Bauxite Imports Increase; Short-Term Adjustment Risks to Watch; Medium and Long-Term Bullish Logic Remains Unchanged [SMM Aluminum Morning Meeting Summary]

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March 18 SMM Aluminum Morning Meeting Notes

Futures Market: Overnight, the most-traded SHFE aluminum 2505 contract opened at 20,715 yuan/mt, reached a high of 20,720 yuan/mt, a low of 20,630 yuan/mt, and closed at 20,650 yuan/mt, down 65 yuan/mt or 0.31%. Yesterday, LME aluminum opened at $2,690/mt, hit a high of $2,699/mt, a low of $2,650/mt, and closed at $2,651/mt, down $40/mt or 1.49%.

Macro Perspective: Overseas, (1) US trade policy - (i) US Treasury Secretary: Reciprocal tariff rates on April 2 will vary by country, with lower rates for some countries; (ii) US Commerce Secretary: Committed to adding export controls to trade agreements. (Bullish★) (2) Fitch: Downgraded the US 2025 economic growth forecast from 2.1% to 1.7%. Tariff impacts are expected to increase short-term US inflation by 1 percentage point, and the US Fed is expected to delay further interest rate cuts until Q4 2025. (Bearish★) (3) Domestically, three departments: Support scrappage and renewal of China III and China IV emission standard commercial vehicles, accelerating the replacement of high-standard, low-emission commercial vehicles. (Bullish★) (4) On March 18, the National Energy Administration released data on electricity consumption for February. From January to February, total electricity consumption nationwide reached 1,556.4 billion kWh, up 1.3% YoY, with power generation by large-scale industrial enterprises at 1,492.1 billion kWh. (Bullish★)

Fundamentals: (1) According to data released by the General Administration of Customs on March 18, China's aluminum ore and concentrate imports in February 2025 totaled 14.41 million mt, up 28.3% YoY; from January to February, imports totaled 30.62 million mt, up 25.6% YoY. (Bearish★) (2) According to SMM statistics, as of March 18, aluminum ingot inventories in Guangdong were 260,400 mt; in Wuxi, 324,000 mt; and in Gongyi, 135,000 mt, with total inventories across the three regions at 719,400 mt, down 1,500 mt from the previous working day. (Bullish★) (3) On March 18, LME aluminum inventories recorded 49,325 mt, down 4,025 mt or 0.82% from the previous day. (Bullish★)

Primary Aluminum Market: During yesterday's morning session, the center of the SHFE front-month aluminum contract gradually shifted downward to around 20,850 yuan/mt. In the spot market, the absolute price center in east China moved lower, with no significant improvement in market transactions. Transactions were concentrated around SMM A00 minus 10 yuan/mt, with downstream maintaining just-in-time procurement. SMM A00 aluminum ingot was recorded at 20,790 yuan/mt, down 30 yuan/mt from the previous trading day. In central China, aluminum prices were previously at highs, leading downstream processing enterprises to accumulate finished product inventories and adopt cautious raw material restocking. Spot premiums in the market were under pressure. Recently, as aluminum prices moved lower, downstream just-in-time procurement increased, but liquidity weakened in central China due to trade risks, limiting upward movement in spot premiums. SMM Central China A00 aluminum was recorded at 20,660 yuan/mt, down 30 yuan/mt from the previous trading day, with the Henan-Shanghai price spread at -130 yuan/mt. Actual market transactions were on par with or slightly below SMM Central China prices by 10 yuan/mt. As aluminum prices continued to decline, trading activity slightly improved during the day. Attention should be paid to downstream restocking, as premium centers may recover.

Secondary Aluminum Raw Materials: Yesterday, primary aluminum spot prices fell by 30 yuan/mt compared to the previous trading day, with SMM A00 spot closing at 20,790 yuan/mt. The aluminum scrap market followed with slight declines, and downstream maintained purchasing as needed. Yesterday, baled UBC aluminum scrap was quoted at 15,250-16,150 yuan/mt (excluding tax), and shredded aluminum tense scrap was quoted at 16,450-17,950 yuan/mt (excluding tax). In the short term, the domestic aluminum scrap market is expected to remain weak on both supply and demand sides, with no significant improvement. Coupled with high prices for primary and aluminum scrap, downstream will likely continue purchasing as needed, and aluminum scrap prices may fluctuate rangebound in line with primary aluminum.

Secondary Aluminum Alloy: Yesterday, aluminum prices slightly declined, with SMM A00 aluminum prices down 30 yuan/mt from the previous trading day to 20,790 yuan/mt, while secondary aluminum prices remained stable. Domestic SMM ADC12 prices were unchanged from the previous day, staying within the range of 21,200-21,400 yuan/mt. Aluminum prices fluctuated narrowly yesterday, and secondary aluminum market quotations remained basically stable. Current downstream actual demand recovery is moderate, with abundant low-priced supply in the market suppressing the upside room for ADC12 prices. However, cost-side support provides some price stability. If demand does not improve significantly, ADC12 prices may face downward pressure due to subsequent cost easing and the impact of low-priced supply in the market.

Summary: From a macro perspective, overseas trade protection and slowing growth create a bearish resonance: US trade policies focus on differentiated tariffs and export controls, while Fitch has downgraded the US 2025 economic growth forecast to 1.7%, warning that tariffs may push inflation higher and delay US Fed interest rate cuts to Q4 2025. Domestically, the trade-in policy continues to gain traction, with three departments promoting the scrappage and renewal of high-emission commercial vehicles. Additionally, total electricity consumption from January to February increased by 1.3% YoY, maintaining a divergence between domestic and overseas trends. On the fundamentals side, bullish signals in the aluminum industry chain are evident: China's February aluminum ore imports rose 28.3% YoY, aluminum ingot inventories in Guangdong, Wuxi, and Gongyi decreased slightly by 1,500 mt to 719,400 mt, and LME aluminum inventories fell by 0.82%. The traditional "golden March and silver April" peak season effect continues to manifest, with ongoing optimization of the supply-demand structure. In the short term, attention should be paid to adjustment risks, while the medium and long-term bullish logic remains unchanged. Continued focus will be placed on changes in US tariff policies and the actual release of downstream demand.

[The information provided is for reference only. This article does not constitute direct investment research advice. Clients should make prudent decisions and not substitute this for independent judgment. Any decisions made by clients are unrelated to Shanghai Metals Market.]