3.9 SMM Morning Meeting Minutes
Futures: Last Friday, the most-traded SHFE aluminum contract closed at 25,180 yuan/mt, surging 2.55%. The price strongly broke above all moving-average systems, with MA5 (24,682), MA10 (24,302.5), and MA20 (23,935.5) forming a standard bullish alignment, confirming a clear medium-term uptrend. In the MACD indicator, DIFF (262.37) and DEA (135.19) accelerated higher above the zero line, and the histogram expanded to 254.36, indicating continuously strengthening bullish momentum. Trading volume rose markedly to 313,000 lots, reflecting strong market participation. The suggested core trading range for SHFE aluminum is 25,200-25,800. LME aluminum closed at $3,431/mt, with an intraday range of 3,277.5-3,449.5. The price has broken above all major moving averages (the moving-average system is in a bullish alignment; although the MA5 value appears abnormal, the chart shows the price is well above the moving averages). MACD DIFF (60.17) and DEA (29.41) maintained a golden cross above the zero line, with the histogram at 61.53, indicating a healthy uptrend. The suggested core trading range for LME aluminum is 3,430-3,500.
Macro front: US President Trump said Iran could face a “very heavy blow.” He said that due to Iran’s actions, the US was “seriously considering” expanding the scope of strikes, including some areas and groups that had not previously been listed as targets. Iranian President Pezeshkian delivered a speech calling for national unity to defend Iran and said Iran would never surrender unconditionally. (Bullish ★) Mediterranean Shipping Company said it would levy an emergency bunker surcharge on all cargo shipped from the Mediterranean and the Black Sea to the Indian subcontinent, the Red Sea, and East Africa. (Bullish ★)
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 affected production or shipments at some aluminum smelters, and daily average production is expected to decline. Demand side, after the holiday, as downstream players gradually resumed operations, demand recovered and the proportion of liquid aluminum rebounded notably. According to data as of this Thursday, the weekly proportion of liquid aluminum rebounded by about 8 percentage points WoW. Downstream weekly operating rates rose further. Specifically: delivery expectations for power grid orders in March were clear, and demand for aluminum wire and cable recovered well; demand for can stock, autos, batteries, and other products continued to recover, driving a recovery in related segments; the recovery in construction demand was relatively slow; starting April 1, export tax rebates for PV products will be canceled, and the PV industry’s relatively high operating rate is expected to continue through month-end March. Inventory side, inventory increased by 15,000 mt on Monday from last Thursday. Demand remains in the recovery stage, and casting ingot output in March is expected to stay at a high level. In addition, some volumes have yet to be warehoused, and some finished product inventories at aluminum smelters have not yet been shipped to social warehouses. In the short term, the inventory buildup trend in China’s social inventory of aluminum ingot is set to continue, and the post-holiday peak is expected to still reach 1.35-1.4 million mt.
Primary Aluminum Market: In early trading, SHFE aluminum 2602 fluctuated upward, while the price center fell sharply from the previous trading day. Downstream processing enterprises were optimistic about the aluminum price outlook and proactively restocked, with strong willingness to purchase; traders mainly focused on shipping to monetize and reducing open interest. Last Friday, market transactions were at the average price to 30 yuan/mt. Last Friday, the east China market shipment sentiment index was 3.11, up 0.13 MoM; the purchasing sentiment index was 2.76, down 0.2 MoM. Geopolitical tailwinds remain unclear, and aluminum prices stopped rising and pulled back in the short term. In the central China market, traders remained strongly bullish and tended to take the opportunity to purchase at lower prices, while suppliers were mostly on the sidelines with low willingness to sell. Circulating supply was tight, driving premiums to continue rising. Quotes climbed from a central China price premium of 20 yuan before the open to a central China price premium of 50 yuan, while the final mainstream transaction prices were mainly around a central China price premium of 20-30 yuan. Last Friday, the central China market shipment sentiment index was 2.66, down 0.1 MoM; the purchasing sentiment index was 2.41, up 0.01 MoM.
Aluminum Scrap: Geopolitical tailwinds continued to fluctuate, driving spot aluminum last Friday to pull back 670 yuan/mt from the previous trading day, and the aluminum scrap market fell in tandem. As for the price difference between A00 aluminum and aluminum scrap, on March 6, the price difference between A00 aluminum and mixed aluminum extrusion scrap free of paint in Foshan was 3,418 yuan/mt, and the price difference between A00 aluminum and shredded aluminum tense scrap was 2,611 yuan/mt. After the Lantern Festival, domestic aluminum scrap yards and downstream scrap utilization enterprises had basically fully resumed a normal production pace, but end-use demand recovered slowly, and actual raw material restocking was below expectations. It is expected that next week the aluminum scrap market will hold up well at elevated levels, with the mainstream range for shredded aluminum tense scrap (priced based on aluminum content) running around 20,300-20,900 yuan/mt (tax excluded). Post-holiday production order is gradually recovering and supply release is further easing, but downstream processing enterprises’ order recovery remains slow. Overall transactions are expected to remain sluggish, and the short-term supply-demand tug-of-war will intensify. Close attention should be paid to the impact of the US-Iran conflict on primary aluminum supply and transportation, downstream resumption progress, and changes in recycling policies, and be alert to heightened price fluctuation risks.
Secondary Aluminum Alloy: On the futures side, the aluminum alloy 2604 contract last Friday fell first and then rose. It opened lower in early trading, hit bottom at 23,000 yuan/mt and then stabilized and rebounded, fluctuating upward intraday and touching an intraday high of 23,465 yuan/mt around midday; in the afternoon it pulled back under pressure at high levels, and edged down at the close, finally settling at 23,280 yuan/mt, down 1.81% from the previous close. Open interest decreased by 375 lots, with funds leaning cautious and short-term bullish momentum weakening. Last Friday, ADC12 market quotes were lowered across the board, mostly by 200-400 yuan/mt. Price adjustments were mainly driven by a downward shift in the cost center and weaker downstream purchasing. However, against the backdrop of a price pullback, aluminum scrap traders’ reluctance to sell became more pronounced, leaving limited room for raw material costs to fall. Enterprises were generally cautious in adjusting prices, and most producers remained bullish on the market outlook. In the short term, supported by costs and amid mild supply release, ADC12 prices are expected to hold up well. The medium-term trend will still depend on the recovery in end-use consumption. If industry orders in the die-casting sector increase significantly, the price center is expected to move further higher; if demand recovery falls short of expectations, coupled with a continued rise in operating rates on the supply side, prices will shift from elevated levels into rangebound consolidation. On the import side, driven by a sharp rise in LME aluminum prices and an uptick in overseas demand, overseas ADC12 offers rose to around $3,200/mt, while domestic price gains were relatively limited, and the import window quickly turned loss-making.
Aluminum Market Summary:Macro front, escalating risks of geopolitical conflict in the Middle East and the US-Iran standoff heightened market concerns over supply disruptions. In addition, the imposition of shipping surcharges pushed up logistics costs, providing bullish support for aluminum prices. Fundamentally, although new projects on the supply side were ramping up production, the Middle East conflict has already affected production and shipments at some aluminum plants, with daily average production expected to decline and expectations of supply contraction strengthening. Demand side, a post-holiday accelerated recovery was evident: the proportion of liquid aluminum rebounded sharply, downstream operating rates rose further, and demand in the power grid, can stock, automotive, battery and other segments recovered well, while PV installation rush demand also provided short-term support. However, inventory pressure remained. Inventory continued to rise this week, and March casting ingot output stayed at high levels. The inventory buildup trend is expected to continue, with the post-holiday peak potentially reaching 1.35-1.4 million mt, constraining upside room for prices. Overall, although domestic social inventory continued to build up, the current Middle East geopolitical situation remains a global focus. If the conflict persists, expectations of global aluminum supply tightens will be strong, and aluminum prices will have strong upward momentum. In the short term, aluminum prices are 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 substitute for independent judgment. Any decisions made by clients are unrelated to SMM.]
