[Geopolitical Negotiations Remain Unresolved; Aluminum Prices Continue LME Outperforms SHFE Pattern] Overall, the Middle East negotiation process continued to face setbacks. However, the supply gap outside China and the continued drawdown of LME inventory supported LME prices to hold up well. Meanwhile, China's aluminum ingot inventory remained at elevated levels, and attention should be paid to whether the inflection point of domestic inventory can materialize smoothly.

SMM April 20 update: SHFE aluminum 2605 fluctuated downward in early trading, but overall aluminum prices remained at high levels. End-users mainly made just-in-time procurement, and traders' buying sentiment was relatively positive, influenced by declining aluminum prices and wider premiums. Mainstream transactions in the market were concentrated around SMM A00 aluminum -10 yuan/mt to +10 yuan/mt. The shipment sentiment index in the east China market was 3.4 today, down 0.32 MoM; the procurement sentiment index was 3.06, flat MoM. SHFE aluminum prices pulled back today, but high aluminum prices still suppressed buying sentiment in the central China market. Downstream processing enterprises mostly adopted a wait-and-see approach, with slight pressure to push for lower prices in actual transactions. However, overall buying sentiment recovered compared to the previous two days. Suppliers had a strong willingness to hold prices firm, transaction prices remained stable, and the downward trend was not significant. Ultimately, actual transaction prices in the central China market ranged between a 20 yuan premium over the central China price and parity. The shipment sentiment index in the central China market was 2.85 today, flat MoM; the procurement sentiment index was 2.39, up 0.04 MoM. Inventory side, aluminum ingot inventory in major consumption areas increased by 28,000 mt MoM today, with all three regions showing inventory buildup.

[Shanghai aluminum futures consolidated narrowly during the night session, with slow downstream resumption of work leading to volatile aluminum prices] On the fundamentals, seasonal pressure remains prominent. On the supply side, new aluminum projects in the domestic market are steadily ramping up production, while the proportion of liquid aluminum conversion remains temporarily low. On the demand side, post-holiday operating rates of downstream processing materials show a steady recovery pace. However, under the influence of seasonal supply exceeding demand and some cargo backlog at railway stations, it is expected that the peak inventory of aluminum ingots domestically after the holiday will exceed 1.35 million mt, hitting a new high in nearly five years, which will be an important factor suppressing price rises. Overall, in the short term, Shanghai aluminum futures will continue a volatile pattern.

SMM February 26 News: In the morning session, SHFE aluminum 2602 fluctuated downward, with the price center higher than the previous trading day. Influenced by the spot-futures price spread and the price spread between futures contracts, some traders entered the market to build positions, leading to a continuous rise in spot quotations since the opening. The mainstream quotations concentrated around the average to 30 yuan/mt. Today, the shipment sentiment index in the east China market was 2.81, up 0.15 MoM; the purchasing sentiment index was 2.7, up 0.08 MoM. SMM A00 aluminum closed at 235,200 yuan/mt, up 1,400 yuan/mt from the previous trading day, at a discount of 1,800 yuan/mt against the 2603 contract, an increase of 200 yuan/mt from the previous trading day. Today, SHFE aluminum prices rose, and traders holding stocks in the central China market showed a clear willingness to sell at high prices. However, during the initial period after the Chinese New Year holiday, downstream processing enterprises had not fully consumed their inventories, coupled with high aluminum prices, resulting in low restocking willingness. Overall, the market's trading situation was poor, with trading volume lower than the previous two days. Ultimately, the actual transaction price in the central China market fell from a premium of 10 yuan/mt over the central China price before the opening to a discount of 40 yuan/mt. Today, the shipment sentiment index in the central China market was 2.6, up 0.06 MoM; the purchasing sentiment index was 2.13, down 0.03 MoM. SMM central China closed at 234,100 yuan/mt, up 1,100 yuan/mt from the previous trading day, at a discount of 2,900 yuan/mt against the 2603 contract, a decrease of 100 yuan/mt from the previous trading day. The price difference between Henan and Shanghai was -1,100 yuan/mt, widening by 300 yuan/mt from the previous trading day. In terms of inventory, today, the aluminum ingot inventory in the main consumption areas increased by 26,000 mt MoM. Affected by the Chinese New Year break, all three regions showed an inventory buildup. In the short term, post-Chinese New Year, aluminum ingots continued to experience seasonal inventory buildup, and spot premiums/discounts are expected to remain under pressure.

[SMM Aluminum Morning Meeting Minutes: Expectations for US Fed Interest Rate Hike Heat Up, Aluminum Prices to Move Sideways in the Short Term] Overall, from a macro perspective, rising short-term expectations for US Fed interest rate hikes are pushing up the US dollar, while geopolitical tensions between the US and Iran and tariff policies are intensifying risk aversion. Coupled with a slowdown in US economic resilience and a weak recovery in the eurozone, the global macro environment is characterized by a fragile balance and high fluctuations. Seasonal pressure from the fundamentals is becoming more pronounced. On the supply side, new aluminum projects domestically and overseas are steadily ramping up production. Demand side, attention should be paid to the pace of downstream enterprise resumptions after the holiday. Currently, due to seasonal oversupply, the market widely expects post-holiday inventory peaks to reach 1.3 million mt, hitting a five-year high, which will be a key factor suppressing prices. Overall, aluminum prices are expected to move sideways in the short term.

SMM February 24: SHFE aluminum 2602 fluctuated upward in the morning session, with the price center rising from the previous trading day. Influenced by the higher SHFE aluminum prices, overall purchase sentiment still lagged behind shipment sentiment, but due to the end of the Chinese New Year break, transaction sentiment rose compared to the pre-holiday trading day. Mainstream quotations concentrated at a discount of 20 yuan/mt to the average price. Today, the shipment sentiment index in the east China market was 2.34, up 0.34 WoW; the purchase sentiment index was 2.31, up 0.25 WoW. SMM A00 aluminum closed at 23,390 yuan/mt, up 230 yuan/mt from the previous trading day, at a discount of 160 yuan/mt against the 2602 contract, down 40 yuan/mt from the previous trading day; at a discount of 210 yuan/mt against the 2603 contract. After the Chinese New Year break, traders and downstream enterprises in central China gradually resumed work. Aluminum ingot inventory saw a significant buildup, and post-holiday recovery boosted shipment and purchase willingness among traders and processing enterprises. However, as the holiday was not completely over, some traders adopted a wait-and-see approach, and market transactions remained sluggish. Actual transaction prices in the central China market finally ranged from a discount of 20 yuan to a premium of 20 yuan against the central China price, with premiums and discounts narrowing as aluminum prices rose. Today, the shipment sentiment index in the central China market was 2.52, up 0.27 WoW; the purchase sentiment index was 2.14, up 0.24 WoW. SMM central China closed at 23,310 yuan/mt, up 230 yuan/mt from the previous trading day, at a discount of 240 yuan/mt against the 2602 contract, down 40 yuan/mt from the previous trading day; at a discount of 290 yuan/mt against the 2603 contract. The price spread between Henan and Shanghai was -80 yuan/mt, flat from the previous trading day. Inventory side, aluminum ingot inventory in major consumption areas increased by 196,000 mt WoW, with all three regions showing inventory buildup due to downstream Chinese New Year breaks. In the short term, high aluminum prices may continue to suppress end-use demand, and combined with the impact of downstream holiday breaks, aluminum ingots still face inventory buildup risks, and spot premiums/discounts are expected to remain under pressure.