Basic Materials - China: Copper/aluminum prices remain firm; TC/RC decline due to supply tightness; iron ore remains strong

Copper/Ally prices remain firm; TC/RCdrops on tight supply; iron ore holds strong Industry Overview Spotcopper TC/RC drops below -US$100/t on tight supply 18 May2026 Supply disruptions remained a key support for copper prices this week. On one hand,recurring Middle East tensions continue to affect shipments through the Strait of Hormuz,keeping oil prices elevated and lifting smelting and logistics costs. On the other hand, Peruapproved a US$2bn state‑backed loan for Petroperu on May 11 to sustain operations,highlighting ongoing strain in the local energy system and continued market concerns overpotential mining supply disruptions. LME copper rose 2.8% WoW to USD 13,895/t,meanwhile, China spot copper prices also increased by 2.7% WoW to RMB 105,790/t.Meanwhile, spot TC/RC slid continued to decrease to a new record low of–USD 104/t,highlighting continued tightness in copper concentrate supply. LME aluminum rose by 5%WoW to USD 3,741/t, while the Changjiang spot price edged up by 0.6% WoW to RMB EquityChina Matty Zhao>>Research AnalystMerrill Lynch (Hong Kong)+852 3508 4001 Edward Leung, CFA>>Research AnalystMerrill Lynch (Hong Kong)+852 3508 3282 edward.leung@bofa.comMiriam Chan, CFA>>Research AnalystMerrill Lynch (Hong Kong)+852 3508 7478miriam.chan@bofa.com Steel:Margins remain weak on high raw material costs Yibing Xia>>Research AnalystMerrill Lynch (Hong Kong)+852 3508 8045 In the first half,speculation of a thermal coal supply meeting and capital outflows drovea sharp pullback in raw materials, dragging down the ferrous complex. In the second half,Trump’s China visit and trade talks added volatility, though largely priced in. Five majorsteelproducts data showed mixed supply,stronger demand,and solid inventorydrawdowns. Spot prices remained firm, but trades skewed to low levels; wider basisprompted arbitrage selling into spot. As of May15, rebar and HRC prices fell by 1.3% and0.7% WoW to RMB3,416/t and RMB3,482/t, respectively, amid a 0.1% WoW drop in iron Yiming Wang>>Research AnalystMerrill Lynch (Hong Kong)+852 3508 5037 Peter Wang>>Research AnalystMerrill Lynch (Hong Kong)+852 3508 7185 Cement/Glass/Paper: Weak performanceCement:The average national cement price inched up by 0.4% WoW to RMB313/t as of May 15th. The nationwide shipment ratio rose by 1.1ppts WoW to 43.9%, and theinventory ratio also increased by 1.2% to 65.4%. In mid-May, price trends diverged by See glossary at the end of the report region. North China and Central-South saw corrective price increases driven by highercoal and raw material costs, while Northeast, East China, and Northwest marketsremained weak, with continued price declines dragging down the national average. Glass: National average float glass price (incl. VAT) inched down by 0.05% WoW toRMB1,150.8/t amid weak demand capped upside. Our analysis shows Xinyi float glassGPM edged down by 0.4ppts to 11.7%.Paper: Paper prices edged up by 0.3% WoW toRMB3,652/t as of May 13 amid narrowing supply-demand gap.Solar glass: Ourcalculation shows Flat Glass GPM (2.0mm) and Xinyi Solar GPM (2.0mm) down >> Employed by a non-US affiliate of BofAS and is not registered/qualified as a research analystunder the FINRA rules. Refer to "Other Important Disclosures" for information on certain BofA Securities entities that takeresponsibility for the information herein in particular jurisdictions.BofA Securities does and seeks to do business with issuers covered in its researchreports. As a result, investors should beaware that the firm may have a conflict of Key charts Exhibit1:Copper and aluminum spot pricesLME copper price +2.8% WoW to US$13,895/t and LME aluminum price was Exhibit2:Copper social inventoryAs of May 15, Shanghai bonded warehouse inventory/Shanghai social inventory was -2.7% / +4.5% WoW; Guangdong bonded warehouseinventory/Guangdong social inventory was +2.6% / flattish WoW +5.0% WoW at USD 3,741/t as of May 15 BofA GLOBAL RESEARCH Exhibit4: Avg. national aluminum margin (60% captive plant)Avg. national aluminum margin rose by RMB 115/t WoW to RMB8,077/t asof May 15 Exhibit3: Domestic monthly treatment charges on Cu concentrateDomestic monthly treatment charges on copper concentrate: -US$103.72/tas of May 15 Source:Bloomberg, SMM, Wind, BofA Global Research Exhibit6: Spot cash margins at steel millsBy May 15, spot rebar cash margins rose by RMB 23/t to –RMB 257/t, while Exhibit5: COMEX gold spot priceCOMEX gold (spot) price decreased by 3.7% WoW to US$4,543/oz as of May spot HRC cash margins decreased by RMB 30/t to –RMB 213/t 15 Exhibit8: ASP at Qinhuangdao port (Kcal5,500)ASP of QHD 5,500kcal spot price rose by 2.3% WoW to RMB830/t as of May 13 Source:Sxcoal, BofA Global Research BofA GLOBAL RESEARCH Exhibit5: Lithium carbonate unit refining marginCurrent lithium carbonate refining margin based on spodumene hasnarrowed and still stayed negative amid decreasing spodumene price Source:Digital cement, BofA Global Research Exhibit10: Nationa