CHINA BASIC MATERIALS MONITOR November 2025: more signs of weaker demand Summary: End-user orderbooks remained lack luster on the ground, notably sequential deterioration in whitegoods, renewables and construction, beyond seasonality. Infrastructure further weakened with project start rates at multi-year low level, mostly due to challenged fundings from local government. The decelerating momentum from the trade-in program, high commodity prices, may also contribute to weaker demand in others. Auto remained ...

Teck Resources held on-and-off talks about a combination with Vale’s base metals unit before agreeing to merge with Anglo American, according to people familiar with the matter https://t.co/PYZ2p27yf3 ...

Summary of China Basic Materials Monitor - October 2025 Industry Overview - The report focuses on the **China Basic Materials** industry, particularly construction materials, steel, coal, cement, aluminum, copper, and lithium sectors. Key Points Construction and Demand Trends - End-user orderbooks showed a month-over-month (MoM) increase as of mid-October, aligning with seasonal trends. However, infrastructure construction is deteriorating faster than anticipated, with weakened project start rates. The impact of central government special funding remains unclear based on feedback from construction dealers and producers of cement and construction steel [1][2][3] - Current Chinese demand for cement and construction steel is reported to be **11-18% lower year-over-year (YoY)**, while demand for copper and aluminum is **5-6% lower YoY**. Flat steel demand has increased by **2% YoY** [2][3] Supply Side Dynamics - There have been no significant cuts in steel production, while corrections in excess production and safety inspections in coal continue. Domestic disruptions in copper scrap have deepened [2] - Recent weeks have seen improvements in margins/pricing for coal, cement, aluminum, copper, and lithium, while steel prices have softened [2] Producer Feedback and Order Trends - A proprietary survey indicates that **61%** of respondents in downstream sectors and **26%** in basic materials reported an MoM increase in orderbooks for October. Conversely, **26%** of respondents indicated a lower MoM trend [3] Price and Margin Analysis - Margin improvements have been noted across several materials, including coal, cement, aluminum, copper, and lithium, while steel margins have softened [2] Market Sentiment - The overall sentiment in the basic materials sector reflects a cautious outlook due to the declining trends in construction and infrastructure projects, despite some positive signals in specific sectors like auto/EV and battery production [1][2] Additional Insights - The report highlights the importance of monitoring the impact of government funding on infrastructure projects, as its effects are yet to be fully realized [1] - The data suggests a potential shift in investment focus towards sectors showing resilience, such as auto/EV and battery production, while traditional construction materials may face ongoing challenges [1][2] This summary encapsulates the critical insights from the October 2025 report on the China Basic Materials industry, emphasizing the current demand trends, supply dynamics, and market sentiment.

Summary of the Conference Call Industry Overview - **Industry**: Metals and Commodities - **Company**: Morgan Stanley Research Key Points and Arguments Macro Environment - A supportive macro backdrop is driving a positive outlook for metals, characterized by a falling USD, rate cuts, and low inventories [1][2] - The DXY is forecasted to reach 89 by 4Q 2026, indicating a continuation of the current USD Bear Regime, which is associated with above-average commodity returns [2] - China's demand indicators, excluding property, have shown positive surprises, supported by exports and consumption measures [2] Commodity Outlook - **Gold**: Remains the top pick with a projected 15% upside by 3Q26, driven by strong physical buying and support from lower rates and a weaker USD [3] - **Uranium**: Expected to rise due to strong spot market activity and improving contracting as uncertainties resolve [3] - **Copper**: Supported by macro and micro factors, with supply disruptions pushing the market into a larger deficit in 2026 [3] - **Cobalt**: Market tightening due to limited export quotas from the DRC [3] - **Aluminium**: Capped output in China but increasing volumes from Indonesia [3] - **Zinc**: Faces challenges from strong output in China, which may lead to increased exports [3] - **Iron Ore**: Considered overdone with stretched positioning and anticipated blast furnace cuts [3] Long-term Outlook - Gold is expected to see the largest uplift in long-term forecasts, with adjustments made to consider above-ground stocks as "supply" [4] - Silver and PGM estimates have also increased, while copper and aluminium see minor increases [4] Price Forecasts - Significant upward revisions in price forecasts for gold, with a new estimate of $4,400 per ounce for 2026, reflecting a 26% increase from consensus [11][16] - Copper is forecasted at $10,650 per ton for 2026, a 9% increase from consensus [16] - Cobalt prices are expected to rise to $23.0 per pound, a 35% increase from consensus [16] Risks and Considerations - Demand risks remain, particularly with indications of price sensitivity in China as metals rally [2] - The impact of US tariffs and front-loading may still affect the market [2] - Geopolitical tensions and local opposition could hinder supply projects and lead to mine disruptions [25] Additional Insights - The report emphasizes the importance of real assets benefiting from macroeconomic conditions, including inflation and low inventories [2] - The potential for extreme weather to increase electricity demand and costs for smelters is noted [25] This summary encapsulates the key insights from the conference call, focusing on the macroeconomic environment, commodity-specific forecasts, and potential risks that could impact the metals and commodities market.

Summary of China Basic Materials Monitor - September 2025 Industry Overview - The report focuses on the **China Basic Materials** industry, highlighting the current demand and supply dynamics affecting pricing and margins in various sectors including construction, automotive, and metals [1][2]. Key Points Demand Trends - **End-user orderbooks** have shown a month-over-month (MoM) increase as of mid-September, consistent with seasonal patterns observed in previous years [1]. - **Aggregated demand** is driven by positive growth in sectors such as **automotive**, **battery production**, and **metal fabrication**, alongside mild seasonal increases in **construction** [1]. - Traditional sectors like **white goods**, **property**, and **machinery** are experiencing weaker demand [1]. Supply Disruptions - Ongoing **supply disruptions** are noted, particularly in: - **Lithium Lepidolite** production - A correction in excess **coal** production - Tightness in domestic **copper scrap** supply [1]. - The Chinese government has reaffirmed its policy on supply management (anti-involution) as a long-term strategy, which is expected to support overall commodity pricing and margins [1]. Pricing and Margin Outlook - Current demand for **cement** and **construction steel** is reported to be 1-6% lower year-over-year (YoY), while **copper** and **aluminium** demand is down 5-7% YoY. In contrast, **flat steel** demand has increased by 3% YoY [1]. - Recent weeks have seen improvements in margins/pricing for **aluminium** and **copper**, while **steel**, **coal**, and **lithium** prices have softened, with **cement** prices remaining stable [1]. Producer Feedback - A proprietary survey indicates that **52%** of respondents in downstream sectors reported an improvement in orderbook trends for August, while **32%** of basic materials producers noted similar improvements [2]. - Conversely, **9%** of downstream respondents and **16%** of basic materials producers indicated a decline in orderbook trends [2]. Additional Insights - The report includes detailed snapshots of downstream demand across various sectors, including infrastructure, property, traditional manufacturing, advanced manufacturing, and exports [7]. - Specific commodity analyses cover **steel**, **coal**, **cement**, **aluminium**, **copper**, and **lithium**, providing insights into their respective demand and pricing trends [7]. Conclusion - The China Basic Materials industry is currently experiencing a complex interplay of steady demand growth in certain sectors and ongoing supply disruptions, which collectively influence pricing and margin expectations. The outlook remains cautiously optimistic, supported by government policies aimed at stabilizing supply and pricing dynamics [1][2].

Group 1: Market Conditions - Geopolitical upheaval, global supply constraints, and economic uncertainty have created challenging conditions for energy and commodity firms in Asia over the past 12 months [2] - The liquefied natural gas (LNG) markets experienced significant fluctuations, with Asia-Pacific remaining the dominant LNG-exporting region, increasing output by 4.1 million tonnes to 138.91 million tonnes out of a global total of 411.24 million tonnes [3] - Asia led gas demand growth, with China registering a 7% increase and India achieving a 10% increase in 2024, compared to a global average of 2.4% [4] Group 2: Price Trends - Prices for Asia's Platts Japan Korea Marker (JKM) LNG benchmark contract fell to as low as $8.30 per million British thermal units in early March 2024, but recovered to over $14 per million British thermal units by late November, averaging $11.91 per million British thermal units for the year, a decrease from $13.78 per million British thermal units in 2023 and $33.98 per million British thermal units in 2022 [5] - Oil prices remained fairly stable in 2024 with a slight downward trend, while base metals prices, particularly copper and aluminum, experienced volatility and price dislocations in Asia [6] Group 3: Risk Management and Awards - In the current era of increased uncertainty, effective risk management skills are crucial, with this year's Energy Risk Asia award-winners demonstrating best practices in risk management across various sectors [7] - The award-winners include notable firms such as Macquarie Group for multiple categories, S&P Global Market Intelligence for climate risk advisory, and PLN Nusantara Power for coal house of the year, showcasing innovative thinking that helps firms protect revenues and shape energy markets across Asia [8][9]

Summary of J.P. Morgan Commodity Market Positioning & Flows Industry Overview - The report focuses on the global commodities market, particularly highlighting the performance of precious metals, base metals, energy markets, and agricultural commodities as of September 5, 2025 Key Points Global Commodity Market Trends - The estimated value of global commodity market open interest increased by 1.5% week-over-week (WOW), reaching approximately $1.53 trillion as of September 5, 2025, which is a rise of $22.84 billion WOW [2][6][9] - Contract-based inflows returned to a seven-week high of over $26.2 billion, with significant concentration in precious metals (~$12 billion WOW), base metals ($6 billion WOW), and agricultural markets ($5.4 billion WOW) [2][6] Precious Metals - The estimated value of open interest in precious metals surged by 8.5% WOW to $286 billion, driven by inflows into gold markets totaling $12 billion WOW [4][25] - Managed Money net length in COMEX Gold futures increased by 19.6k contracts to approximately 162k contracts net long, indicating strong bullish sentiment [4][14] - Central banks' net gold purchases were around 10 tonnes in July, with the People's Bank of China (PBoC) continuing a 10-month buying spree, although the pace of purchases has slowed due to elevated gold prices [4] Base Metals - The estimated value of open interest in base metals increased by 3.3% WOW to $180 billion, with net inflows of $6 billion, primarily in copper [4][25] - Visible inventory levels in China for copper are trending higher, indicating a slowdown in downstream consumption [4] Energy Markets - The estimated value of open interest in energy markets declined by 1.3% WOW to $624 billion, marking a three-week low [2][19] - Despite sanctions affecting nearly 20% of the global oil market, price impacts have been limited, with crude oil experiencing outflows of $5 billion WOW [2][19] - The European natural gas market is facing risks from low storage levels and competition from LNG imports, reinforcing a bullish stance for Q4 2025 [2] Agricultural Commodities - The estimated open interest value in agricultural markets decreased by 0.2% WOW to $326 billion, with inflows largely offset by weaker prices in soybeans, softs, and livestock [4][27] - China's soybean imports continued at a record high pace, primarily sourced from Brazil, amid ongoing trade tensions with the U.S. [4] Price Momentum and Market Signals - Price momentum across commodities was mixed, with increases in natural gas and precious metals, while declines were noted in energy and base metals [4] - The long-term momentum trading signal for COMEX Gold has increased, indicating a strong bullish trend [4] Investor Positioning - The estimated value of net investor positioning across global commodity futures markets increased by 17.3% WOW, reaching $144 billion, with significant gains in precious metals and energy markets [2][13] - Net investor positioning in precious metals rose by 23% WOW to $101.1 billion, while energy markets saw a slight increase to $1.5 billion [2][13] Additional Insights - The report highlights the divergent signals from businesses, indicating a material two-sided risk to global growth forecasts, with a near-term U.S. recession risk estimated at 40% [2] - The report emphasizes the importance of monitoring geopolitical risks and market dynamics, particularly in energy and agricultural sectors, as they can significantly impact pricing and investor sentiment [2][4] This summary encapsulates the critical insights and data from the J.P. Morgan report on commodity market positioning and flows, providing a comprehensive overview of current trends and investor behaviors in the commodities sector.

Report Industry Investment Rating No information provided. Report's Core View - Gold is experiencing a cooling of sentiment [2][4] - Silver is in a state of oscillatory adjustment [2][4] - For copper, the market's expectation of the Fed's interest rate cut restricts the price decline [2][9] - Zinc is in a continuous process of inventory accumulation [2][12] - The reduction of internal and external inventories supports the price of lead [2][15] - Tin is oscillating within a range [2][17] - Aluminum is oscillating within a range, alumina is operating weakly, and cast aluminum alloy follows the trend of electrolytic aluminum [2][22] - The price of stainless steel is oscillating within a narrow range [2][26] Summary by Related Catalogs Gold and Silver - **Fundamental Data**: The closing prices of Shanghai Gold 2510 and Gold T+D showed increases, while the closing price of Shanghai Silver 2510 slightly decreased. The trading volume and positions of some contracts changed, and the positions of SPDR Gold ETF decreased. The inventories of Shanghai Gold and Shanghai Silver increased [5] - **Macro and Industry News**: The US ISM services index expanded at the fastest pace in half a year, employment was weak, and prices remained high. The ADP employment growth in August slowed significantly, and the first - time unemployment claims reached the highest level since June. The trade deficit widened, and there were various statements and events related to the Fed [5][8] - **Trend Intensity**: The trend intensity of both gold and silver is 0, indicating a neutral outlook [7] Copper - **Fundamental Data**: The closing prices of the Shanghai Copper main contract and the London Copper 3M electronic disk decreased. The trading volume and positions of some contracts changed, and the inventory of Shanghai Copper increased while that of London Copper decreased [9] - **Macro and Industry News**: The weak JOLTS job vacancy data in the US strengthened the market's expectation of interest rate cuts. The copper production in Chile in July increased slightly, and some copper - related companies had production and operation news [9][11] - **Trend Intensity**: The trend intensity of copper is 0, indicating a neutral outlook [11] Zinc - **Fundamental Data**: The closing price of the Shanghai Zinc main contract decreased, while that of the London Zinc 3M electronic disk increased. The trading volume and positions of some contracts changed, and the inventory of Shanghai Zinc decreased while that of London Zinc decreased [12] - **News**: The ADP employment growth in the US in August slowed significantly, strengthening the Fed's interest rate cut expectation. The US trade deficit widened [13] - **Trend Intensity**: The trend intensity of zinc is - 1, indicating a slightly bearish outlook [14] Lead - **Fundamental Data**: The closing prices of the Shanghai Lead main contract and the London Lead 3M electronic disk decreased. The trading volume and positions of some contracts decreased, and the inventories of Shanghai Lead and London Lead decreased [15] - **News**: The weak JOLTS job vacancy data in the US strengthened the market's expectation of interest rate cuts [15] - **Trend Intensity**: The trend intensity of lead is 0, indicating a neutral outlook [15] Tin - **Fundamental Data**: The closing prices of the Shanghai Tin main contract and the London Tin 3M electronic disk decreased. The trading volume and positions of some contracts changed, and the inventories of Shanghai Tin and London Tin increased [18] - **Macro and Industry News**: Similar to the gold - silver section, there were various economic data and events in the US [18][19][20] - **Trend Intensity**: The trend intensity of tin is - 1, indicating a slightly bearish outlook [21] Aluminum, Alumina, and Cast Aluminum Alloy - **Fundamental Data**: The closing prices of the Shanghai Aluminum main contract, the Shanghai Alumina main contract, and the Aluminum Alloy main contract changed. The trading volume and positions of some contracts also changed, and the inventories of electrolytic aluminum, alumina, and aluminum alloy had different trends [22] - **Comprehensive News**: The US ISM services PMI expanded at the fastest pace in half a year, with weak employment and high prices [24] - **Trend Intensity**: The trend intensity of aluminum and cast aluminum alloy is 0 (neutral), and that of alumina is - 1 (slightly bearish) [24] Nickel and Stainless Steel - **Fundamental Data**: The closing prices of the Shanghai Nickel main contract and the Stainless Steel main contract changed. The trading volume and positions of some contracts changed, and there were price and profit - related data in the nickel industry chain [26] - **Macro and Industry News**: There were various events in the nickel - related industry in Canada, Indonesia, and China, such as production suspension, environmental violations, and policy changes [26][27][28][29][30] - **Trend Intensity**: The trend intensity of both nickel and stainless steel is 0, indicating a neutral outlook [31]

Summary of J.P. Morgan Commodity Market Positioning & Flows Industry Overview - The report focuses on the global commodities market, particularly the precious metals, energy, agricultural, and environmental markets as of August 29, 2025 Key Points Precious Metals Market - Expectations of a Federal Reserve rate cut have driven precious metals to new highs, increasing the estimated value of global commodity market open interest by 0.8% week-over-week (WOW) to $1.51 trillion, marking a five-week high [3][8] - The estimated value of net investor positions in precious metals rose by $2.5 billion WOW to $82.2 billion, with a projected increase of $12.5 billion as of August 29 [3][4] - Gold inflows accounted for $11.3 billion of the total inflows, contributing to a 7% increase in the estimated value of open interest in precious metals to $264 billion [4][27] Energy Market - The estimated value of open interest in energy markets declined by $7 billion WOW, marking the fourth consecutive weekly decline, primarily due to outflows in petroleum products and natural gas [4][22] - Natural gas markets saw a $4.3 billion decline in open interest, driven by $4.7 billion in net outflows [4][36] Agricultural Market - The estimated value of open interest in agricultural markets decreased by 1% WOW to $327 billion, largely due to net outflows of $4.2 billion [4][29] - Short covering was observed across grain and oilseed markets, with a 21% decline in the projected net short position of Managed Money [4][29] Environmental Markets - Open interest in environmental markets increased by 1.8% WOW to $77 billion, driven by net inflows of $1 billion, primarily from the European Union Allowances (EUA) market [4][25] Global Commodity Inventory - The Global Commodities Inventory Monitor (GCIM) showed a recovery in inventory levels, with a rise to 59.3 days-of-use, up 0.5% month-over-month (MOM) [3][52] - Ex-China inventories increased by 1.5% MOM to 51.36 days-of-use, the highest reading of 2025 [3][53] Market Dynamics - Concerns over softening US labor demand persist, with expectations of a soft August jobs report [3] - The US Court of Appeals ruled against President Trump's use of IEEPA for imposing tariffs, which may impact trade dynamics [3] Price Momentum - Price momentum varied across commodities, with notable increases in NYMEX Natural Gas, COMEX Gold, and CBOT Corn, while declines were seen in ICE Cotton and NYMEX Palladium [4][48] Investor Positioning - The overall net investor position across global commodity futures markets increased by 4.5% WOW to $122 billion, with losses only in base metals markets [4][14] Additional Insights - The report highlights the mixed performance across various commodity sectors, indicating a complex market environment influenced by macroeconomic factors and investor sentiment [4][48]

Summary of Key Points from the Conference Call Industry Overview - The conference call discusses the base metals industry, specifically focusing on copper and aluminum markets, and their price forecasts and dynamics [1][2][3][4]. Core Insights and Arguments - **Copper Price Forecast**: The year-end LME copper price forecast is maintained at $9,700 per ton, which is $100 below current levels. The market is expected to remain stable due to a surplus [1][10]. - **Aluminum Price Dynamics**: The support for aluminum prices from anti-involution policies in China is expected to be short-lived. Although SHFE alumina futures increased by nearly 30% from May to July, this was primarily due to market speculation regarding domestic alumina refining capacity cuts [2][3]. - **Alumina Production Capacity**: In July, 3 million tons of alumina refining capacity were added, increasing domestic capacity by over 3%. Despite expectations of reduced investments due to anti-involution policies, no cuts to existing capacity have been observed, leading to rising inventories [3][4]. - **Global Bauxite Exports**: Global bauxite exports are up 18% year-over-year year-to-date, despite a decrease in Guinean bauxite exports in the second half of the year due to seasonality and mining license cancellations [3]. - **Steel Sector Stability**: There are no signs of reduced production in the steel sector, and the weak labor market complicates the implementation of significant production cuts [4]. - **China's Economic Activity**: Broad activity data in China is weakening, with apparent consumption growth of copper and aluminum slowing in recent months [8]. - **COMEX vs. LME Copper Pricing**: Despite a 25% drop in COMEX copper prices in July, the COMEX price continues to trade at a ~1% premium to LME prices, driven by potential tariff risks on refined copper [9][51]. Additional Important Insights - **European Defense Spending**: An increase in European defense spending could boost global base metals demand, with estimates suggesting a cumulative 6% increase in European industrial metals demand by 2027 [11]. - **Copper Inventory Trends**: Global copper stocks have increased by over 500,000 tons year-to-date, indicating a substantial surplus. The estimated stock build is 290,000 tons based on supply and demand models [10][34]. - **Aluminum Demand Growth**: Global aluminum demand growth is slowing, with primary aluminum consumption in China and the rest of the world showing a decline [79][80]. - **Speculative Positioning**: Speculative positioning in the COMEX copper market remains higher compared to LME markets, indicating differing market sentiments [113][118]. This summary encapsulates the key points discussed in the conference call, providing insights into the current state and future outlook of the base metals industry, particularly copper and aluminum.