand, but rather by substantive improvements in the global macro environment and the endogenous repair momentum of the industrial chain after a period of deep profit inversion. As inflationary pressures ease and financing costs in major economies decline, the release of global liquidity will slowly lift the pricing center for stainless steel. Furthermore, after the extreme cycle of 2025 where margins were squeezed to their limits, the production side will show a strong desire for price recovery. This repair logic is not just a result of rigid cost support, but a natural outcome of the industry attempting to reverse the unsustainable state of long-term cost-price divergence through production cuts and price-holding strategies. Additionally, pricing logic will return further to industrial fundamentals. The Indonesian government is expected to continue tightening export quota management for mineral resources and guiding the industry toward high-value-added downstream processing. This may drive structural changes in global nickel flows. With the implementation of "anti-involution" (anti-cutthroat competition) policies and the natural exit of overcapacity, the global supply-demand balance is expected to see marginal improvement. The core focus of competition will shift systematically toward green/low-carbon levels, cost resilience, and the ability to capture structural growth opportunities. Conclusion: Finding Structural Opportunities Amid Uncertainty The 2025 review reveals an industry undergoing profound transition, while the 2026 outlook points to a more complex future governed by "rule-based" competition. In the context of global supply chain restructuring, stainless steel enterprises must find a balance between enhancing low-carbon competitive advantages and optimizing global supply chain layouts. The future winners will no longer be those who rely solely on scale, but those who can flexibly allocate resources in a fragmented market, navigate trade barriers, and lead the green transition. Written by: Bruce Chew