3.12 SMM Morning Meeting Summary
Futures: The night session on March 11 closed at 25,315 yuan/mt, up 0.68%, extending its strength. Prices held above all moving averages, with MA5 (25,015) and MA10 (24,689) in a bullish alignment, keeping the medium-term uptrend intact. The MACD indicator showed DIF (349.81) and DEA (221.57) accelerating higher, while the histogram expanded to 256.49, indicating continued strengthening in bullish momentum. The recommended core trading range for SHFE aluminum is 25,100-25,500. LME aluminum closed at $3,457/mt, surging 1.68% and breaking above the previous high. Prices moved well above the moving average system including MA5 (3,393.7), with a clear bullish alignment. The MACD indicator showed DIF (83.41) and DEA (52.41) forming a bullish crossover and moving higher, while the histogram expanded to 61.99, indicating ample upward momentum. The recommended core trading range for LME aluminum is 3,420-3,490.
Macro Front: US President Trump said there were “almost no targets left to strike” in Iran and that US military operations against Iran were “about to end.” However, US and Israeli officials said they had not yet received any internal instructions to halt military operations. US Central Command issued a statement warning of possible strikes on Iranian civilian ports. A spokesperson for Iran’s armed forces said that if its ports were threatened, it would strike all ports and terminals in the region. (Neutral)
Fundamentals: Supply side, newly commissioned aluminum projects in China, Indonesia, and Angola continued to ramp up production, but escalating geopolitical conflict in the Middle East may have already affected production or shipments at some aluminum plants, and daily average production is expected to decline. Demand side, as downstream sectors gradually resumed operations after the holiday, demand recovered, and the proportion of liquid aluminum rebounded significantly, with the weekly proportion rising by about 8 percentage points WoW. Weekly downstream operating rates increased further. Specifically, power grid order deliveries in March had clear expectations, supporting a solid recovery in demand for aluminum wire and cable; demand for can stock, automobiles, battery, and other products continued to recover, driving demand improvement in related sectors; construction demand recovered relatively slowly; with export tax rebates for PV products to be canceled from April 1, the relatively high operating rate in the PV industry is expected to continue through month-end March. Inventory side, inventory on Thursday this week increased by 23,000 mt from Monday this week. Aluminum casting ingot volume is expected to remain high in March. In addition, some material has yet to enter warehouses, and part of the finished product inventories at aluminum smelters has not yet been shipped to social warehouses. In the short term, the inventory buildup trend in China’s social inventory of aluminum ingot is expected to continue, with the post-holiday peak still likely to reach 1.35-1.4 million mt.
Primary Aluminum Market: SHFE aluminum 2603 strengthened in early trading, with the price center rising sharply from the previous trading day. Market shipment sentiment improved, and buying sentiment also strengthened, but high aluminum prices suppressed downstream demand, leaving overall procurement demand still at a relatively weak level. Market premiums continued to decline from the opening. Yesterday, mainstream transaction prices were concentrated at discounts of 20 yuan/mt to parity with the average price. Yesterday, the east China market shipments sentiment index was 3.27, up 0.08 MoM; the purchasing sentiment index was 2.66, up 0.13 MoM. In recent days, the SHFE aluminum front-month contract saw large fluctuations and surged sharply yesterday. In the central China market, buying sentiment among downstream processing enterprises weakened, but bullish traders provided limited support to purchase sentiment. Overall market trading volume declined from the previous two days, with wait-and-see sentiment still dominating. Ultimately, the actual transaction price range in the central China market hovered around parity with the central China price to a discount of 20 yuan to the central China price. Yesterday, the central China market shipments sentiment index was 2.64, up 0.06 MoM; the purchasing sentiment index was 2.34, down 0.08 MoM.
Secondary Aluminum Raw Materials:Persistent fluctuations in geopolitical risks drove spot primary aluminum sharply higher by 560 yuan/mt yesterday from the previous trading day, and the aluminum scrap market rose across the board in tandem. Against the backdrop of sharp aluminum price fluctuations, sentiment toward price adjustments varied across regions. East China followed the rise quickly, with single-day gains reaching 300-500 yuan/mt, while central China and south China adjusted prices by 200-300 yuan/mt on the day. Although it is now the traditional peak season, domestic aluminum scrap yards and downstream scrap utilization enterprises maintained a lukewarm production pace, and actual raw material restocking fell short of expectations due to weaker-than-expected recovery in end-user orders and wild swings in prices. On the policy side, recycling enterprises lacked clear expectations for the specific implementation rules of “reverse invoicing,” and aluminum scrap circulation is expected to tighten further. It was expected that the aluminum scrap market would maintain high-level, strong fluctuations this week. After the holiday, production order gradually recovered and supply release became further more ample, but downstream processing enterprises saw a slow recovery in orders. Overall transactions were expected to remain sluggish, and the tug-of-war between sellers and buyers was expected to intensify in the short term. Close attention should be paid to the impact of the US-Iran conflict on primary aluminum supply and transportation, progress in downstream resumption of work, and changes in recycling policies, with vigilance against intensifying price fluctuation risks.
Secondary Aluminum Alloy:Futures side, aluminum alloy 2604 fluctuated upward after opening higher yesterday, hitting an intraday high of 24,125 yuan at one point before pulling back, and then maintaining narrow consolidation in the afternoon. It finally closed at 23,885 yuan, up 205 yuan/mt from the previous close, or 0.87%. Trading volume was 8,158 lots, open interest increased slightly to 5,900 lots, and bullish sentiment was relatively strong. In the spot market, boosted by the rebound in futures prices, ADC12 quotations moved higher across the board yesterday, with the SMM ADC12 average price raised by 300 yuan/mt. Driven by the cost side, producers actively recouped earlier losses and generally raised prices by 200-400 yuan/mt. However, affected by wild swings in prices during the week, downstream purchasing sentiment remained cautious, with most participants maintaining a wait-and-see stance and restocking only for rigid demand, while the overall market transaction pace remained steady. Against the backdrop of cost support and a mild supply release in the short term, ADC12 prices are expected to continue to hold up well.
Aluminum Market Summary:Macro front, the Middle East situation remained deadlocked, with conflicting statements from both the U.S. and Iran, while the conflict did not materially ease. Escalating threats to ports suggested that supply chain risks still persisted. Demand side, demand recovered at an accelerated pace after the holiday. The proportion of liquid aluminum rebounded sharply, downstream operating rates increased further, and demand from the power grid, can stock, automotive, battery and other sectors recovered well, while the PV installation rush also provided short-term support. However, inventory still remained under pressure. Inventory continued to build this week, and March casting ingot output stayed high. The inventory buildup trend is expected to continue, with the post-holiday peak set to reach 1.35-1.4 million mt, constraining upside room for prices. Overall, macro geopolitical risks provided bottom support for prices, while the continued buildup in China social inventory weighed on aluminum prices. However, the geopolitical situation in the Middle East still remained unclear. If the geopolitical conflict continues, expectations for tighter global aluminum supply will remain strong, and aluminum prices will still have strong upward momentum. In the short term, aluminum prices will still mainly 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 substitute for their own independent judgment. Any decisions made by clients are unrelated to SMM.]
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