3.24 SMM Morning Meeting Summary
Futures: During the night session on March 23, the most-traded SHFE aluminum 2605 contract opened at 23,850 yuan/mt, hit an intraday high of 23,855 yuan/mt and a low of 23,615 yuan/mt, and finally closed at 23,750 yuan/mt. Open interest in the night session stood at 267,000 lots, down 113 lots from the daytime session. Technical analysis showed that prices at night session ran below all short-term moving averages, with the 5-day (24,061), 10-day (24,615), and 20-day (24,548) moving averages diverging downward, sending a clear bearish signal. RSI pulled back to the 35–42 range, approaching oversold territory, but with no clear bullish divergence at the bottom, it did not yet constitute a reversal signal. LME aluminum opened at $3,178/mt, reached a high of $3,234.5/mt and a low of $3,162.5/mt, and closed at $3,225.5/mt, up 1.05%. Trading volume was 28,487 lots, down 3,512 lots, and open interest was 677,000 lots, down 6,384 lots.
Macro Front: According to Iranian sources on March 24 local time, the US and Israel attacked two energy infrastructure sites located in Isfahan in central Iran and Khorramshahr in southwestern Iran. Reportedly, the natural gas company building and a natural gas pressure-reduction station in Isfahan were hit, causing damage to some facilities and nearby residences. A natural gas pipeline at the Khorramshahr power plant was also targeted, but no casualties were reported. (Bullish ★) US Fed Governor Milan said there was currently no need to consider a rate hike, the policy outlook remained for interest rate cuts, and he still expected four interest rate cuts in 2026. (Bullish ★)
Fundamentals: Inventory side, on Monday, aluminum ingot inventory in China's mainstream consumption regions fell by 2,000 mt from last Thursday, with the main sources of destocking being Gongyi and Shanghai. On Monday, aluminum billet inventory in China's major consumption regions fell by 12,000 mt from last Friday, with the main destocking regions being Foshan and Nanchang, while Changzhou and Huzhou saw slight inventory buildup. This round of post-holiday inventory buildup in aluminum has entered its final stage. As downstream demand continued to recover, spot transactions remained active, and inventory overhang pressure gradually eased, the momentum of inventory buildup kept weakening. Supported by rigid demand and peak-season expectations, aluminum social inventory in China is expected to usher in a trend reversal in late March.
Primary Aluminum Market: In the morning session, SHFE aluminum 2604 fluctuated upward, while the price center fell sharply from the previous trading day. Affected by the decline in aluminum prices, overall procurement sentiment rose yesterday, prompting sellers to hold prices firm. Mainstream transaction prices yesterday were concentrated at SHFE aluminum 04 contract +10 yuan/mt to +20 yuan/mt. Yesterday, the shipment sentiment index in the east China market was 2.72, down 0.58 MoM; the purchasing sentiment index was 3.3, up 0.07 MoM. Yesterday, aluminum prices extended their decline. In central China, premiums remained in positive territory, while traders showed less willingness to purchase and stockpile than in the previous two days. Although downstream processing enterprises still intended to buy the dip, they did not make large-scale concentrated purchases, and overall market buying sentiment weakened. In the end, actual quotes and transaction prices in the central China market fell all the way, from a 50 yuan premium to the central China price before the opening to near parity with the central China price, with suppliers showing no clear willingness to hold prices firm. Yesterday, the shipment sentiment index in the central China market was 2.63, up 0.01 MoM; the buying sentiment index was 2.48, down 0.03 MoM.
Aluminum Scrap:Yesterday, spot primary aluminum fell 630 yuan/mt from the previous trading day, and the aluminum scrap market generally followed lower. In some regions, scrapyards or alloy plants had already lowered aluminum scrap prices on Saturday the 21st in line with futures, and therefore made no further adjustments yesterday. Amid the current wild swings in aluminum prices, scrapyards became more willing to hold back cargoes, highlighting the resilience of aluminum scrap prices, with cuts ranging from 100-400 yuan/mt. On the other hand, tighter regulatory oversight under the “reverse invoicing” policy sharply raised tax compliance costs in the aluminum scrap recycling segment. In some regions, as operating procedures have not yet been fully streamlined, the actual supply of compliant invoice-backed circulating cargoes remained tight, and supply-side flexibility was significantly weakened by policy frictions. As for the price difference between A00 aluminum and aluminum scrap, as of March 23, the price difference between A00 aluminum and mixed aluminum extrusion scrap free of paint in Foshan was 2,878 yuan/mt, and the price difference between A00 aluminum and shredded aluminum tense scrap was 1,588 yuan/mt. Aluminum scrap market is expected to 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 high, and raw material circulation efficiency continues to be suppressed. Demand side, expectations that aluminum prices will remain in the doldrums are expected to weigh on the purchasing and sales sentiment of traders and downstream scrap utilization enterprises. In addition, the peak season effect of “Golden March and Silver April” has fallen short, the release pace of end-user orders has lagged significantly behind the seasonal pattern, and downstream scrap utilization enterprises have mainly 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:On the futures side, yesterday the aluminum alloy 2604 contract retreated after rapid rise and fluctuated at lows overall. It opened at 22,400 yuan/mt in early trading, once climbed to a high near 22,760 yuan/mt during the session, and then bulls lost steam, with prices starting to fluctuate downward. In the afternoon, futures weakened further and losses widened, touching a low of 22,180 yuan/mt and falling to around 22,360 yuan/mt at the intraday low, with the full-day decline reaching 0.84%. Although there was a slight late-session rebound for repair, the overall market remained in a weak pullback pattern. Technically, short-term moving averages formed resistance, and the RSI moved lower, indicating weakening short-term bullish momentum and generally cautious market sentiment. In the spot market, the secondary aluminum alloy ADC12 market continued to weaken yesterday, with mainstream enterprises generally cutting quotes by 200–400 yuan/mt. The price weakness was mainly dragged down by a wider decline in aluminum prices and futures, while the cost center also moved lower in tandem; in addition, some enterprises had previously held relatively strong bullish sentiment and lagged in their price adjustment pace, leading to a catch-up decline in the market yesterday. In terms of market sentiment, secondary aluminum enterprises turned cautiously bearish on short-term aluminum price trends, focusing mainly on active shipments. Demand-side support remained weak, downstream procurement was limited to rigid demand, wait-and-see sentiment was strong, and transactions showed no obvious increase in volume. Overall, ADC12 prices are expected to remain in the doldrums in the short term.
Aluminum Market Summary:Current macro and geopolitical risks in the global aluminum market have yet to fade. 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 disruptions to both raw material imports and product exports. The stability of the global aluminum supply chain was under pressure, and the risk premium remained in place. However, earlier in the week, part of the risk premium 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 postponed to late Q3 to Q4. A stronger US dollar, combined with expectations of tighter liquidity, continued to weigh on commodity valuations. Fundamentally, expectations for aluminum production cuts outside China remained, with Europe, the Middle East, and other regions disrupted by energy and logistics factors, and some capacity entering maintenance cycles, so the logic of global supply contraction remained intact; in China, aluminum operating rates stayed stable, supply-side increments were limited, and the overall market remained steady. After the holiday, China demand 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, and power grid sectors was strong, forming the core support; construction extrusion recovered slowly as work resumed, the recovery pace in traditional sectors was relatively mild, and overall end-user support gradually strengthened. Continued destocking in LME inventory provided bottom support for LME aluminum, but under tightening fund liquidity and profit-taking by bulls, upside momentum was insufficient, and the backwardation structure weakened somewhat. China social inventory rose to a high for the same period in the past five years, the inventory buildup cycle had not ended, and high inventory plus weak spot fundamentals jointly capped upside momentum. Divergence between domestic and overseas drivers persisted, the SHFE/LME price ratio continued to weaken, and the market was 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.]
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