Copper is supported by tighter supply, steel prices rise with iron ore but profits remain pressured

Overview

This report focuses on weekly changes in prices, inventories, output, and margins across Chinese basic materials and commodities. The key theme is that copper is supported by supply-side disruptions and declining inventories, while steel prices rose on higher iron ore prices, but final demand and steel mill profits have not improved materially; cement, glass, paper, and photovoltaic glass reflect insufficient demand recovery, inventory pressure, or narrowed margins. The report date is May 11, 2026, with most data as of May 8 or April 30, 2026.

Core views

First, copper is the strongest direction in the report. Both LME copper and Chinese spot copper rose, and TC/RC fell to negative record levels, indicating that refined copper concentrate supply remains tight. Second, aluminum prices declined slightly, but aluminum smelting profits remain at a relatively high level, showing divergence between price and profit behavior. Third, gold continued to rise, and China's central bank gold reserves increased slightly in April, reinforcing hints of safe-haven and allocation demand. Fourth, steel prices were supported by higher iron ore prices, but apparent consumption, output, inventories, and negative profits together suggest the industry fundamentals remain fragile. Fifth, cement, glass, and photovoltaic glass lack upward price momentum in the short term, with weak demand and inventory pressure limiting profit recovery.

Analysis framework

The report uses a weekly high-frequency tracking framework, comparing key commodity prices, social inventories, bonded-warehouse inventories, treatment fees/refining fees, steel output and apparent consumption, steelmaker cash profits, cement dispatch and inventory rates, glass inventory days, and effective capacity. Its analytical focus is not single-company earnings forecasts; rather, it evaluates short-term cyclical sentiment in China's basic materials sector through price, inventory, capacity utilization, and margin indicators.

Methodology notes

• Supply and inventoryPrice-inventory-treatment fee linkage analysis

  Validation of tight copper supply

  Copper prices rose alongside TC/RC falling to a record negative level, with bonded and social inventories declining, forming cross-validation that supply tightness is supporting prices.

• Profit trackingCash profit and GPM tracking

  Profit pressure in steel, aluminum, glass, and photovoltaic glass

  The report uses rebar and HRC cash profits, aluminum smelting profits, Xinyi float glass GPM, and photovoltaic glass GPM to assess whether price moves translated into profit improvement.

• High-frequency industry sentimentWeekly price and production-sales monitoring

  Short-term momentum in basic materials

  The report uses weekly price, output, consumption, shipment rate, inventory rate, and inventory days as short-term sentiment indicators, suitable for judging marginal changes in industry conditions rather than long-term valuation.

Asset mapping & comparison

Structured mapping from thesis to named assets (strengths, weaknesses, peers, risks).

• Copper

  Positively correlated core asset

  Strengths

  Delayed full Grasberg restart, record-negative TC/RC, and declines in Shanghai and Guangdong inventories collectively support prices.

  Weaknesses

  Prices are already elevated; if mine-side disruptions ease or inventories recover, price sensitivity may decline.

  Comparison

  Compared with aluminum and steel, copper's rise is more supply-constrained driven and has stronger fundamental support.

  Risks

  Freeport may resume faster than expected, demand may weaken, and inventories may re-accumulate.

• Aluminum

  Related base metal

  Strengths

  Smelting profits remain at a relatively high level, indicating relatively stable industry profitability support.

  Weaknesses

  LME and Yangtze spot aluminum prices declined on a weekly basis, and profits also narrowed.

  Comparison

  Price momentum is weaker than copper, but profit levels are better than steel.

  Risks

  Further declines in aluminum prices, or alumina/electricity cost changes compressing margins.

• Gold

  Precious metal allocation asset

  Strengths

  Gold rose 2.4% week-over-week to USD 4,724/oz, and China's central bank gold reserves increased slightly.

  Weaknesses

  The report does not provide a full causal analysis of macro rates, the dollar, or global gold ETF flows.

  Comparison

  Gold is different from industrial metals, being more driven by safe-haven and reserve allocation demand.

  Risks

  Rising real yields, stronger USD, and slower central bank gold buying.

• Steel

  Downstream cyclical demand asset

  Strengths

  Rebar and HRC prices rebounded with rising iron ore prices; finished steel inventories fell slightly.

  Weaknesses

  Apparent consumption declined, output declined, and steelmaker cash profits remain negative.

  Comparison

  The quality of the steel price rebound is weaker than copper's rise because steel lacks concurrent profit improvement and confirmed demand recovery.

  Risks

  Continued iron ore cost increases, demand below expectations at the end market, and persistent negative profits.

• Cement

  Construction-material demand tracking asset

  Strengths

  Shipment rate rose slightly, inventory rate declined slightly, and some regions still show push for price hikes.

  Weaknesses

  National average price declined; demand remained weak due to the rainy season and weak market sentiment.

  Comparison

  Cement performs weaker than copper and steel and is more constrained by real estate and infrastructure demand recovery pace.

  Risks

  Prolonged rainy-season impact, price retracement to pre-hike levels, and slow inventory digestion.

• Float glass

  Construction and real estate chain asset

  Strengths

  Effective capacity data is transparent, enabling continuous tracking through inventory days and GPM.

  Weaknesses

  Prices fell with intensified destocking pressure, and Xinyi float glass GPM narrowed to 12.2%.

  Comparison

  Glass profit trends are weaker than aluminum and also weaker than copper-related assets.

  Risks

  Inventory continues to accumulate, real estate completion demand remains insufficient, and soda ash and energy cost disruptions.

• Paper

  Light industrial materials asset

  Strengths

  Paper prices rose 0.6% week-over-week, and the supply-demand gap narrowed; Nine Dragons margin tracker is RMB 132/t.

  Weaknesses

  The increase is small, and the report does not show strong demand recovery.

  Comparison

  Paper shows better marginal improvement than cement and glass, but the strength is still weaker than copper.

  Risks

  Rising waste paper costs and weak end-demand.

• Photovoltaic glass

  New-energy materials asset

  Strengths

  3.2mm prices held stable, and capacity remained unchanged.

  Weaknesses

  2.0mm prices fell, GPM declined, and inventory days rose to 49.33.

  Comparison

  Photovoltaic glass is weaker than upstream metals, with more pronounced inventory pressure.

  Risks

  Demand for modules below expectations, high capacity levels, and intensified price competition.

Key data

• LME copper priceUSD 13,331/t, up 3.2%Driven by Freeport's delay in the full Grasberg restart.
• Chinese spot copper priceRMB 103,010/t, up 1.3%Rising in tandem with LME copper.
• Spot copper concentrate TC/RC-USD 86.53/tFell to a record low, reflecting continued relative tightness in copper concentrate supply.
• Shanghai copper inventoriesBonded inventory down 5.1% week-over-week, social inventory down 3.3% week-over-weekAs of 2026-05-08.
• Guangdong copper inventoriesBonded inventory down 29.6% week-over-week, social inventory basically unchangedBonded inventories in Guangdong declined sharply.
• LME aluminum priceUSD 3,542/t, down 1.2%Yangtze River spot aluminum price fell 0.7% week-over-week to RMB 24,220/t.
• Aluminum smelting profitRMB 7,962/tMargins narrowed but remain at a relatively high level.
• Gold priceUSD 4,724/oz, up 2.4%China's central bank gold reserves increased slightly in April to 74.64mn ounces.
• Lithium carbonate priceRMB 194,000/t, up 9.6%Largest increase among commodities.
• Rebar priceRMB 3,458/t, up 3.7%Supported by higher iron ore prices.
• HRC priceRMB 3,518/t, up 3.5%Risen in sync with rebar.
• Iron ore priceUSD 111.65/t, up about 3.5%As of 2026-05-07, Tianjin Port 62% CFR.
• Apparent steel consumption8.4 mnt, down 7.5% week-over-weekWeak demand weakens the quality of the steel price rebound.
• Steelmaker cash profitsRebar -RMB 281/t, HRC -RMB 184/tProfits remain weak and volatile.
• Nationwide average cement priceRMB 314/t, down 1.3% week-over-weekAs of 2026-04-30, demand was affected by the rainy season and weak sentiment.
• Cement shipment and inventory rate41.5% shipment rate, 63.9% inventory rateShipment rate rose 0.2 ppts week-over-week, inventory rate declined slightly.
• Float glass average priceRMB 1,151/t, down 1.0% week-over-weekInventory destocking pressure intensified, and Xinyi float glass GPM fell to 12.2%.
• Paper priceRMB 3,639/t, up 0.6%Supply-demand gap narrowed.
• Photovoltaic glass price3.2mm flat at RMB 15.25/sqm, 2.0mm down to RMB 9.00/sqmInventory days rose to 49.33, and daily melt remained at 86,800t/day.

Impact & implications

From an investment perspective, the clearest positive signal in basic materials is still copper's supply constraint and declining inventories, which may continue to support copper prices and copper-related asset performance; however, the steel chain's price rebound is more driven by higher input costs, and if demand and profits do not improve, its sustainability is uncertain. Construction materials and glass chains still face weak demand, inventory pressure, and margin compression. In the short term, investors should watch for de-stocking and demand recovery signals rather than infer cyclical recovery from price rebounds alone.

Risks

• Copper price support may weaken if copper mining supply disruptions ease.
• High prices may suppress downstream purchasing, leading to inventory re-accumulation in copper or other metals.
• Steel price rises are mainly driven by higher iron ore costs; if end demand fails to recover, negative profitability may persist.
• Cement and glass demand are affected by weather, real estate chain conditions, and market sentiment, limiting short-term price recovery.
• Rising inventory days and falling GPM in photovoltaic glass may indicate continued supply-demand pressure.
• The report is a high-frequency industry tracker rather than a company deep-dive and cannot directly replace company earnings forecasts or valuation judgments.
• BofA Securities discloses it may have business relationships with covered issuers, and investors should be aware of potential conflicts of interest.

What to watch

• Progress of the full Grasberg restart and the pace of subsequent supply restoration by Freeport.
• Whether copper concentrate TC/RC remains in negative territory and changes in China's bonded and social inventories.
• Whether any divergence emerges among LME copper, China spot copper, and downstream procurement.
• Whether iron ore prices continue to rise and whether steel mills' negative profitability can recover.
• Weekly changes in steel apparent consumption, finished steel inventories, rebar output, and HRC output.
• Whether cement shipment rates, inventory rates, and regional prices stabilize.
• Changes in float glass inventory days, effective capacity, and Xinyi float glass GPM.
• Whether there is improvement in photovoltaic glass 2.0mm prices, inventory days, and daily melt volume.
• Subsequent movements in gold prices, China's central bank gold reserves, and global gold ETF flows.