Copper and aluminum prices remain firm; copper TC/RC falls to a record negative level amid tight supply

Overview

This report covers weekly price, inventory, margin, and demand changes across multiple sub-sectors of China's basic materials sector. The key conclusion is that non-ferrous metals were stronger, especially copper and aluminum, supported by supply disruptions, logistics costs, and smelting costs; the black materials chain showed improvement in demand and inventory data, but high raw material costs pressured steel mill profits; building materials, glass, paper, and solar glass were weak or mixed.

Core views

On copper, tensions in the Middle East affected shipping through the Strait of Hormuz and pushed up energy, smelting, and logistics costs. Combined with concerns over potential mine supply disruptions caused by pressure on Peru's energy system, this supported copper prices. At the same time, TC/RC fell to a new negative low, reinforcing the signal of tight copper concentrate supply. On aluminum, LME and domestic prices rose in tandem, and smelting margins improved significantly. On steel, output of the five major steel products was broadly stable, apparent consumption rebounded sharply, and inventories fell, but margins for rebar and hot-rolled coil remained negative. Cement prices edged up but diverged by region; glass and solar glass gross margins declined; paper prices and Nine Dragons' profit tracking improved slightly.

Analysis framework

The report uses a weekly industry tracking framework, comparing major commodity prices, exchange and social inventories, smelting or manufacturing margins, output, apparent consumption, shipment rates, and regional price changes. The focus is not single-stock valuation, but using price and margin indicators to judge supply-demand tightness along the industrial chain, cost pass-through, and downstream profitability pressure.

Methodology notes

• Weekly industry trackingPrice-Inventory-Margin Linkage Analysis

  Use spot and futures prices, inventory changes, and cash margins to judge basic materials cyclical strength.

  Weekly data for copper, aluminum, steel, cement, glass, and paper are compared within the same framework to identify tight supply, improving demand, or margin pressure.

• Non-ferrous metals supply analysisTC/RC Indicator

  TC/RC stands for copper concentrate treatment and refining charges.

  A decline in TC/RC into negative territory usually indicates tight copper concentrate supply and weaker bargaining power for smelters over raw materials. The report uses this as important evidence of copper supply tightness.

• Steel chain analysisSteel Mill Cash Margin

  Observe steel mill profitability by subtracting major raw material costs from rebar and hot-rolled coil prices.

  Although steel demand and inventory data improved, high raw material costs kept cash margins negative, showing that price strength in steel did not fully translate into earnings recovery.

Asset mapping & comparison

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

• Copper

  Tight supply and rising costs support prices.

  Strengths

  LME copper and China spot copper both rose WoW, TC/RC fell to a record negative low, and inventories and supply disruptions reinforced price support.

  Weaknesses

  Prices are already elevated; if supply disruptions ease or demand weakens, volatility risk may increase.

  Comparison

  Compared with steel and building materials, copper shows stronger supply constraint signals.

  Risks

  Easing Middle East logistics disruptions, lower Peru supply risks, weaker-than-expected demand, or high prices dampening consumption.

• Aluminum

  Prices rose and smelting margins improved.

  Strengths

  LME aluminum price rose 5.0% WoW, Changjiang aluminum price edged up, and average aluminum margins increased to RMB 8,077/t.

  Weaknesses

  Domestic price gains lagged LME, and inventories and demand still need monitoring.

  Comparison

  Aluminum's margin improvement is more pronounced than steel's.

  Risks

  Energy cost changes, inventory replenishment, and slower downstream demand.

• Steel and Iron Ore

  Iron ore prices remain firm, but steel mill margins are under pressure.

  Strengths

  Apparent consumption rebounded sharply and finished steel inventories fell, indicating some improvement in demand and destocking.

  Weaknesses

  Cash margins for rebar and hot-rolled coil remained negative, and spot trading stayed weak.

  Comparison

  Compared with copper and aluminum, steel price and margin recovery is weaker.

  Risks

  High raw material costs, unsustainable demand recovery, arbitrage selling pressure, and trade policy volatility.

• Cement

  The national average price edged up, but regional divergence remained.

  Strengths

  Some northern and central-southern regions saw recovery price increases driven by coal and raw material costs.

  Weaknesses

  Northeast, East China, and Northwest markets remained weak, and inventory ratios rose.

  Comparison

  Cement performed slightly better than glass, but overall demand remained uneven.

  Risks

  Insufficient regional demand, continued inventory buildup, and inability to pass through cost increases.

• Glass and Solar Glass

  Weak demand and declining margins.

  Strengths

  Capacity data was relatively stable and some prices held steady.

  Weaknesses

  Float glass prices edged down, Xinyi float glass GPM declined; 2.0mm solar glass prices fell, and Flat Glass and Xinyi Solar GPM dropped sharply WoW.

  Comparison

  Compared with paper, margin pressure is more pronounced in glass and solar glass.

  Risks

  Further inventory day expansion, weaker-than-expected property or solar demand, and intensifying price competition.

• Paper

  Prices rose slightly and margin tracking improved.

  Strengths

  Containerboard, corrugated paper, and mixed paper prices all edged up, the supply-demand gap narrowed, and Nine Dragons' profit tracker was positive.

  Weaknesses

  The increases are limited and margin recovery still needs sustained demand confirmation.

  Comparison

  Paper performed better than glass, but not as strong as copper and aluminum's supply-tightness logic.

  Risks

  Rising recovered paper costs, insufficient demand recovery, and unsustainable margin improvement.

Key data

• LME copper priceUSD 13,895/t, +2.8% WoWAs of May 15.
• China spot copper priceRMB 105,790/t, +2.7% WoWThe report also lists the Changjiang copper price at about USD 13,036/t excluding tax.
• Spot copper TC/RCaround -USD 103.72/t to -USD 104/tA record low, indicating tight copper concentrate supply.
• LME aluminum priceUSD 3,741/t, +5.0% WoWAs of May 15.
• Changjiang spot aluminum priceRMB 24,370/t, +0.6% WoWAluminum smelting margins improved to RMB 8,077/t.
• COMEX gold spot priceUSD 4,543/oz, -3.7% WoWAs of May 15.
• Iron ore priceUSD 111.5/t, -0.1% WoWThe report describes iron ore as remaining firm.
• Rebar priceRMB 3,416/t, -1.3% WoWAs of May 15.
• Hot-rolled coil priceRMB 3,482/t, -0.7% WoWAs of May 15.
• Apparent steel consumption9.1 mnt, +8.4% WoWBased on the five major steel products.
• Finished steel inventories-4.3% WoWInventory destocking was relatively pronounced.
• Rebar and hot-rolled coil cash margins-RMB 257/t and -RMB 213/tMargins remained negative.
• National average cement priceRMB 313/t, +0.4% WoWAs of May 15, with divergent regional price performance.
• Average float glass priceRMB 1,150.8/t, -0.05% WoWWeak demand limited upside.
• National average containerboard priceRMB 3,652/t, +0.3% WoWAs of May 13.
• Nine Dragons profit trackerRMB 118/tThe report says this week's NP/t metric was RMB 118/t.
• 2.0mm solar glass priceRMB 8.45/sqm, down RMB 0.55/sqmSolar glass gross margins declined WoW.

Impact & implications

In terms of investment implications, the report is more supportive of upstream non-ferrous metals and assets with supply constraints, while remaining cautious on downstream manufacturing segments facing high raw material costs, weak demand, or inventory pressure. Tight copper concentrate supply and expanding aluminum margins may improve upstream earnings expectations; although steel demand has improved and inventories have declined, negative margins limit sector upside; glass and solar glass still need demand and inventory improvement.

Risks

• High volatility in commodity prices could lead to a pullback.
• Changes in geopolitics, energy, and logistics disruptions could quickly alter copper and aluminum supply expectations.
• Chinese downstream demand may recover less than expected, weakening price support for steel, cement, glass, and paper.
• Insufficient cost pass-through at steel mills and building-material companies could keep margins under pressure.
• A renewed buildup in inventories could weigh on prices and gross margins.
• The research report includes investment-banking conflict disclosures, and investors should treat it as only one reference factor.

What to watch

• Whether copper concentrate TC/RC stays negative and makes new lows.
• Changes in LME, SHFE, and COMEX copper inventories and China social inventories.
• Whether aluminum smelting margins can stay elevated.
• Whether apparent consumption, output, and destocking for the five major steel products remain strong.
• The relative moves in iron ore prices and steel mill cash margins.
• Whether regional cement prices can shift from local divergence to nationwide improvement.
• Changes in glass and solar glass inventory days, capacity, and gross margins.
• Whether rising paper prices can translate into sustained margin improvement.