2026Q1 Aluminum Price Review

Q1 SHFE Aluminum Price Review (By Stage)

January: Market traded on Fed rate-cut expectations, decoupled from fundamentals

• Fundamentals: Spring Festival low season + demand vacuum + inventory accumulationAluminum prices rose continuously and hit a historical high for the period, squeezing downstream profit margins and weighing on primary aluminum demand.Environmental production restrictions in some regions constrained raw material consumption.Social inventories of primary aluminum kept accumulating. By the end of January, SMM social aluminum ingot inventory rose to 782,000 tonnes, the highest level for the same period in nearly three years.

• Macroeconomics: The Federal Reserve was in a rate-cut cycle in January. The U.S. dollar weakened notably, and large capital inflows into commodity futures boosted broad commodity prices.Coupled with positive domestic consumption-boosting policies, aluminum prices were well supported.

February: Market traded on Fed rate-hold expectations, decoupled from fundamentals

• Fundamentals: Aluminum prices traded in a weak range.Domestic downstream fabricators sharply reduced purchases due to the Spring Festival holiday, while smelters raised ingot-casting activity, leading to continued accumulation in primary aluminum social inventories.After the holiday, SMM social aluminum ingot inventory climbed to 1.108 million tonnes. High inventory provided little upward support for aluminum prices.

• Macroeconomics: Diminished U.S. rate-cut expectations drove the DXY stronger. Profit-taking capital outflows triggered a pullback in aluminum prices, reinforcing the weak sideways pattern.

March: Market swung between Middle East supply disruptions and demand headwinds

Intensive long-short competition drove aluminum prices into a “rally – correction – rebound” volatile structure.

• Supply side:

1. Frequent overseas production cuts continued to roil the market.Mozal entered maintenance. Qatar Aluminum announced it would halt further cuts and maintain 60% operating rate.Alba Bahrain shut down Lines 1, 2 and 3 under controlled and safe conditions, with market rumors later emerging that Line 4 may also face production cuts or shutdowns.EGA suffered severe facility damage, with the extent still under assessment; the market expects large-scale production cuts or shutdowns.Worsening concerns over global supply shortages became the key driver of periodic aluminum price gains.

2. Escalating Middle East conflicts and safety concerns over shipping through the Strait of Hormuz heightened uncertainty over global primary aluminum supply, injecting sustained geopolitical risk premium and supporting high price levels.

• Demand side:

1. Rising stagflation fears boosted risk aversion, pressuring aluminum prices to correct and limiting upside.

2. Downside risks in overseas demand became prominent, as downstream fabricators faced multiple constraints:(1) High aluminum prices significantly suppressed purchasing willingness and restrained demand realization;(2) Shortages of natural gas, crude oil and other energy resources forced some fabricators to cut or halt production;(3) Sharply rising freight and smelting costs squeezed downstream margins, further dampening demand indirectly.