SHFE Aluminum Night Session Closed Higher, Geopolitics and Fundamentals Jointly Supported Aluminum Prices [SMM Aluminum Morning Meeting Summary]

4.1 SMM Morning Meeting Summary

Futures: During the night session on March 31, the SHFE aluminum 2605 contract opened at 25,180 yuan/mt, hit an intraday high of 25,180 yuan/mt and a low of 24,895 yuan/mt, and finally closed at 24,915 yuan/mt, up 40 yuan/mt from the previous close, or 0.16%. Technical analysis showed that the short-term moving averages (SMA5: 24,739.52; SMA10: 24,462.07) continued to trend upward, with prices holding firmly above the 5-day and 10-day moving averages, indicating that the short-term bullish trend remained intact. The medium-term moving averages (SMA20: 24,344.46; SMA40: 24,358.69; SMA60: 24,315.70) showed a relatively small price spread, with the medium-term cost center highly concentrated, and the tug-of-war between longs and shorts entering a period of balance. On the 4-hour candlestick chart, the MACD red histogram continued to expand (DIFF=37.78, DEA=-105.81, STICK=287.18). Following the golden cross between DIFF and DEA, the gap widened further, bearish momentum weakened further, and bullish momentum continued to strengthen. In terms of open interest, night-session open interest was about 257,000 lots, down 2,094 lots from the previous session. On March 31, LME aluminum opened at $3,433.5/mt, hit an intraday high of $3,536.0/mt and a low of $3,418.5/mt, and finally closed at $3,436.0/mt, down 0.26% from the previous day. In terms of open interest, night-session open interest was about 688,000 lots, up 297 lots from the previous session.

Macro Front: The Monetary Policy Committee of the central bank held its 2026 Q1 regular meeting. The meeting pointed out that it would continue to implement a moderately accommodative monetary policy, step up counter-cyclical and cross-cyclical adjustments, better leverage both the aggregate and structural functions of monetary policy tools, strengthen coordination between monetary and fiscal policies, and promote stable economic growth and a reasonable rebound in prices. (Bullish ★) On Tuesday, US Fed's Schmid warned that rising energy prices should not be assumed to have only a temporary impact on inflation, because even before the Iran conflict sent oil prices soaring, inflation had already been close to 3%, and progress toward the US Fed's 2% inflation target had already stalled. Schmid said, “I do not think we can afford to take lightly the risks facing inflation expectations.” He also noted that although most measures of medium and long-term inflation expectations had remained stable, that did not provide him with much comfort. (Bearish ★)

Fundamentals: According to SMM statistics, China’s aluminum production in March 2026 (31 calendar days) was up 1.6% YoY and up 10.7% MoM. The increase in the month was mainly driven by the recovery in calendar days and the gradual resumption of production by downstream enterprises after Chinese New Year. Operating rates across downstream industries rose overall, while the share of liquid aluminum also rebounded, up about 9.3 percentage points MoM to 73.7%, exceeding expectations at the beginning of the month. In March 2026, total aluminum production outside China edged up 0.2% YoY, while daily average production outside China fell 2.7% MoM, mainly due to widespread output cuts and suspensions at aluminum plants in Mozambique and the Middle East in March.

Primary Aluminum Market:In early trading, SHFE aluminum 2604 rose, with the price center moving higher than the previous day. Supported by higher aluminum prices, shipment sentiment surged yesterday, with relatively ample available cargoes in the market, driving wider transaction premiums. Market transactions were mainly concentrated at discounts of 10 yuan/mt to the SMM A00 aluminum average price. Yesterday, the shipment sentiment index in east China was 3.31, up 0.13 MoM; the purchasing sentiment index was 3.11, unchanged MoM. As aluminum futures prices continued to rise yesterday, bullish sentiment among traders in central China rebounded slightly from the previous day. Suppliers, fearing that excessive inventory could trigger a price pullback, saw a sharp increase in mildly bearish sentiment, and quoted premiums fell all the way. However, sentiment diverged significantly between large and small traders, with major traders showing a stronger inclination to hold prices firm. Ultimately, actual transaction prices in the central China market were around discounts of 10 yuan to 40 yuan against the central China price. Yesterday, the shipment sentiment index in the central China market was 2.74, up 0.02 MoM; the purchasing sentiment index was 2.32, down 0.07 MoM.

Secondary Aluminum Raw Material:The US-Iran war disrupted fund sentiment and aluminum fundamentals, driving spot primary aluminum to extend its uptrend yesterday from the previous trading day, up 80 yuan/mt. The aluminum scrap market was largely stable overall, with some grades making up the previous day’s gains. Amid current wild swings in aluminum prices, aluminum scrap yards became more willing to hold back cargoes, highlighting the resilience of aluminum scrap prices. Meanwhile, tighter regulatory oversight under the “reverse invoicing” policy sharply increased tax compliance costs in the aluminum scrap recycling segment. In some regions, as operating procedures have yet to be fully streamlined, the supply of actually compliant, invoiced, and available cargoes remained tight, and supply-side elasticity was significantly weakened by policy frictions. Aluminum scrap prices are expected to maintain consolidation at high levels this week, with the mainstream range for shredded aluminum tense scrap, priced based on aluminum content, at 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 supply, coupled with yards holding back cargoes, will continue to underpin prices. On the demand side, peak-season recovery fell short of expectations, downstream wait-and-see sentiment at high prices remained strong, and there was a lack of momentum for large-scale restocking, with just-in-time procurement still dominant. Primary aluminum will likely remain volatile under the influence of geopolitical and macro factors, while the overall tug-of-war between sellers and buyers will persist, warranting caution over the risk of wild price swings.

Secondary Aluminum Alloy:In futures, the aluminum alloy 2605 contract posted a bottom-out rebound and late-session rally in the daytime session yesterday, fluctuating upward throughout the day. After the morning open, prices fluctuated upward and hit an intraday high of 23,695 yuan/mt, then fluctuated lower and fell to an intraday low of 23,320 yuan/mt in the afternoon. After bottoming out, prices gradually stabilized and rebounded, before gaining momentum into the close. It finally settled at 23,695 yuan/mt, up 180 yuan, or 0.77%, from the previous trading day’s settlement price. Trading volume was 7,501 lots, open interest was 6,958 lots, and open interest in the daytime session decreased by 2,029 lots. The intraday chart showed prices fluctuating around the moving average, with a strong late-session rally; on the 4-hour chart, the KDJ indicator formed a bullish crossover and moved upward, indicating the market held up well in the short term. Spot side, yesterday’s ADC12 market mainly held prices steady. After the aluminum price rally slowed, enterprises’ willingness to adjust prices declined markedly, and most chose to remain on the sidelines. In terms of market expectations, some enterprises maintained a relatively bullish view, but against the backdrop of marginally weaker end-use consumption, tighter downstream procurement, and mediocre trading performance, overall industry sentiment remained cautious, with short-term bearish sentiment gradually building. ADC12 prices are expected to continue fluctuating rangebound in the short term. Going forward, close attention should be paid to the impact of developments in the Middle East situation on aluminum prices and downstream consumption performance.

Aluminum Market Summary:At present, macro geopolitical risks in the global aluminum market continue to escalate, with risk premiums remaining elevated and becoming the core variable dominating market sentiment. Fundamentally, on the supply side, the market reported further production cuts at an aluminum plant in Bahrain, Middle East, involving 320,000 mt of capacity, while the EGA Taweelah smelter in the UAE was attacked on March 28 and suffered severe damage, making the global supply contraction more pronounced. On the demand side, downstream operating rates rebounded further, while the weekly proportion of liquid aluminum was relatively stable. Entering April, as the peak season deepens, the proportion of liquid aluminum is expected to rebound further. On the inventory side, last week the center of aluminum prices pulled back from the previous period, but wait-and-see sentiment in the market remained strong. Downstream buyers mainly made just-in-time procurement on dips, and aluminum ingot social inventory failed to enter the destocking stage. 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 geopolitical situation in the Middle East remains the core factor affecting the global aluminum market. Successive production cuts and damage incidents at Middle Eastern aluminum plants are expected to provide strong upward momentum for aluminum prices in and outside China. Coupled with support from expectations that peak-season demand in China will gradually be released, aluminum prices are expected to remain in a high-level consolidation pattern in the short term.

[The information provided is for reference only. This article does not constitute direct advice for investment research decisions. Clients should make decisions prudently and should not use this as a substitute for their own independent judgment. Any decisions made by clients are unrelated to SMM.]