[SMM Coke and Coking Coal Daily Briefing] Coking Coal Market: Low-sulphur coking coal in Linfen is quoted at 2,050 yuan/mt. Coking coal side, supply disruptions at production sites are frequent, production resumptions are progressing slowly, and resources remain tight. Recently, arrivals at downstream coke enterprises have improved, and coupled with rising resistance to high prices, purchases by steel mills and traders are trending cautious. Coal mine shipments have weakened, and bids lack the momentum to rise. However, inventory at most mine sites is low, and mines are firmly holding prices steady, keeping mainstream coal prices free from significant declines, with only some high-priced coal undergoing slight corrections. Coke Market: The nationwide average price of quasi-first-grade metallurgical coke - dry quenching is 2,090 yuan/mt. Supply side, coke enterprises currently have moderate profits, and production willingness has edged up slightly, keeping coke supply steady. However, arrivals at downstream steel mills have improved, and rigid demand for coke has weakened, with shipments from many producers slowing, causing supply-demand conditions to ease marginally. Demand side, the plum rain season has ended in east and south China, but high temperatures persist, and demand for finished steel has not recovered. Multiple rounds of coke price increases have squeezed steel mill profits, and with peak rigid demand having passed, steel mills are cutting purchase volumes. Overall, hot metal output is expected to pull back, and steel mills' purchase willingness is declining, so coke prices are likely to remain stable in the short term.[SMM Steel]

In H1 2026, the overseas bauxite market was generally characterized by high shipment levels, growing imports, a year-on-year decline in prices but a recovery within the year, stronger policy disturbances, and rising energy and freight costs. In particular, escalating geopolitical tensions in the Middle East pushed up oil prices and dry bulk freight rates, becoming an important cost-side factor supporting Guinea bauxite CIF China prices. On the supply side, bauxite shipments from Guinea’s major ports maintained significant year-on-year growth, making Guinea the core source of overseas bauxite supply increments. Australian shipments were generally stable, although local weather disruptions in March caused a temporary decline in shipments from major ports. In terms of domestic import structure, as June customs import data by country has not yet been released, this article mainly observes import changes from January to May 2026. Data shows that domestic bauxite imports continued to grow year-on-year during January-May 2026, with the source structure becoming increasingly concentrated in Guinea. On the price side, imported bauxite prices in H1 2026 were significantly lower than the same period in 2025, but prices did not continue to decline throughout the year. Since March, escalating geopolitical tensions in the Middle East have pushed up international oil prices and dry bulk freight costs, leading to a significant increase in Guinea bauxite CIF China prices. Around the Labour Day holiday and again in mid-to-late June, market rumours repeatedly suggested that the Guinean government might introduce bauxite export quota-related policies. Although no such policies were officially implemented within the expected timeframe, these rumours disrupted the transaction pace between buyers and sellers and provided support to forward price expectations. At the same time, after the Chinese New Year holiday, imported bauxite raw material inventories at domestic alumina refineries remained at elevated levels, while port inventories of imported bauxite continued to accumulate after March and throughout H1, limiting further upside in spot prices. Overall, the overseas bauxite market in H1 2026 did not face an absolute shortage. Instead, it showed a pattern of relatively loose physical supply but tightening expectations from costs and policy risks. High Guinean shipments supported arrivals of imported bauxite in the domestic market, but the high concentration of domestic import sources in Guinea also made the market more sensitive to Guinean policy changes, rainy-season shipment disruptions, freight rate fluctuations, and changes in long-term contract prices. Price: Still Low YoY, but CIF Prices Recovered in Stages During the Year According to SMM data, in January-June 2026, the average SMM Imported Bauxite CIF Index stood at around $66.37/mt, down around 26.0% from the same period in 2025. The average Guinea bauxite CIF China price was around $65.88/mt, down around 25.8% year-on-year. The average Australia high-temperature bauxite CIF China price was around $56.93/mt, down around 23.0% year-on-year. The average Australia low-temperature bauxite CIF China price was around $61.63/mt, down around 24.1% year-on-year. From a year-on-year perspective, imported bauxite prices in H1 2026 remained significantly below the same period last year. However, from an intra-year perspective, imported bauxite prices first declined and then recovered. In early January, the SMM Imported Bauxite CIF Index was around $68.35/mt, while Guinea bauxite CIF China was around $67.5/mt. By late February, Guinea bauxite CIF China had once fallen to around $60/mt. After entering March, rising oil prices and freight costs amid escalating geopolitical tensions in the Middle East pushed up the landed cost of Guinea bauxite delivered to China. On March 2, Guinea bauxite CIF China was around $62/mt; by March 20, it had risen to $66.5/mt, and by the end of March it further increased to $68.5/mt. It is worth noting that in March, the increase in Guinea CIF prices was significantly greater than the change in FOB prices. SMM data shows that Guinea bauxite FOB was around $37.5/mt on March 2, rose to $38.5/mt on March 20, and remained near $38.5/mt at the end of March. Over the same period, the Guinea CIF-FOB spread widened from around $24.5/mt to around $30/mt. Overall, the March increase in Guinea CIF prices was not entirely driven by mine-side quotations. Freight rates, energy costs, trading premiums, and forward supply risk expectations all provided support to landed prices. From late April to early May, the market heard rumours that the Guinean government might announce bauxite export quota-related policies during the Labour Day holiday. As a result, transaction activity between buyers and sellers slowed significantly, and the market turned cautious. In terms of price performance, Guinea bauxite CIF China remained largely stable at around $67.5/mt between April 24 and May 8, while the SMM Imported Bauxite CIF Index also stayed near $67.52/mt. Prices mainly moved sideways and did not break out significantly. As no related policy was officially introduced during the Labour Day period, market transactions gradually recovered in mid-May, and Guinea bauxite CIF China edged up to around $68/mt. Entering June, Guinean policy expectations once again disturbed the market. Around the Dragon Boat Festival, market rumours again suggested that the Guinean government might introduce export quota-related policies between mid-June and early July. At the same time, market participants were waiting for the release of July long-term contract prices, causing buyers and sellers to turn cautious again. In terms of prices, Guinea bauxite CIF China rose from around $68/mt in early June to around $69.5/mt in mid-June, and further increased to around $71/mt by the end of June. For Guinea monthly long-term contract prices, the price stood at $67/mt in January 2026, fell to $62/mt in February, rebounded to $63/mt in March, remained at $70/mt from April to June, and further increased to $71/mt in July. The firm long-term contract price also provided certain support to the spot market. Shipments: Guinea Maintained High Growth, while Australia Saw a Temporary Weather-Related Decline in March Due to the limited disclosure frequency of overseas mine production data, this article uses weekly shipments from major ports as a reference indicator for observing overseas bauxite exportable supply trends. For monthly comparison, all monthly shipment data mentioned in this article is calculated by allocating weekly shipment data to corresponding months based on the proportion of calendar days. According to SMM statistics, in January-June 2026, bauxite shipments from Guinea’s major ports totalled around 115.1357 million mt, up around 26.5% from the same period in 2025. By month, shipments from Guinea’s major ports increased by around 40.2% YoY in January, 35.1% YoY in February, 28.7% YoY in March, 31.5% YoY in April, 10.9% YoY in May, and 13.5% YoY in June. Overall, Guinean shipments remained high in H1 and continued to serve as the main source of overseas bauxite supply growth. In terms of shipment structure, high Guinean shipments reflected continued release of mine and port export capacity, while also supporting high arrivals of imported bauxite in the domestic market. At the same time, Guinea’s rising share in the domestic import structure means that the market has become increasingly sensitive to local policy changes, weather conditions, port operations, and shipping conditions. For Australia, bauxite shipments from major ports totalled around 21.6586 million mt in January-June 2026, down around 3.7% year-on-year. Overall performance was relatively stable, but its incremental supply elasticity was weaker than Guinea’s. Australia’s shipments fell notably in March, mainly due to local weather disruptions and related natural events. Weekly data shows that Australian bauxite shipments from major ports declined significantly during March, with shipments from Weipa falling to a low level in late March. After entering April, shipments from Australia’s major ports recovered quickly. This indicates that the weather disruption had more of a temporary impact on shipments rather than representing a sustained supply contraction. Import Structure: Domestic Imports Grew YoY in January-May, with Guinea’s Dominance Further Strengthened On the import side, as June customs import data by country has not yet been released, this article mainly observes domestic bauxite import changes in January-May 2026. According to customs data, domestic bauxite imports totalled around 100.7579 million mt in January-May 2026, up around 18.6% from 84.9571 million mt in the same period of 2025. By country, domestic imports from Guinea reached around 82.5716 million mt in January-May 2026, up around 24.9% from 66.1231 million mt in the same period of 2025. Guinea accounted for around 82.0% of total domestic bauxite imports, up from around 77.8% in the same period last year. This shows that Guinea remained the largest source of domestic imported bauxite, while its dominance in the import structure further strengthened. Australia remained the second-largest source of domestic bauxite imports. In January-May 2026, domestic imports from Australia stood at around 14.4914 million mt, up around 8.2% from 13.3929 million mt in the same period of 2025. However, Australia’s share of total domestic bauxite imports stood at around 14.4%, lower than around 15.8% in the same period last year. Overall, Australian supply remained stable, but its share in the domestic import structure was significantly lower than Guinea’s, and its short-term incremental supply elasticity was relatively limited. Among non-mainstream sources, domestic imports from Sierra Leone reached around 1.0353 million mt in January-May 2026, marking a significant year-on-year increase. Imports from Guyana reached around 747,200 mt, up slightly year-on-year, while imports from Türkiye reached around 559,100 mt, down significantly year-on-year. Overall, non-mainstream sources provided supplementary supply in certain months, but in terms of supply scale, stability, quality compatibility, and logistics conditions, they remain unable to substantially replace Guinea in the short term. From a monthly perspective, domestic bauxite imports remained high in January-May 2026. Imports stood at around 19.2528 million mt in January, 16.9530 million mt in February, 21.7789 million mt in March, 19.7433 million mt in April, and further increased to around 23.0298 million mt in May. May imports were at a high level, with imports from Guinea reaching around 19.6074 million mt and imports from Australia around 3.0259 million mt. High Guinean shipments in earlier periods and continued demand for imported ore from domestic coastal alumina refineries jointly supported import growth. Inventory and Transactions: High Inventories Suppressed Spot Procurement, while Policy Expectations Disrupted Transaction Pace In terms of inventories, according to SMM surveys, imported bauxite raw material inventories at domestic alumina refineries remained at elevated levels after the Chinese New Year holiday. Meanwhile, after geopolitical tensions in the Middle East escalated in March, domestic port inventories of imported bauxite continued to accumulate throughout H1. With relatively sufficient inventory buffers, downstream alumina refineries had limited acceptance of high-priced spot cargoes. Procurement was mainly conducted on a need-to basis, while some enterprises preferred to observe policy changes, freight rates, and long-term contract price movements before restocking. High inventories also explain a key contradiction in price movements during H1. On the one hand, geopolitical tensions in the Middle East pushed up energy and freight costs, while repeated Guinean policy expectations disturbed market sentiment and supported imported bauxite prices. On the other hand, elevated inventories at alumina refineries and ports meant that spot procurement did not see sustained concentrated buying, and acceptance of high-priced cargoes remained limited, thereby restricting further price upside. Around the Labour Day holiday, the market heard rumours that the Guinean government might announce bauxite export quota-related policies during the holiday period. Transactions between buyers and sellers weakened significantly, and the market entered a wait-and-see mode. As no related policy was officially introduced within the expected timeframe, market transactions gradually recovered after mid-May, but prices only saw a mild recovery. In mid-to-late June, the market again heard rumours that Guinea might introduce quota-related policies between mid-June and early July. Together with uncertainty around July long-term contract prices, transaction activity became cautious again. Therefore, the impact of Guinean policy expectations in H1 2026 was reflected more in transaction pace and price expectations, rather than simply driving a sustained rapid increase in spot prices. Major Events: Cost Disturbances, Australian Weather, and Guinean Policy Expectations Ran Through H1 The major events in the overseas bauxite market in H1 2026 can be divided into three main lines. First, escalating geopolitical tensions in the Middle East in March pushed up oil prices and dry bulk freight costs, driving a rapid recovery in Guinea bauxite CIF China prices. As the Guinea-China route is long, freight rate movements have a significant impact on landed costs. From March to June, Guinea-China bauxite freight rates remained high, once rising to around $36/mt, and fluctuated within a high range. At the same time, persistently high oil prices also pushed up transportation and export costs at Guinean mines. Some mines faced pressure on export margins, and market feedback suggested that some mines reduced shipments in stages or controlled shipment pace during May-June to ease cost pressure. Second, Australia saw a temporary decline in shipments from major ports in March due to local weather disruptions. After allocating weekly shipment data to months based on calendar days, Australian bauxite shipments from major ports stood at around 2.5339 million mt in March, down around 38.8% year-on-year. Among them, shipments from Weipa fell notably in late March. Shipments recovered quickly after entering April, indicating that the disruption was more of a short-term event and had limited impact on the full-year supply structure. Third, Guinean export quota policy expectations repeatedly disturbed the market. Around the Labour Day holiday, market rumours suggested that the Guinean government might announce export quota-related policies, leading to weaker transactions and sideways price movements. However, no such policy was eventually introduced, and market transactions gradually recovered after mid-May. In mid-to-late June, the market again heard rumours that the Guinean government might introduce quota-related policies between mid-June and early July. Together with the pending release of July long-term contract prices, prices again remained firm. Although the policy has not yet been officially implemented, the market has become significantly more sensitive to such news amid the high dependence of domestic imported bauxite on Guinea. Full-Year Outlook: Guinean Policy Risk and Freight Cost Disturbances Continue to Support Forward Price Expectations Looking ahead to H2 2026, the core contradiction in the overseas bauxite market is expected to continue revolving around Guinean policy changes, rainy-season shipments, and freight cost fluctuations. If shipments from Guinea’s major ports remain relatively stable as seen in early July, and Guinea-China freight rates continue to fall, imported bauxite supply is still expected to remain relatively sufficient. Domestic alumina refinery and port inventories may also remain elevated, limiting further upside in spot prices. However, on the risk side, current market rumours still suggest that the Guinean government may introduce bauxite export quota-related policies in H2 2026. If such policies are officially implemented and impose substantial constraints on local mine shipment schedules, Guinean bauxite supply elasticity may be affected, thereby supporting imported bauxite prices. Meanwhile, as Guinea gradually enters its traditional rainy season, mining, inland transportation, and port loading may all face temporary disruptions. Based on historical rainy-season performance, Guinean shipments may decline in certain months, affecting domestic arrival schedules and port inventory digestion. In terms of freight rates, Middle East developments still showed potential for volatility in early July, and the previous easing expectations still require further observation. If geopolitical risks rise again, oil prices and dry bulk freight costs may increase once more. Guinea-China bauxite freight rates may rebound from the current range of around $30-32/mt to $36/mt or even higher, pushing imported bauxite CIF prices higher again. Conversely, if the Middle East situation continues to ease and oil prices and freight rates decline further, Guinea-China freight rates may fall below $30/mt. In that case, some Guinean mines that previously reduced shipments or controlled shipment pace may resume shipments, and market transaction activity may recover. On prices, overseas bauxite prices in H2 are expected to remain constrained on both the upside and downside. On the upside, elevated raw material inventories at domestic alumina refineries and port inventories will limit acceptance of high-priced spot cargoes. If actual supply does not shrink significantly, the momentum for a sustained sharp price increase may be limited. On the downside, Guinean policy expectations, rainy-season disruptions, freight volatility, long-term contract price support, and import source concentration risks all mean that imported bauxite prices lack the basis for a sharp decline. In H2 2026, the market needs to closely monitor whether Guinean export policies are officially implemented, the actual impact of the rainy season on local mines and port shipments, Guinea-China freight rate movements, July and subsequent long-term contract price adjustments, and domestic port inventory digestion. If Guinean shipments remain high and port inventories continue to accumulate, the upside elasticity of imported bauxite prices may remain limited. However, if policy implementation tightens, rainy-season disruptions exceed expectations, or freight rates rise again, Guinea bauxite CIF China prices may still receive periodic support. Conclusion Overall, the overseas bauxite market in H1 2026 was characterized by high shipments, growing imports, a year-on-year price decline but intra-year recovery, and stronger policy disturbances. Guinean shipments increased significantly year-on-year, supporting high domestic bauxite import volumes. Australian shipments recovered after a temporary weather-related decline in March, and overall supply remained relatively stable. In terms of import structure, domestic bauxite imports increased by around 18.6% year-on-year in January-May 2026. Among them, imports from Guinea increased by around 24.9% year-on-year, with its share rising further to around 82.0%, indicating that domestic imported bauxite reliance on Guinea continued to increase. On the price side, imported bauxite prices in H1 2026 were significantly lower than the same period in 2025. However, prices recovered during the year amid geopolitical tensions in the Middle East, rising oil and freight costs, Guinean export quota policy expectations, and long-term contract price support. At the same time, elevated raw material inventories at alumina refineries after the Chinese New Year holiday and continued port inventory accumulation after March limited further upside in spot prices. Looking ahead, the overseas bauxite market does not lack absolute supply, but the supply structure is highly concentrated. Price volatility is increasingly driven by policy, logistics, freight, and risk premiums rather than a simple supply-demand gap. In H2, Guinean policy implementation, rainy-season shipments, freight rate movements, long-term contract price adjustments, and domestic port inventory digestion will be key factors affecting overseas bauxite prices and import structure changes.

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

[SMM Secondary Aluminum Alloy Daily Review] Quotations in China's secondary aluminum alloy market diverged slightly today. Driven by the continued rebound in aluminum prices and futures, some enterprises actively followed the uptrend, while others, due to moderate downstream demand, a slowdown in end-user procurement pace, coupled with significant resistance in shipments and insufficient motivation for price adjustments, chose to hold steady and wait and see, leading to more cautious market sentiment. Overall, the ADC12 market today saw a coexistence of price-hike following and wait-and-see stance, with the price rise lacking effective support from the demand side. In the short term, the market continued to consolidate.

SMM July 8 news: The market generally suggested raising the secondary refined lead online price by 175 yuan/mt. Upstream suppliers held a bullish outlook and held back from selling. Smelters used refined lead for their own alloy production, resulting in low spot order circulation. Ex-factory offers were at a premium of 25 yuan/mt, and delivered sources were at a premium of 75 yuan/mt. Actual transactions were weak, with spot orders transacted at a discount of 50 yuan/mt. The transaction price excluding tax was 14,750 yuan/mt. Overall industry activity was sluggish. Today, SMM secondary refined lead average price was reported at 15,975 yuan/mt, at parity with the SMM #1 lead average price. The supplier's selling sentiment was 1.15, and today's secondary refined lead buying sentiment was 0.41 (historical data can be accessed by logging into the database). .

The average warrant price on July 8 rose $2/mt from the previous trading day to $82/mt (price range $75-$89/mt); the average B/L price rose $2/mt to $82/mt (price range $74-$90/mt); the average price for EQ copper (CIF B/L) rose $2/mt to $50/mt (price range $45-$55/mt), with offers referencing shipments arriving from July to mid-August. The SHFE/LME price ratio moved higher that day, and suppliers further raised their offers. However, it is understood that actual consumer demand was relatively mediocre, and the market showed a pattern of weak supply and demand, with upstream and downstream players continuing to vie. It was heard that trades were done yesterday for registered ER copper B/L arriving in late July at $90/mt, registered warrants in mid-July at $90/mt, and EQ copper in late July at $52/mt. It was heard that offers today were quoted at $95/mt for registered B/L arriving in late July, and a small volume of EQ copper for late July was offered at around $60/mt.

[Shanghai Zinc: Futures Zinc Prices Consolidate at Highs, Market Transactions See No Improvement] Today, #0 zinc mainstream transaction prices were mainly concentrated in 24,580-24,685 yuan/mt, Shuangyan mainstream transactions were at 24,740-24,835 yuan/mt, and #1 zinc mainstream transactions were at 24,510-24,615 yuan/mt. In early trading, quotes were at a premium of 10-20 yuan/mt against the SMM average price, with no quotes against futures yet...

In North China, spot #1 copper cathode was quoted at a discount of 80 yuan/mt to parity against the front-month contract today, with an average discount of 40 yuan/mt, up 20 yuan/mt from the previous trading day. The average transaction price was 102,820 yuan/mt, down 215 yuan/mt from the previous trading day.

[7.8 Morning Meeting Minutes] US President Trump stated on the Ukraine issue that he was in consultations with Russian President Putin to see if the Russia-Ukraine conflict could be ended. Trump said they had a "very good call." The most-traded SHFE nickel contract (2609) edged higher early before pulling back to close the morning session at 126,290 yuan/mt, down 0.03%. July is within the submission window for Indonesia's nickel ore RKAB, and the final approval outcome will determine the supply-demand pattern for H2, making it the most critical uncertain variable at present. In the short term, nickel prices are expected to remain in the doldrums within the 125,000-135,000 yuan/mt range.

As of July 7, the operating rate of 50 electric furnace steel mills mainly producing building materials nationwide was 36.74%, down 2.24% from the previous period; capacity utilization rate at 36.65%, down 4.24% from the previous period; daily average production of building materials at 81,600 mt, down 9,400 mt from the previous period.