[SHFE and LME Aluminum Indicators Strengthen Across the Board, Geopolitical Risks Dominate Short-Term Market] Overall, from a macro perspective, risks of strait transit restrictions and conflict escalation resonated with fundamental supply-side hard damage and low global inventory, jointly providing strong bottom support for aluminum prices. However, weak interest rate cut expectations, China's aluminum ingot inventory buildup exceeding expectations, and adverse expectations on consumption and inflation from recent high fluctuations in oil prices all notably dragged on the upside room for aluminum prices. In the short term, aluminum prices fluctuated at highs.

The global aluminum market is currently characterized by a distinct divergence between Chinese and overseas markets. Overseas markets have performed strongly amid supply-side disruptions, while the domestic market has also strengthened due to similar supply disturbances but remained relatively weak compared with the LME. Details on supply, demand, trade and market structure are as follows: I. Overseas Aluminum Market: Prominent Supply Tightness and Sustained Pressure on Inventories The core contradiction in overseas aluminum markets lies in supply contraction and low inventory levels, exacerbated by geopolitical conflicts, further intensifying supply tightness. In terms of LME inventory data, current inventories remain on a continuous downward trend, greatly weakening their supportive role in the market. Historically and recently, LME cancelled warrants peaked at 178,000 tonnes earlier, accounting for 39% of total inventory. As a result, the effectively available LME inventory has dropped to its lowest level since May 2025, further highlighting tight overseas supply. Supply contraction has widened the market deficit, with production cuts at two key projects—EGA and Alba—having a particularly significant impact.On March 28, EGA’s Al Taweelah smelter in the UAE and Alba’s plant in Bahrain were attacked, causing equipment damage and sharply raising risks of capacity disruptions. This came on top of earlier disruptions: March 15: Alba reduced output at three production lines due to shipping disruptions in the Strait of Hormuz; March 12: Qatar’s Qatalum smelter suspended 40% of capacity due to natural gas supply cuts. Overseas primary aluminum supply deficits are expected to continue widening. Meanwhile, high energy costs in Europe have also reduced local semi-fabricated aluminum output, further tightening supply. Supply tightness has directly driven a sharp rise in overseas spot premiums. Amid supply concerns from escalating Middle East geopolitical conflicts, the Q2 MJP premium rose by approximately USD 156.5/t to USD 351.5/t. Specifically, major regional premiums rose markedly at end-March: CIF South Korea: from USD 168/t (early March) to USD 292/t; CIF Thailand: from USD 183/t to USD 317/t; European Duty Unpaid: from USD 345/t to USD 400/t; US Midwest DDP: from 103.75 cents/lb to 105.5 cents/lb. This fully reflects that expectations of tight primary aluminum supply have enabled sellers to push up quotations. Downstream demand and purchasing patterns vary significantly across regions: South Korea: Phase-wise restocking completed; weak downstream restocking sentiment, limited demand support. Southeast Asia: Dominated by term contract execution with limited spot restocking; insufficient incremental buying momentum. Europe: Rising supply shortage concerns amid production cuts in Qatar and Bahrain; downstream restocking underway, relatively strong demand. United States: Low inventories entering a restocking cycle, providing moderate market support. II. Chinese Aluminum Market: High Inventory Pressure, Weak and Constrained Demand In contrast to strong overseas markets, the domestic aluminum market has strengthened amid supply disruptions but underperformed relative to the LME, characterized by high inventories and constrained demand. High domestic aluminum prices have continued to suppress downstream purchasing. Current buying is mainly order-based rigid demand, with low willingness for active restocking, providing limited upward support. Domestic inventory pressure has not eased effectively: primary aluminum inventories remain elevated, and inventory destocking has progressed slower than expected, likely prolonging the digestion period.High inventories and high prices form dual constraints. Although the domestic market has upward momentum, it is weaker than overseas. Domestic spot premiums are expected to remain under pressure and further widen in the short term.

The current global aluminum market showed a clear divergence between markets outside and inside China. LME remained strong amid supply-side disruptions, while the Chinese market also strengthened under supply disruptions, though its overall performance was still relatively weaker than LME. Details on supply and demand, trade flows, and market structure are as follows: I. Overseas Aluminum Market: Tight Supply Became More Pronounced, Inventory Remained Under Pressure The core issue in the overseas aluminum market centered on supply contraction and low inventory, compounded by disruptions from geopolitical conflicts, with the tight supply pattern continuing to intensify. Based on LME inventory data, current inventory remained on a sustained downward trend, and the support provided by inventory to the market weakened significantly. Historical and recent data showed that LME cancelled warrants previously peaked at 178,000 mt, accounting for as much as 39 of total inventory. As a result, LME's actually available effective inventory fell to the lowest level since May 2025, further highlighting the tight supply situation outside China. The contraction on the supply side further amplified the deficit in markets outside China, with the impact of production cuts at the two key projects, EGA and Alba, being particularly prominent. On March 28, EGA's Al Taweelah production site in the UAE and Alba's plant in Bahrain were both attacked, and equipment damage sharply increased the risk of capacity disruptions. In addition, Alba had already started production cuts on three lines on March 15 due to shipping disruptions in the Strait of Hormuz, while Qatar's Qatalum aluminum smelter shut 40 of its capacity on March 12 due to a natural gas supply interruption. Against this backdrop, the supply gap in overseas aluminum ingot is expected to continue widening. Meanwhile, high energy costs in Europe also led to production cuts and volume reductions in local fabricated products, further exacerbating supply tightness. Tight supply directly pushed premiums in overseas spot markets sharply higher. Affected by supply concerns triggered by the escalation of geopolitical conflict in the Middle East, the Q2 MJP price rose by about $156.5/mt to $351.5/mt. Specifically, by month-end, premiums in major regions all showed a significant upward trend: CIF South Korea premiums rose from $168/mt at the beginning of the month to $292/mt; CIF Thailand premiums rose from $183/mt to $317/mt; Europe duty-unpaid premiums rose from $345/mt to $400/mt; and US Midwest DDP premiums rose from 103.75¢/lb at the beginning of the month to 105.5¢/lb, fully reflecting that current expectations of tight overseas aluminum ingot supply pushed sellers to raise offers. From the perspective of downstream demand and procurement pace across overseas regions, clear divergence was evident: South Korea: phased restocking had already been completed earlier, and downstream purchase and restocking sentiment was currently weak, with demand providing limited support to the market; Southeast Asia: the market was currently focused on digesting inventories, with only partial spot order restocking demand, and overall momentum for new purchases was insufficient; Europe: affected by production cuts in Qatar and Bahrain's aluminum industries, market concerns over a supply deficit continued to intensify, and downstream players were gradually carrying out restocking purchases, with demand showing relatively strong performance; US: inventory was currently at a low level and was entering a restocking cycle, providing some support to the market. II. China’s Aluminum Market: Under Pressure from Inventory at High Levels, with Suppressed and Weak Demand In contrast to the strength of the LME, although China’s aluminum market was likewise supported by supply disruptions and showed an upward trend, its overall performance remained relatively weaker than the LME, with the core pattern characterized by “elevated inventory and suppressed demand.” On the price front, persistently high aluminum prices in China continued to restrain downstream purchasing demand. At present, the downstream procurement pace is mainly driven by order-based just-in-time procurement, while willingness to restock proactively remains subdued, making it difficult to form stronger demand support. China has not effectively eased inventory pressure—domestic aluminum ingot remains at inventory at high levels, and the pace of inventory drawdown was slower than expectations. Inventory drawdown is expected to take even longer going forward. Inventory at high levels and high aluminum prices have formed a dual constraint, leaving the Chinese market with upward momentum, but weaker than that of the LME. In the short term, spot premiums in China are expected to remain under pressure and widen further. Source: SMM

SMM News, March 31: According to SMM statistics, total aluminum production outside China in March 2026 edged up 0.2% YoY, while daily average production fell 2.7% MoM, mainly due to widespread production cuts and shutdowns at aluminum plants in Mozambique and the Middle East during March. According to an announcement on Hydro's official website, Qatalum smelter in Qatar initiated an orderly shutdown on March 3, and announced on March 12 that it had decided to stop further production cuts and maintain a 60% operating rate. On March 16, according to South32's official website, Mozal Aluminium (Mozal) was confirmed to have entered maintenance status on March 15, involving 580,000 mt of capacity. On March 15, according to an announcement on Alba's official website, Alba initiated the shutdown of Lines 1, 2, and 3 under controlled and safe conditions, involving capacity equivalent to 19% of its total capacity of 1.623 million mt, or about 310,000 mt; around March 25, the market reported that its Line 4 might also see production cuts or shutdowns, involving 320,000 mt of capacity; on March 28, according to an announcement on Alba's official website, its aluminum plant facilities were hit on March 28, the extent of equipment damage was still being assessed, and it would maintain operational flexibility and employee safety. On March 28, according to EGA's official website, facilities at its Al Taweelah aluminum plant suffered severe damage, with the extent of the damage still under assessment. The market expects large-scale production cuts and shutdowns there, and the plant has aluminum capacity of about 1.55 million mt. Looking ahead to April 2026 , although the Mount Holly aluminum plant in the US and the Grundartangi aluminum plant in Iceland are expected to begin resuming production, production resumptions at Spain's San Ciprián aluminum plant continue to advance, and operating capacity at new aluminum projects in Indonesia and Angola is expected to continue ramping up, given the large scale of production cuts and shutdowns at aluminum plants in the Middle East and Mozambique in March and the further emergence of their impact, aluminum production outside China in April is expected to decline significantly both YoY and MoM. Overall, if the situation in the Middle East proves difficult to ease, monthly aluminum production is expected to shift into sustained negative YoY growth from Q2 to Q4 2026. Continued attention should be paid to subsequent announcements from relevant aluminum plants in the Middle East and trends in global aluminum inventory.

[Supply Tightening Coupled With Macro Tailwinds Keeps Aluminum Prices Firmly at High Levels] Overall, the geopolitical situation in the Middle East remains the core factor affecting the global aluminum market. A series of production cuts and damage incidents at Middle Eastern aluminum plants is expected to provide strong upward momentum for aluminum prices in and outside China, together with support from expectations of gradually releasing peak-season demand in China. In the short term, aluminum prices are expected to remain in a high-level consolidation pattern.

On March 29, the UAE’s EGA aluminum plant was hit by Iranian missiles and drones, causing severe damage to its facilities. A damage assessment has been launched, and widespread production cuts were expected, involving total capacity of about 1.55 million mt. Combined with the production cut process initiated earlier this month by Alba and Qatalum, the total scale of production cuts at the three aluminum plants was about 2.43 million mt.