4.2 SMM Morning Meeting Summary
Futures: In the night session on April 1, the SHFE aluminum 2605 contract opened at 24,830 yuan/mt, hit an intraday high of 24,980 yuan/mt and a low of 24,775 yuan/mt, and finally closed at 24,910 yuan/mt, up 250 yuan/mt from the previous close, or 1.01%. Technical analysis showed that the short-term moving averages (SMA5: 24,788.63; SMA10: 24,583.32) maintained an upward trend, with prices holding firmly above the 5-day and 10-day moving averages, further reinforcing the short-term bullish trend. The price spread between the medium-term moving averages (SMA20: 24,429.42; SMA40: 24,400.58; SMA60: 24,346.78) and the short-term moving averages continued to widen, while the medium-term cost center remained highly concentrated. The MACD red bars persisted (DIFF: 90.70, DEA: -40.52, STICK: 262.44), with DIFF and DEA remaining in a golden cross, indicating continued strengthening in bullish momentum and ample upside momentum. In terms of open interest, night session open interest was about 248,000 lots, an increase of 1,479 lots from the previous session. On April 1, LME aluminum opened at $3,459.0/mt, hit an intraday high of $3,537.0/mt and a low of $3,425.0/mt, and finally closed at $3,527.5/mt, up 2.66% from the previous day. Open interest in the night session stood at about 683,000 lots, down 4,742 lots from the previous session.
Macro Front: According to Xinhua News Agency, Li Qiang, member of the Standing Committee of the Political Bureau of the CPC Central Committee and Premier of the State Council, conducted a survey in Sichuan from March 30 to April 1. He stressed the need to thoroughly implement General Secretary Xi Jinping's important statements on green development and building China into an energy powerhouse, carry out the new energy security strategy, adhere to innovation-driven development, leverage resource endowment advantages, continue expanding green electricity supply, focus on advancing new-type power grid construction, and accelerate the adjustment and optimization of the energy structure to provide strong support for high-quality economic and social development. (Bullish ★) Data released by ADP Research Institute on Wednesday showed that US private-sector employment increased by 62,000 in March, above the median analyst forecast of 40,000 in a Bloomberg survey. The previous month's increase was 63,000, broadly in line with this month. (Bearish ★)
Fundamentals: According to SMM data, the average tax-inclusive full cost of China's aluminum industry in March 2026 rose 0.5% MoM and fell 5.7% YoY, mainly due to a slight rebound in alumina raw material costs during the period. Aluminum capacity outside China that has already undergone production cuts (including Mozambique), together with capacity facing significant production reduction risk, exceeded 3 million mt. If production cuts at this portion of capacity are confirmed later, aluminum supply outside China is expected to maintain negative YoY growth for an extended period, and the global aluminum market is expected to face a sizable deficit, with the deficit outside China far exceeding that in China. Inventory side, as of Thursday this week, aluminum ingot inventory in China’s major consumption hubs continued to build up, up 14,000 mt from Monday and up 38,000 mt from last Thursday.
Primary aluminum market:In the morning session, SHFE aluminum 2604 fluctuated downward, with its center largely flat from the previous day. Affected by elevated aluminum prices, downstream procurement enthusiasm was low, with purchases mainly made against orders and little inventory buildup. Market shipment sentiment was relatively strong, and available cargoes were fairly ample, pushing spot transaction premiums wider. 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 3.41, up 0.1 MoM; the purchasing sentiment index was 3, down 0.11 MoM. With the arrival of the first trading day of April, downstream processing enterprises in central China entered a new order cycle, and buying sentiment improved markedly from the previous day, driving traders’ purchase volumes higher as well. Market trading turned more active, and overall trading volume rose sharply. As trading volume increased, market transaction prices were gradually raised, with actual transaction prices in the central China market ultimately around parity to a discount of 40 yuan against the central China price. Yesterday, the shipment sentiment index in the central China market was 2.76, up 0.02 MoM; the purchasing sentiment index was 2.42, up 0.1 MoM.
Secondary aluminum raw material:The US-Iran war disrupted fund sentiment and aluminum fundamentals. Yesterday, primary aluminum spot prices dropped slightly by 10 yuan/mt from the previous trading day, while the aluminum scrap market was largely stable overall. Amid wild swings in aluminum prices yesterday, aluminum scrap yards showed stronger willingness to hold back cargoes, highlighting the resilience of aluminum scrap prices. Meanwhile, affected by tighter regulatory oversight under the “reverse invoicing” policy, tax compliance costs in the aluminum scrap recycling segment rose sharply. In some regions, as operating procedures have yet to be fully streamlined, the supply of actually compliant, invoice-backed, available cargoes remained tight, and supply-side elasticity was significantly weakened by policy frictions. The aluminum scrap market is 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. Tight compliant cargo 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 the mainstream. Primary aluminum will likely continue to fluctuate under the influence of geopolitical and macro factors. Overall, the tug-of-war between sellers and buyers will persist, and caution is warranted against the risk of wild price swings.
Secondary aluminum alloy:Futures side, before noon yesterday, the most-traded aluminum alloy 2605 contract retreated after rapid rise and then fluctuated downward. After the opening, prices rose rapidly and touched an intraday high of 23,985 yuan/mt, then pulled back under pressure, with the intraday low falling to 23,535 yuan/mt. As of the midday close, it stood at 23,630 yuan/mt, down 115 yuan from the previous trading day, or 0.48%. Spot market, yesterday’s ADC12 market prices were mainly stable. Fluctuations in aluminum prices and aluminum scrap prices narrowed, cost support tended to stabilize, and enterprises generally lacked the motivation to adjust prices. Meanwhile, downstream demand showed no obvious improvement, with procurement still mainly driven by just-in-time needs, and market transactions delivered mediocre performance. In the absence of new macro and fundamental drivers, ADC12 prices are expected to continue moving sideways in a narrow range 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. From a fundamental perspective, on the supply side, the market has heard reports of further production cuts at an aluminum plant in Bahrain, Middle East, 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. Approaching 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. A series of 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 of gradually released peak-season demand in China, aluminum prices are expected to remain in a high-level adjustment 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.]
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