Qatar Production-Cut News Boosts Prices; Overnight LME Aluminum and SHFE Aluminum Both Close Higher [SMM Aluminum Morning Meeting Minutes]

3.4 SMM Morning Meeting Minutes

Futures: In the night session on March 3, the most-traded SHFE aluminum 2604 contract opened at 24,210 yuan/mt, hit a high of 24,500 yuan/mt and a low of 24,090 yuan/mt, and finally closed at 24,410 yuan/mt, up 505 yuan/mt from the previous close, a gain of 2.11%. From a technical perspective, the MA moving averages showed a divergent pattern: MA5 (24,092) > MA30 (24,065) > MA20 (23,977) > MA10 (23,861). In terms of open interest, night-session open interest stood at 250,000 lots, down 7,178 lots from the daytime session. LME aluminum opened at $3,193/mt, reached a high of $3,315/mt and a low of $3,151/mt, and closed at $3,275/mt, up 2.83%. Trading volume was 56,463 lots, an increase of 12,074 lots, while open interest was 666,000 lots, down 1,007 lots.

Macro Front: A press conference on news related to the 2026 national Two Sessions was expected to be held. The press conference for the Fourth Session of the 14th National People’s Congress was scheduled for 12:00 on March 4 (Wednesday) at the Press Conference Hall of the Great Hall of the People, and the press conference for the Fourth Session of the 14th National Committee of the Chinese People’s Political Consultative Conference was scheduled for 15:00 on March 3 (Tuesday) at the first-floor Press Conference Hall of the Great Hall of the People. (Neutral) US Fed’s Kashkari said that if inflation cools, it may be appropriate to cut interest rates one to two more times later this year; US Fed’s Williams said he still believed the US Fed’s policy rate was slightly above the neutral rate. (Bullish★)

Fundamentals: QatarEnergy said in a news release on its official website that after deciding to halt production of liquefied natural gas (LNG) and related products, it also planned to suspend production of some downstream products within Qatar, including urea, polymers, methanol, and aluminum. According to public information, Qatar Aluminium (Qatalum) has annual aluminum capacity of 636,000 mt in Qatar, with QatarEnergy and Hydro each holding a 50% stake.

Primary Aluminum Market: In early trading, SHFE aluminum 2602 rose first and then fell, with the price center higher than the previous trading day. Affected by the US-Iran conflict, the market’s bullish sentiment was strong, and buying sentiment increased. Mainstream quotations were concentrated from the average price to a premium of 20 yuan/mt, with mainstream transactions at 10 yuan/mt. On Tuesday this week, the east China market willingness-to-sell sentiment index was 2.94, flat MoM; the buying sentiment index was 3.22, up 0.29 MoM. Affected by geopolitical factors, aluminum prices surged and traders remained bullish on aluminum prices, lifting overall transaction sentiment in the central China market on Tuesday this week. The inventory buildup trend continued, and suppliers’ willingness to sell was notable; however, the post-holiday recovery in end-user orders was weak, and with downstream processing enterprises’ inventories not yet fully digested, purchase sentiment pulled back. Ultimately, actual transaction prices in the central China market hovered between parity with the central China price and a discount of 20 yuan/mt to the central China price. This Tuesday, the central China market’s willingness-to-sell sentiment index was 2.67, up 0.03 MoM; the purchasing sentiment index was 2.26, down 0.03 MoM.

Aluminum scrap: This Tuesday, spot primary aluminum rose 330 yuan/mt from the previous trading day, and aluminum scrap prices actively followed the uptrend. After the Chinese New Year holiday, most domestic yards resumed operations and cargo receiving/shipping mainly from the eighth to the tenth day of the first lunar month. Although raw material inventories at downstream aluminum processing enterprises fell to low levels during the holiday, creating restocking demand, the 2026 Chinese New Year holiday was extended compared with previous years, and overall large-scale restocking actions lagged. As a result, aluminum scrap shipments have not yet shown clear signs of a rebound this week. It is expected that the aluminum scrap market will hover at highs this week, with shredded aluminum tense scrap (priced based on aluminum content) mainly moving in the 19,000-19,600 yuan/mt (tax-exclusive) range. Supply side, yards are gradually resuming operations across the board, and supply release is set to increase, but recycling policies still constrain circulation. Demand side, downstream enterprises accelerated their pace of resuming operations, and restocking demand is expected to be released slowly. The tug-of-war between sellers and buyers will continue, and market trading activity is set to recover gradually but remain sluggish overall. Close attention should be paid to downstream production resumption progress, primary aluminum price trends, and changes in recycling policies, with vigilance against price fluctuation risks.

Secondary aluminum alloy: Futures, the most-traded aluminum alloy 2604 contract first surged intraday to 23,305 yuan/mt, then saw a rapid plunge in the afternoon, bottoming at 22,650 yuan/mt, and rebounded slightly into the close to settle at 22,750 yuan/mt, down 265 yuan/mt from the previous close, a decline of 1.15%. Trading volume was 8,621 and open interest was 6,569, with bulls mainly reducing positions. This Tuesday, domestic ADC12 spot quotations continued to rise, with mainstream gains reaching 300 yuan/mt. Cost side, supported by raw material prices rising in tandem, the downside was solid; demand side, although recovering steadily, downstream enterprises still maintained a just-in-time procurement pace. Driven by consecutive gains, the market’s “rush to buy amid continuous price rise and hold back amid price downturn” sentiment strengthened, and inquiry activity increased, but actual traded volumes expanded only limitedly. At present, producers’ willingness to sell strengthened along with the progress of resuming production, while downstream order release remained cautious. The current uptrend is driven more by cost push and market sentiment, with mediocre performance in transactions. Overall, ADC12 prices are expected to maintain a sideways movement pattern in the short term. Before the production resumption pace is fully realized, supply release will be relatively slow; coupled with cost support, downside room for prices is limited. Going forward, as enterprises fully resume production, market focus will gradually shift from the supply side to the realization of end-use consumption. If end-user orders see a phased increase in volume while primary aluminum continues to fluctuate upward, there remains room for the ADC12 price center to move higher; if demand recovery falls short of expectations, prices may continue to move sideways in consolidation.

Aluminum Market Summary:The Middle East turmoil triggered by the U.S.-Iran conflict has become the biggest geopolitical black swan for the global primary aluminum market, potentially causing supply disruptions on the scale of several million mt while pushing up smelting cost. Coupled with risk-off sentiment, aluminum price volatility may intensify. Going forward, continued vigilance is needed against risks such as escalation of the conflict, strait blockades, and raw material supply cutoffs, as well as further impacts on aluminum prices from macro disruptions, and prudent responses are required to the operating and investment risks brought by supply chain fluctuations. Fundamentals: seasonal pressure remains pronounced. Supply side, domestic and overseas aluminum new projects steadily ramped up output, and the conversion ratio of liquid aluminum remained temporarily low. Demand side, after the holiday, downstream processing operating rates showed a steady recovery pace; however, under the impact of seasonal supply exceeding demand and some cargo piling up at railway platforms, the post-holiday peak of domestic aluminum ingot inventory is expected to reach above 1.35 million mt, a new high in nearly five years, which will be an important factor capping any rise in prices. Overall, aluminum prices around Chinese New Year showed a trajectory of first falling and then rising, and in the short term, SHFE aluminum is expected to hold up well.

[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 replacement for independent judgment. Any decisions made by clients are unrelated to SMM.]