On Monday, Shanghai copper prices rose, with the main contract seeing a reduction in open interest by over 5,000 lots. According to SMM data, as of May 11, the average price of SMM #1 electrolytic copper was 104,315 yuan per tonne, an increase of 1,555 yuan per tonne from the previous trading day. Despite the price increase, market trading activity was limited. Recently, both domestic and international copper prices have been rebounding and correcting, encountering slight resistance near 105,000 yuan per tonne during the session.
Latest data from Shanghai Metals Market (SMM) shows that as of May 8, the spot treatment charges (TC) for copper concentrate have further declined to -93 USD per dry tonne. Coupled with disruptions from news regarding the resumption of operations at the Grasberg mine, concerns over tightening global copper concentrate supply continue to amplify. The market remains highly sensitive to supply-side disruptions, providing ongoing bullish support for copper prices. Additionally, apart from insufficient copper concentrate supply, sulfur prices have recently hit new historical highs due to the Middle East conflict. This cost pressure may gradually transmit to overseas copper smelting, heightening concerns over marginal production cuts. Meanwhile, due to strict tax invoice inspections, the supply of taxable scrap copper remains relatively tight.
On the demand side, the peak domestic demand season is gradually nearing its end. However, long-term demand from sectors like power grids remains resilient. Furthermore, copper inventories are still in a destocking trend. As of May 11, China's electrolytic copper inventory stood at 242,600 tonnes, resuming its destocking pattern. The current copper market presents a fundamentally bullish scenario of constrained supply and robust demand.
Overall, the medium to long-term bullish factors for the copper market are relatively clear, supporting copper prices to fluctuate strongly at high levels. In the short term, the upcoming visit of former US President Trump to China is driving improved market sentiment, resonating with the fundamental support for copper. Copper prices are expected to trade with a firm bias, though the volatile situation in the Middle East remains a focal point for market speculation. In the medium to long term, copper prices are anticipated to demonstrate the long-term allocation value of a strategic resource commodity amid escalating geopolitical changes and supply chain restructuring. Copper prices are expected to reach new highs within the year. Strategically, long positions can be held, with attention to buying opportunities on dips.
On Monday, alumina prices declined, with the main contract seeing an increase in open interest by over 7,000 lots. According to SMM data, as of May 11, the average spot price of alumina was 2,674.09 yuan per tonne, an increase of 7.4 yuan per tonne from the previous trading day. On the supply side, capacity utilization rates are continuously recovering. The resumption of alumina capacity and the release of new capacity in the southwestern region will bring substantial incremental supply. While domestic demand remains stable, there is a significant gap in overseas demand. The expectation of a supply surplus exerts downward pressure on alumina prices. On the other hand, the anticipated cost increase driven by rising sea freight and bauxite prices, along with risk pricing triggered by mining policy changes in Guinea, serve as bullish drivers for alumina prices.
Overall, amid mixed bullish and bearish factors, alumina prices are expected to trade within a range for the time being. Support is seen near 2,700 yuan per tonne, with resistance around 3,100 yuan per tonne. Trading within the band is advisable.
On Monday, the main contract price for industrial silicon rose by 0.72% compared to the previous trading day, closing at 9,110 yuan per tonne. On the supply side, the number of operating furnaces in southwestern enterprises has increased, while the operating rate in the northwestern region has declined, leading to a week-on-week decrease in industrial silicon output.
On the demand side, polysilicon spot quotations remained stable, with weekly output declining, resulting in moderate demand for industrial silicon. The price of organic silicon DMC held steady, with industry operating rates increasing. However, the industry continues with joint production cuts, leading to weak demand for industrial silicon. Operating rates at aluminum alloy enterprises have decreased, weakening procurement demand for industrial silicon. The fundamentals for industrial silicon have not shown significant improvement. With leading large-scale plants in the northwest gradually resuming production, industrial silicon prices face medium-term pressure. The trading strategy favors selling on rebounds.
On Monday, the main contract price for polysilicon fell by 4.63% compared to the previous trading day, closing at 38,215 yuan per tonne, with open interest increasing by 2,274 lots. On the supply side, weekly polysilicon output declined sequentially. Both production halts and resumptions occurred among enterprises, with May output likely to remain stable compared to April. Regarding downstream demand, prices for silicon wafers, solar cells, and modules remained stable. Enterprise inventories saw some digestion, and silicon wafer producers increased their production schedules. End-user module demand showed seasonal improvement in May, with a slight increase in enterprise operating rates. Polysilicon fundamentals remain weak, and prices are expected to fluctuate with a downward bias in the near term. The trading strategy maintains a sell-on-rebound approach.