3.27 SMM Morning Briefing Summary
Futures: In the night session on March 26, the most-traded SHFE aluminum 2605 contract opened at 23,970 yuan/mt, hit an intraday high of 23,995 yuan/mt and a low of 23,850 yuan/mt, and finally closed at 23,870 yuan/mt, up 0.61%. Open interest in the night session stood at 259,000 lots, down 884 lots from the daytime session. MA20 (24,526) > MA30 (24,256) > MA10 (24,179) > MA5 (23,727), with short-term moving averages tangled and fierce competition between bulls and bears; medium-term moving averages remained in a bullish alignment, but showed signs of weakening. RSI rebounded from lows to around 50, staying in neutral to slightly strong territory without entering the overbought range, leaving room for further fluctuations. LME aluminum opened at $3,240/mt, reached a high of $3,299/mt, a low of $3,212/mt, and closed at $3,254.5/mt, up 0.39%. Trading volume was 24,910 lots, an increase of 5,004 lots, while open interest was 68,100 lots, down 3,709 lots.
Macro Front: Trump said Iran was in talks with the US. The US would wait and see whether an appropriate agreement could be reached and the Strait of Hormuz could be opened; otherwise, Iran would face continued fierce offensives from the US. Trump also said Iran had allowed 10 oil tankers to pass through the Strait of Hormuz as a “gift.” (Neutral) The State Administration for Market Regulation held its first Fair Competition Symposium for Enterprises of 2026, emphasizing deeper rectification of “involution-style” competition, and conducted in-depth exchanges with representatives from enterprises including China Minmetals, China State Construction, CATL, BYD, Chery Automobile, Didi, and Meituan. (Neutral)
Fundamentals: This week, the weekly operating rate of leading downstream aluminum processing enterprises in China rebounded 2.1 percentage points WoW to 64%, with operating rates across segments showing differentiated recovery. Consumption gradually returned to the peak-season pace, but the overall level still lagged behind the same period last year, as the strength of demand recovery intertwined with disruptions from the macro environment. Overall, most segments in the aluminum processing industry saw operating rates recover under the drive of work resumption, but affected by uncertainty in aluminum price trends and a relatively slow demand recovery, current consumption, though back on the peak-season track, was still weaker than the same period last year, and the sustainability of downstream orders required further confirmation.
Primary Aluminum Market: In early trading, SHFE aluminum 2604 fluctuated downward. Affected by low futures levels, some sellers still did not quote prices. Yesterday, shipment sentiment weakened somewhat, while some sellers showed a notably stronger willingness to hold prices firm. Yesterday, mainstream transaction prices were mainly concentrated at the average price of the SHFE aluminum 04 contract to a premium of 20 yuan/mt. Yesterday, the east China market shipment sentiment index was 2.63, down 0.22 MoM; the purchasing sentiment index was 3.38, up 0.11 MoM. Over the past two days, aluminum prices fluctuated rangebound. In central China, traders and downstream processing enterprises were caught between bullish and bearish sentiment, with overall market purchasing relatively weak. Suppliers showed limited willingness to hold prices firm, and amid sluggish trading, quoted premiums showed a continued weakening trend. Ultimately, actual transaction prices for next-month invoices in the central China market were around premiums of 10 yuan/mt to discounts of 10 yuan/mt against central China prices. Yesterday, the shipment sentiment index in the central China market was 2.64, flat MoM; the purchasing sentiment index was 2.4, down 0.01 MoM.
Aluminum Scrap:Yesterday, spot primary aluminum pulled back 250 yuan/mt from the previous trading day, and the aluminum scrap market generally followed lower. Amid current wild swings in aluminum prices, aluminum scrap yards saw rising willingness to hold back cargoes, highlighting the resilience of aluminum scrap prices. Meanwhile, tighter regulatory oversight under the “reverse invoicing” policy has sharply increased tax compliance costs in the aluminum scrap recycling segment. In some regions, as operating procedures have yet to be fully streamlined, the actual circulation of compliant, invoiced cargoes remained tight, and supply-side elasticity was significantly weakened by policy friction. As for the price difference between A00 aluminum and aluminum scrap, as of March 26, the price difference between A00 aluminum and mixed aluminum extrusion scrap free of paint in Foshan was 2,693 yuan/mt, and the price difference between A00 aluminum and shredded aluminum tense scrap was 1,403 yuan/mt. The aluminum scrap market is expected to maintain consolidation at high levels next week, with the mainstream range for shredded aluminum tense scrap (priced based on aluminum content) running around 19,800-20,500 yuan/mt (ex-tax). Policy constraints on the supply side are unlikely to ease in the short term, and tight compliant cargoes, coupled with yards holding back cargoes, will continue to underpin prices. Demand side, peak-season recovery fell short of expectations, downstream wait-and-see sentiment amid high prices remained strong, and there was a lack of momentum for large-scale restocking, with just-in-time procurement still dominant. Primary aluminum remains subject to fluctuations driven by geopolitical and macro factors, and the overall tug-of-war between sellers and buyers will continue, warranting vigilance against the risk of wild swings in prices.
Secondary Aluminum Alloy:Futures side, yesterday the aluminum alloy 2604 contract generally showed a narrow-range, weaker trend, opening at 22,865 yuan/mt, hitting a high of 22,975 yuan/mt, dipping to a low of 22,710 yuan/mt, and closing at 22,820 yuan/mt, down 50 yuan/mt, or 0.22%, from the previous settlement price. Trading volume was 3,600 lots, and open interest fell by 1,730 lots to 1,833 lots, indicating a slight outflow of funds. It remains in the doldrums in the short term, though downside support is gradually emerging. Spot side, yesterday the ADC12 market remained in the doldrums, with mainstream enterprises generally cutting quotes by 100-200 yuan/mt. Current market demand remained weak, order follow-up was insufficient, downstream procurement was mainly just-in-time procurement, and wait-and-see sentiment was relatively strong. At the same time, affected by poor orders, enterprises faced greater shipment pressure, low-priced cargoes gradually increased, market competition intensified, and the price center moved lower passively. Overall, against the backdrop of no clear improvement in demand, ADC12 prices will remain under pressure, with weak rangebound movement likely in the short term. Markets outside China, current overseas ADC12 quotations remained in the range of $3,220-3,260/mt, and immediate import losses continued at around 2,000 yuan, leaving the theoretical import window closed.
Aluminum Market Summary:Currently, macro and geopolitical risks in the global aluminum market have yet to fade. The Middle East situation remained in a stalemate, threats to navigation through the Strait of Hormuz were unresolved, and aluminum enterprises in the region faced disruptions to both raw material imports and product exports. The stability of the global aluminum supply chain was under pressure, and the risk premium persisted. However, the earlier risk premium during the week partially pulled back as sentiment eased and bulls took profits. Last week, the US Fed announced the decision of its March policy meeting, keeping the benchmark interest rate unchanged at 3.5-3.75%. Affected by inflation and employment data, market expectations for US Fed interest rate cuts shifted back significantly, and even reignited discussion of further US Fed rate hikes. Fundamentals, supply side, the market heard that Aluminum Bahrain in the Middle East further cut production, involving 320,000 mt of capacity, while no other changes occurred for the time being; demand side, downstream operating rates further rebounded, but the proportion of liquid aluminum was relatively stable this week. Entering April, as the peak season deepens, the proportion of liquid aluminum is expected to further rebound. Inventory side, although the center of aluminum prices pulled back from the previous period during the week, market wait-and-see sentiment remained strong, and downstream buyers mainly made just-in-time procurement on dips. Social inventory of aluminum ingot failed to enter the destocking stage, and as of this Thursday, total social inventory of aluminum ingot still showed an inventory buildup of 10,000 mt from last Thursday; finished product inventories of aluminum ingot at aluminum smelters declined further. From late March to early April, attention should be paid to whether aluminum ingot inventory can smoothly enter a destocking cycle under high aluminum prices. Overall, the Middle East situation remained a key concern. If Middle Eastern aluminum smelters further cut production, it is expected to provide upward momentum to aluminum prices in and outside China, but continued inventory buildup in China social inventory and ample supply are expected to bring top-side pressure to SHFE aluminum prices. In the short term, aluminum prices are expected to mainly fluctuate in a range with adjustments.
[The information provided is for reference only. This article does not constitute direct advice for investment research decisions. Clients should make prudent decisions and should not use this as a substitute for their own independent judgment. Any decisions made by clients are unrelated to SMM.]
![[SMM Analysis] Aluminum Processing Rates Rebound 1.1% MoM, But Lag Behind Previous Years' Peak-Season Levels](https://imgqn.smm.cn/usercenter/ppauU20251217171651.jpg)
