U.S.-Iran Negotiation Situation Fluctuated, Macro Factors Were Mixed with Both Bullish and Bearish Signals This Week [SMM Aluminum Price Weekly Review]

SMM April 23 News:

Macro perspective:

Fed nominee Warsh pledged to safeguard monetary policy independence. The US-Iran temporary ceasefire agreement was set to expire on April 22. Trump initially stated it was "extremely unlikely" to extend the ceasefire agreement with Iran, but later on Tuesday local time announced an extension of the ceasefire deadline, maintaining the naval blockade while awaiting Iran's submission of a unified negotiation proposal. The US-Iran negotiation situation remained volatile, with bullish and bearish macro factors intertwined this week.

Fundamentals:

Markets outside China continued to be affected by geopolitical disruptions. Navigation through the Strait of Hormuz had not yet fully returned to normal. Combined with ongoing production cuts at aluminum smelters in the Middle East due to the impact of regional tensions, the global aluminum supply deficit further intensified, and ex-China aluminum fundamentals exhibited a relatively significant supply-demand gap. This week, the LME aluminum Cash-3M premiums structure continued to recover, with the price spread rebounding to $57.07/mt. Meanwhile, LME aluminum inventory continued its destocking trend, with total inventory pulling back to a relatively low level of 378,800 mt, providing strong support for ex-China aluminum prices.

Chinese market side, the overall operating rate of downstream processing enterprises pulled back this week. Combined with aluminum prices currently at elevated levels, this suppressed downstream enterprises' enthusiasm to pick up goods to some extent. Additionally, some aluminum ingots in the Wuxi area were still pending warehousing, creating visible backlogs. This week, China's aluminum ingot social inventory saw an inventory buildup of 12,000 mt WoW to a high level of 1.465 million mt. Whether the subsequent inventory inflection point would materialize as expected still requires continuous tracking and verification.

Overall:

The Middle East negotiation process remained volatile, and geopolitical risks had not yet been fully cleared. However, the widening ex-China supply gap and steady LME inventory destocking jointly supported LME aluminum prices to hold up well. China's aluminum ingot social inventory remained at elevated levels, and the pace of demand recovery and inventory destocking became the core variables influencing SHFE price trends. The most-traded SHFE aluminum contract is expected to trade in the range of 24,700-25,300 yuan/mt next week, while LME aluminum is expected to trade in the range of $3,500-3,700/mt.