3.25 SMM Morning Meeting Summary
Futures: In the night session on March 24, the most-traded SHFE aluminum 2605 contract opened at 23,655 yuan/mt, hit an intraday high of 23,895 yuan/mt and a low of 23,610 yuan/mt, and finally closed at 23,810 yuan/mt. Open interest in the night session stood at 266,000 lots, an increase of 5,051 lots from the daytime session. The 5-day (23,835) and 10-day (24,454.5) moving averages were still diverging downward, with prices running below short-term moving averages, indicating a weak short-term trend. LME aluminum opened at $3,223/mt, reached a high of $3,268/mt, a low of $3,177.5/mt, and closed at $3,245.5/mt, up 0.62%. Trading volume was 25,297 lots, down 3,190 lots, and open interest was 681,000 lots, down 3,594 lots.
Macro front: The central bank announced that on March 25, 2026, it will conduct a 1-year MLF operation of 500 billion yuan through fixed-quantity, interest-rate tendering and multiple-price allotment. (Bullish ★) According to Israeli media reports, the US intends to propose a one-month ceasefire plan to facilitate discussions with Iran on a 15-point agreement aimed at ending the war. The peace proposal reportedly includes Iran dismantling its existing nuclear capabilities, committing not to develop nuclear weapons, and prohibiting uranium enrichment on its own soil. In exchange, Iran may receive a full lifting of international sanctions and US support for developing civilian nuclear projects. (Neutral)
Fundamentals: On inventory, aluminum ingot inventory across three regions increased slightly by 6,500 mt yesterday, with the buildup mainly coming from Guangdong and Gongyi, while Wuxi inventory fell slightly; aluminum billet inventory across two regions declined slightly by 1,000 mt, mainly in Guangdong.
Primary aluminum market: In early trading, SHFE aluminum 2604 fluctuated downward, while edging up slightly from the previous trading day. Overall market buying sentiment was relatively good, and sellers held prices firm as aluminum prices remained at relatively low levels. Yesterday, mainstream transaction prices were concentrated at SHFE aluminum 04 contract +10 yuan/mt. Yesterday, the east China market shipment sentiment index was 2.79, up 0.07 MoM, while the buying sentiment index was 3.34, up 0.04 MoM. As aluminum prices extended their decline, traders in central China showed low buying sentiment. With the month-end settlement day approaching, suppliers shipped aggressively, with limited willingness to hold prices firm. Downstream processing enterprises were wary of further declines and had no expectation of large-scale stockpiling on dips for now. Overall market purchase activity was sluggish, and prices showed a continued price collapse trend. Final actual transaction prices in the central China market were concentrated in the range from a premium of 20 yuan/mt over central China prices to a discount of 20 yuan/mt to central China prices. Yesterday, the central China market shipment sentiment index was 2.63, flat MoM, while the buying sentiment index was 2.4, down 0.08 MoM.
Secondary aluminum raw materials: Yesterday, spot primary aluminum rose 30 yuan/mt from the previous trading day, while aluminum scrap prices were generally unchanged. Amid current wild swings in aluminum prices, the willingness of aluminum scrap yards to hold back cargoes has increased, highlighting the resilience of aluminum scrap prices. Meanwhile, tighter regulatory oversight under the "reverse invoicing" policy has sharply raised tax compliance costs in the aluminum scrap recycling segment. In some regions, as operating procedures have yet to be fully streamlined, the actual supply of compliant, invoice-backed, tradable cargoes remained persistently tight, and supply-side flexibility was significantly weakened by policy frictions. In terms of the price difference between A00 aluminum and aluminum scrap, as of March 24, the price difference between A00 aluminum and mixed aluminum extrusion scrap free of paint in Foshan was 2,908 yuan/mt, and the price difference between A00 aluminum and shredded aluminum tense scrap was 1,618 yuan/mt. It is expected that the aluminum scrap market will enter a weak consolidation phase this week, with the mainstream range for shredded aluminum tense scrap (priced based on aluminum content) hovering around 19,800-20,500 yuan/mt (excluding tax). Supply side, regulatory policies such as reverse invoicing are unlikely to see any substantive easing in the short term, compliance costs in the aluminum scrap recycling segment remain elevated, and raw material circulation efficiency continues to be restrained. Demand side, expectations of aluminum prices remaining in the doldrums will weigh on the purchasing and sales sentiment of traders and downstream scrap utilization enterprises. In addition, the peak season of "Golden March and Silver April" has fallen short of expectations, the release pace of end-user orders has lagged significantly behind the seasonal pattern, and downstream scrap utilization enterprises have mostly purchased as needed, lacking the momentum for large-scale restocking. In the short term, close attention is still needed on the impact of geopolitical conflicts on fluctuations in primary aluminum prices, the actual recovery of end-user orders, and the actual implementation progress of supply-side policies, with vigilance against the risk of wild swings in prices.
Secondary Aluminum Alloy:Futures side, yesterday the aluminum alloy 2604 contract opened at 22,750 yuan/mt. After a brief dip in early trading, it then fluctuated upward. Although it attempted to rise several times during the session, it failed to break the intraday high, gradually weakened in the afternoon, and accelerated its pullback into the close. From the intraday chart, prices repeatedly hovered around the average price line, with an intraday high of 22,840 yuan/mt and a low of 22,575 yuan/mt, finally closing at 22,585 yuan/mt, down 165 yuan/mt from the previous settlement price, a decline of 0.73%. Spot side, the ADC12 market as a whole continued its stable-price pattern yesterday. Although aluminum prices showed signs of stabilizing yesterday, market sentiment recovered only limitedly, and enterprises generally chose to suspend price adjustments and remain on the sidelines. Demand side, downstream orders showed no obvious improvement, with just-in-time procurement still dominating, and transactions delivered mediocre performance. Against the backdrop of easing cost-side fluctuations and insufficient demand support, ADC12 prices may continue to fluctuate with relative stability in the short term, with relatively limited momentum for price adjustments. Further attention should still be paid to aluminum price trends and the recovery of end-use demand.
Aluminum Market Summary:At present, macro and geopolitical risks in the global aluminum market have yet to subside. The Middle East situation remained in a stalemate, threats to navigation through the Strait of Hormuz remained unresolved, and aluminum enterprises in the region faced two-way disruptions to raw material imports and product exports. The stability of the global aluminum supply chain remained under pressure, and the risk premium persisted. However, the earlier risk premium during the week partially retreated as sentiment eased and bulls took profits. Affected by stronger-than-expected US employment and inflation data, market expectations for interest rate cuts were pushed back significantly, with the first cut this year likely delayed to late Q3 to Q4. A stronger US dollar, coupled with expectations of tighter liquidity, continued to weigh on commodity valuations. Fundamentally, expectations for aluminum production cuts outside China still remained, with Europe, the Middle East, and other regions disrupted by energy and logistics factors. Some capacity entered maintenance cycles, and the logic of global supply contraction remained intact; in China, aluminum operating rates stayed stable, supply-side additions were limited, and overall supply remained steady. After the holiday, demand in China entered a gradual recovery path, the share of direct supply of liquid aluminum increased, and the operating rate of downstream processing enterprises rebounded MoM, with the industry gradually returning to a normal production pace. Among them, demand from PV, packaging, power grid, and other sectors was strong, providing core support; construction extrusion slowly recovered as work resumed, the recovery pace in traditional sectors remained mild, and overall end-user support gradually strengthened. Continued destocking of LME inventory provided bottom support for LME aluminum, but amid tightening fund liquidity and profit-taking by bulls, upward momentum was insufficient, and the backwardation structure weakened somewhat. China’s social inventory rose to a high for the same period in nearly five years, the inventory buildup cycle had not ended, and high inventory together with weak spot fundamentals jointly weighed on upward momentum. Divergence between domestic and overseas drivers continued, the SHFE/LME price ratio kept weakening, and prices were mainly under pressure in the short term.
[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.]
![Sellers Show a Strong Willingness to Hold Prices Firm, While Transaction Premiums Continue to Narrow [SMM Spot Aluminum Midday Commentary]](https://imgqn.smm.cn/usercenter/wsCPG20251217171653.jpg)
