Renewed Threat of U.S.-Iran War, Aluminum Prices Fluctuate at Highs [SMM Aluminum Morning Meeting Minutes]

Published: May 20, 2026 09:33 (GMT+8)

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[Middle East Geopolitical Risks Cool Down, Aluminum Prices Under Pressure in the Short Term] On the macro front, US President Trump once again signaled readiness for war against Iran, claiming military action was prepared, while Iran issued a tough warning that it would "open a new front." Geopolitical conflict risks escalated again, with market risk-aversion sentiment pushing up risk premiums. China's inventory at high levels remains the core factor suppressing significant price rallies. Additionally, weak spot market transactions further limited the upside room for aluminum prices. In the short term, aluminum prices are expected to continue the pattern where the overseas market outperforms the domestic market, fluctuating at highs.

5.20 SMM Morning Meeting Minutes
Futures: SHFE aluminum closed at 24,445 yuan/mt, edging up 0.20%. The price was above MA30 (24,351.47) but remained under pressure from MA5 (24,540), MA10 (24,504.5), and MA60 (24,607.17), with the short-term moving averages still in bearish alignment. The MACD indicator showed DIF = -76.14, DEA = -39.79, and after the death cross, the negative histogram expanded to -72.7, with bearish momentum continuing to strengthen. Trading volume increased slightly to 66,000 lots but remained at low levels overall. The suggested core trading range for SHFE aluminum is 24,200-24,700. LME aluminum closed at $3,600.5/mt, up 0.38%. The price stood above all moving averages (MA5 = 3,595.1, MA10 = 3,577.45, MA30 = 3,560.6, MA60 = 3,440.32), in bullish alignment. The MACD indicator showed DIF = 31.81, DEA = 34.65, with the death cross continuing but the negative histogram narrowing to -5.69, indicating weakening bearish momentum. The suggested core trading range for LME aluminum is 3,570-3,630.

Macro front: US President Trump issued new war threats, stating that the US may need to take military action against Iran again, and revealed that he was once just one hour away from approving a military strike but ultimately decided to hold off. Reports indicated that joint preparations by Israel and the US for resuming military operations against Iran have been completed, and they are currently awaiting Trump's decision. Iran's military warned that if the US launches another attack on the country, Iran will "open a new front."

Fundamentals: Outside China, aluminum under the Middle East conflict showed a rigid supply gap, driving continuous destocking of LME inventory. As of last Wednesday, LME inventory decreased by approximately 11,700 mt YoY to 346,500 mt. The LME aluminum Cash-3M premium structure continued to deepen. Domestically, as of this Monday, SMM aluminum social inventory was approximately 1.435 million mt, an inventory buildup of approximately 7,000 mt compared to last Thursday, with inventory still at high levels, continuing to pressure aluminum prices.

Primary aluminum market: Yesterday, SHFE aluminum 2606 contract fluctuated upward, with the overall price center significantly higher than the previous trading day. Market buying sentiment declined due to rising aluminum prices, while selling sentiment increased. Mainstream spot market quotes shifted from SMM A00 minus 10 yuan/mt to parity. East China market shipment sentiment index was 2.97, up 0.08 MoM; buying sentiment index was 2.78, down 0.05 MoM. Futures prices were in the doldrums over the past two days. In central China, downstream processing enterprises' buying sentiment rebounded slightly WoW, and with aluminum prices edging up, suppliers' willingness to sell strengthened, and overall market trading atmosphere warmed. Insufficient invoice quotas restricted suppliers' shipments, with significant willingness to hold prices firm and hold back from selling, resulting in higher transaction prices. Ultimately, the actual transaction price range in central China was between central China price at parity and central China price plus 30 yuan premium. Central China market shipment sentiment index was 2.84, up 0.02 MoM; buying sentiment index was 2.32, up 0.03 MoM.

Aluminum scrap: Yesterday, A00 aluminum price rebounded 150 yuan/mt from the previous trading day, and aluminum scrap market prices edged up overall. Supply side was significantly constrained by policies, with strict enforcement on reverse invoicing leading to a shortage of compliant invoice sources, rising industry costs, and widespread holding back from selling and holding prices firm at yards. According to survey feedback, warehouse inflows at mainstream yards in east China declined YoY, showing slight inventory buildup, while aluminum tense scrap inventory pulled back. Regarding imported aluminum scrap, persistently high overseas prices creating an inverted arbitrage window made import traders cautious, and subsequent imports are expected to pull back. Demand side entered the traditional consumption off-season, with secondary aluminum enterprise operating rates pulling back slightly. Tax enforcement pressure combined with low-price difficulties caused some enterprises to cut or halt production, further weakening market demand. Aluminum tense scrap maintained a low-inventory just-in-time procurement model. Although wrought aluminum alloy scrap received slight support from sheet and strip operating rates, overall momentum was limited, with sluggish market trading and strong wait-and-see sentiment.

Secondary aluminum alloy: Yesterday, the ADC12 market remained generally stable. As aluminum prices rebounded, some enterprises slightly raised their quotes, but most still chose to hold prices steady and wait, with limited overall price adjustments. From a fundamental perspective, demand side was generally stable with slight fall, constraining upside room; cost side rose due to higher aluminum prices, providing price support. Additionally, compliant aluminum scrap sources tightened with elevated prices, forcing some secondary aluminum enterprises to cut production; heavy rainfall, while creating disruption expectations in some areas, had not yet shown actual impact. ADC12 prices are expected to continue moving sideways in the short term, with upside room still requiring further demand-side support.

Aluminum market summary: Macro front, US President Trump again released signals of war against Iran, stating military action preparations were complete, while Iran issued a tough warning of "opening a new front," with geopolitical conflict risks escalating again and market risk-aversion sentiment pushing up risk premiums. Domestically, inventory at high levels remained the core factor suppressing significant price rallies, coupled with weak spot market trading performance, further limiting aluminum price upside room. In the short term, aluminum prices are expected to continue with LME outperforming SHFE, fluctuating at highs.

[The information provided is for reference only. This article does not constitute direct advice for investment research decisions. Clients should make prudent decisions and not use this as a substitute for independent judgment. Any decisions made by clients are not related to SMM.]

Data Source Statement: Except for publicly available information, all other data are processed by SMM based on publicly available information, market communication, and relying on SMM's internal database model. They are for reference only and do not constitute decision-making recommendations.

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