Pause in US-China trade tensions inspires cautious optimism in Chinese non-ferrous metals markets, particularly concerning the US-China battery metals trade.
The joint announcement by China and the United States on Monday May 12 – that both countries will remove all additional import tariffs put in place since April 2 – has boosted confidence and inspired “cautious optimism” among non-ferrous market participants in China, Fastmarkets understands.
Under the agreement, on May 14, the world’s two largest economies will remove all tariff adjustments announced since April 2 and will revert to the 10% “reciprocal” tariffs previously in place for most imports.
Battery raw materials market reacts to tariff pause
Sentiment improves across battery supply chain
The surprise move has buoyed the sentiment across China’s battery supply chain, which has long been shrouded by bearishness amid macroeconomic uncertainty and slowing demand. Nonetheless, caution persists over long-term support for the country’s battery materials market, source said.
“The latest negotiation result effectively alleviates the pressure on the global supply chain and instills a certain degree of confidence in the electric vehicle (EV) market,” a Chinese battery producer said. “Should the subsequent negotiations progress favorably, the market is likely to experience a even greater sense of optimism.”
A second Chinese battery producer said: “In response to the recent tariff adjustments, there might be a rush to export.
“Previously, we focused on transshipment, but now there could be a window [of opportunity] to accelerate exports given that the current round of negotiations has been relatively smooth.” producer added.
Cobalt, lithium and EV market outlook
A cobalt producer said the latest move could benefit the whole of the new energy industry.
“The relaxation of Sino-US trade tensions has enhanced the trade environment within the new energy industry chain. This improvement could potentially have an indirect positive impact on cobalt demand,” the cobalt producer said.
“Nevertheless, thus far, the price of cobalt has not seen a substantial upward movement due to this,” the producer added.
The most-active LC2507 lithium carbonate futures contract on Guangzhou Futures Exchange – which is a strong indicator of sentiment, according to market participants – increased to close at 64,040 yuan ($8.890) per tonne on Monday, up from the daily bottom of 62,560 yuan, which was achieved within the first hour of trading, with the contract having opened at 63,720 yuan per tonne.
Fastmarkets’ daily price assessment for lithium carbonate, 99.5% Li2CO3 min, battery grade, spot price range, exw domestic China was 64,100-65,000 yuan per tonne on Monday, narrowing up by 600 yuan per tonne from 63,500-65,000 yuan per tonne on May 9.
“The trade war between China and US amplified pessimism on the macroeconomic [situation]. Now that [tensions have] eased, it is undoubtedly bullish news for the lithium market,” a Chinese lithium trader told Fastmarkets.
But most market participants remain cautious about the development of lithium prices, citing ongoing pressures from supply and demand dynamics.
“The de-escalation of the tariff war between China and the US will not have any major impact on demand for lithium,” a Chinese lithium producer source said.
“Some Chinese battery makers are still cutting production [and] unless there’s a concrete plan for China to further boost its EV consumption, or for production cuts from the lithium mining sector, the market will still remain weak,” the source added.
Market participants also pointed to the high inventories of cathodes and batteries in China that could be ready for export during the 90-day tariff pause – which also suggests it may take a while for additional domestic demand for battery materials to emerge.
Chinese anode industry sources, meanwhile, remain uncertain about the latest agreement between China and the US, Fastmarkets understands.
Graphite anode exports remain uncertain despite US-China battery metals trade breakthrough
One natural graphite market participant told Fastmarkets that, while the long-term impact should be positive, it is unlikely to be reflective of the spot market, because “for now, the most [important] factor is that China has yet to downgrade its export controls on graphite products.”
Other sources, meanwhile, said that current export permit applications for Chinese graphite products has been further extended by adding a new review stage.
“The new agreement [between China and the US] may be a positive signal for Chinese graphite anode exports to the US if no further control measures are issued,” a second natural graphite source said.
Minor metals in holding pattern as US-China battery metals trade recovery unfolds
The situation surrounding critical technology metals such as gallium, germanium, indium, and bismuth has grown increasingly complex, however, because these materials are also subject to Chinese export controls despite also being included in the US reciprocal tariffs exemption list as of April 2025.
So while the 90-day suspension of tariffs has fostered cautious optimism, minor metals market participants remain largely in a wait-and-see mode, sources told Fastmarkets.
“The 90-day suspension is certainly positive news. Export expectations were previously dire, particularly for small household cooling appliances, which faced significant disruption,” a tellurium market participant told Fastmarkets. “End users have been cutting purchases and inventories, but we hope the suspension will help revive market activity.”
Bismuth telluride is a critical raw material for refrigeration applications due to its exceptional thermo-electric properties.
Since 2023, when China imposed export restrictions on gallium, germanium, antimony, indium, bismuth, tellurium, and related items, actual exports of these critical metals to the US have sharply declined or ceased entirely, according to Chinese customs data. The impact of tariffs is now being transmitted upward through the supply chain via downstream consumer goods.
Copper market sees stabilization amid eased tensions
“This ‘truce’ between the two countries… sends out a positive signal to the market, but it’s still at an early stage and more time is needed to see more details, and how it will develop in the end,” a Shanghai-based copper trader said.
The sweeping import tariffs introduced by the US from early April had led to turmoil in global copper market, with the premium for copper cathode into Shanghai rising amid reduced supplies.
On May 9, Fastmarkets daily benchmark copper grade A cathode premium, cif Shanghai remained at its highest level since November 2022 at $100-120 per tonne.
Nickel market gains short-term boost
Nickel market participants said the major reduction in tariffs had levelled the US tariff rates on China and the rest of the world, making Chinese goods containing nickel – such as small home appliances – competitive again in the world’s biggest consumer market.
“This is particularly good news for the electroplating sector, and also good news for the 300-grade stainless steel producers,” a nickel trader based in eastern China said. “They can stop worrying about overall demand and it will create extra demand for nickel in the short term.”
The de-escalation of tariff tensions came as a relief to nickel market participants, with China is reportedly promoting tougher regulation of the national crude steel production limits – partly to offset the impact of the previously excessive tariffs [imposed by the US on] Chinese export demand for stainless steel and downstream products containing stainless steel, sources told Fastmarkets.
“Now that market sentiment has eased following this big, positive news, let’s wait and see how nickel and stainless steel futures react,” a nickel trader based in Shanghai said.
Zinc prices rise on sentiment shift triggered by US-China battery metals trade developments
Zinc market participants are expressing optimism about the 90-day pause, although some remain cautious because the move is so far only temporary.
One zinc market participant told Fastmarkets the agreement reached was generally being seen as a positive sign of warming relations – mainly because the magnitude of the tariff cuts was unexpected.
The futures price of zinc rose during the day on Monday, amid bullish sentiment sparked by the positive outcome from the weekend talks between China and the US.
The most-traded zinc contract at Shanghai Futures Exchange closed at 22,490 yuan per tonne on Monday May 12, rising by 1.08% from Friday’s close of 22,190 per tonne.
The three-month London Metal Exchange zinc price also opened higher in the morning trading session on Monday, rising by 1.79% from Friday’s close at $2,655.50 per tonne.
“It’s a very good signal for the industries in China that need export business to drive growth, [such as] the automobile sector,” a zinc trader based in Shanghai said.
Transportation and car manufacturing accounts for a huge proportion of the refined zinc consumption, with the galvanizing metal coating used to protect steel structures from corrosion.
“Due to the tariff cuts, regular trading activity between the two countries should come back online, with US exports finding their way to China,” a second Shanghai zinc trader said.
Sources told Fastmarkets that the zinc and lead concentrates produced by the Red Dog mine in the US state of Alaska, which is a key supplier to China, had tariffs reduced from more than 100% to just 10%.
But even so, a mood of uncertainty still hovers the market as the slashing of tariffs is only “temporary” so far, sources said.
“This might encourage downstream buyers to consider accelerating their procurement schedules during the 90-day pause, with [the potential for] aggressive stockpiling,” a third Shanghai-based zinc trader said.
Aluminium outlook brightens on unexpected breakthrough in US-China battery metals trade
“[The US-China deal went] beyond expectations and will support a rise in aluminium prices in the short term,” an aluminium producer said.
And an aluminium trader said: “The import arbitrage loss for aluminium might narrow, but [the window is] likely to remain closed.”
