[SMM Analysis]Aluminum Processing PMI Rebounded Sharply to 66 in March, Expected to Pull Back in April

[SMM Analysis] Steel Export Review: Geopolitical Conflicts Trigger the Reshaping of the Export Landscape In terms of steel billet exports , the main target market in the first two months remained Indonesia. Part of the cargoes was imported by Chinese-funded or joint-venture rolling mills in Indonesia for further processing and use, thereby avoiding Southeast Asia’s import tariffs on finished steel products, while another part was supplied directly to local projects under construction. Meanwhile, Southeast Asia, Africa, and South America formed a solid base of exports. In particular, on the African side, Djibouti, as a core transshipment hub, had been handling a large volume of circulating resources. Turkey, meanwhile, saw a wave of concentrated external purchases due to delays in steel scrap vessel schedules and spot-futures price spread arbitrage. In terms of bar exports , the share to Hong Kong, China declined somewhat from the end of last year, while exports to Singapore overtook it. The main reason was that procurement in Singapore was rigidly driven by local public housing renewal and public infrastructure projects, such as the Greater Southern Waterfront, according to construction periods, with actual end-user consumption remaining relatively stable; whereas Hong Kong, China, as a capital and logistics transshipment hub, saw some earlier speculative re-export orders constrained by offshore exchange-rate fluctuations at the beginning of the year and funding borrowing costs. Traders proactively reduced some speculative exposure for financial risk hedging purposes, which led to a decline in transshipment procurement volume. Looking ahead to March , with the full blockade of the Strait of Hormuz, Iran’s semi-finished products export channels were effectively cut off. Chinese steel billet is expected to absorb these additional export orders arising from geopolitical conflict, and traders and steel mills will also accelerate shipments to markets outside China such as Southeast Asia to gain a larger replacement share. Therefore, total steel billet exports still have room to rise. By contrast, Chinese bar exports mainly rely on short-haul regional shipping routes into the inland areas within Asia, and were subject to extremely limited direct impact from the disruption of long-haul Middle East logistics. Therefore, March shipments are expected to remain stable, supported by rigid-demand restocking within the region. Source: SMM, General Administration of Customs Unlike the strong performance of billets, sheets & plates exports in the first two months were unsatisfactory. The cumulative exports of both cold galvanized and hot-rolled products in January and February declined YoY , with the drop in hot-rolled products being more pronounced. However, it should be noted that before the full suspension of navigation through the Strait of Hormuz at the end of February, logistics channels to the Middle East remained open, which secured a critical delivery window for sheets & plates. Therefore, in terms of HRC exports , Saudi Arabia still firmly ranked first among export destinations with a volume of 348,000 mt , mainly because its large-scale non-oil infrastructure and manufacturing projects in China were still in an intensive construction phase, with strong end-user steel demand, which also prompted local buyers to lock in relatively lower-priced Chinese HRC ahead of shipping disruptions, thereby maintaining its leading position. Pakistan (230,000 mt ), by contrast, saw this mainly due to bottlenecks in domestic supply, creating phased concentrated restocking demand, and according to the SMM survey, most purchases were made by downstream pipe factories. From the perspective of cold galvanized exports , the Southeast Asian market was currently in a stage of rapid development, and macroeconomic expansion had created a huge gap in flat steel products. Thailand in particular (304,000 mt ) was in a concentrated raw material stocking cycle for local downstream auto manufacturers at the beginning of this year, so just-in-time procurement by multiple physical manufacturers directly pushed up local imports. Looking ahead to March , under the dual impact of the Strait of Hormuz blockade and the Ramadan effect, sheets & plates exports to the Middle East core region are expected to face a sharp contraction. SMM shipping data showed that steel arrivals had already declined by more than 900,000 mt. However, under the pressure of elevated destocking in China, this portion of blocked exports is expected to be redirected to Southeast Asia and other alternative markets with “rigid manufacturing demand” for redistribution, thereby offsetting shipment reductions caused by localized logistics disruptions. Therefore, there is no need for excessive concern over total sheets & plates exports in March Source: SMM, General Administration of Customs Copyright and Intellectual Property Statement: This report is independently created or compiled by SMM Information & Technology Co., Ltd. (hereinafter referred to as "SMM"), and SMM legally enjoys complete copyright and related intellectual property rights. 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In recent years, the most common and straightforward framework for assessing demand across the lithium battery value chain has been to anchor it to EV sales. The logic was simple: the more vehicles sold, the stronger the battery demand; conversely, a slowdown in vehicle sales would imply weaker battery demand. This relationship held true in the early stages of the industry, when EV penetration was rapidly increasing, product structures were relatively simple, and battery demand exhibited a strong linear correlation with vehicle sales. However, this linear relationship is now clearly weakening. Increasing evidence suggests that battery demand is no longer solely determined by vehicle sales , but is increasingly driven by multiple factors, including average battery capacity per vehicle, product mix, commercial vehicle electrification, and export dynamics. 1. The “Vehicle Sales = Battery Demand” Formula Is Breaking Down At its core, vehicle sales represent the number of units sold, while battery demand reflects total energy consumption, i.e., total installed battery capacity. These two metrics only move in tandem when the average battery capacity per vehicle remains stable. Once average battery size increases, or when the sales mix shifts across BEV vs. PHEV, passenger vs. commercial vehicles, the direct linkage between vehicle sales and battery demand begins to decouple. As a result, assessing battery demand today requires answering several additional questions beyond headline vehicle sales: What is the average battery capacity per vehicle? Which vehicle segments are driving incremental growth? Are export flows and regional differences amplifying demand volatility? In other words, the industry is transitioning from a “unit-driven” model to an “energy-driven” model . 2. Rising Battery Capacity per Vehicle: The Primary Driver The most direct reason for the decoupling is the continuous increase in battery capacity per vehicle. This trend is driven by three key factors. First, vehicle upsizing. Both in China and overseas, EV consumption is shifting from basic electrification to enhanced user experience. The rising share of SUVs, pickup trucks, larger sedans, and premium vehicles naturally drives higher battery capacity per vehicle. Larger vehicle size, longer range requirements, and higher performance expectations all translate into higher kWh configurations. Second, the range competition is not over. While the industry has moved beyond the most aggressive phase of “range-at-all-costs,” consumers still place strong emphasis on real-world range, low-temperature performance, highway efficiency, and charging convenience. Even amid intense price competition, automakers are reluctant to reduce battery capacity, as it remains a core determinant of product competitiveness. Third, the growth of premium BEVs and heavy-duty applications. Although EV sales growth is expected to moderate going forward, battery demand is still projected to grow at a faster pace, with increasing battery capacity per vehicle being a key contributor. This reflects a critical shift: vehicles may not be selling faster, but each vehicle is consuming more battery capacity. Therefore, relying solely on slowing vehicle sales growth to infer weaker battery demand may significantly underestimate the offsetting effect from rising battery capacity per vehicle. 3. Product Mix Matters More Than Total Sales Volume Beyond battery capacity, changes in product mix are also reshaping battery demand. For instance, selling one million EVs with a higher BEV share will result in stronger battery demand than the same volume with a higher PHEV share, due to differences in battery size. In other words, shifts between different powertrain technologies directly impact overall battery intensity. Globally, this structural divergence is becoming more pronounced. In Europe, policy adjustments have led to a temporary rebound in PHEVs, which dilutes average battery capacity per vehicle. In contrast, China continues to maintain a high share of BEVs and higher-capacity vehicles, supporting stronger battery demand intensity. Thus, evaluating battery demand today requires understanding not just how many vehicles are sold, but what types of vehicles are driving the growth . 4. Commercial Vehicle Electrification: The Most Undervalued Growth Driver If rising battery capacity per vehicle represents the first layer of demand restructuring, then the electrification of commercial vehicles represents the second—and arguably the most underestimated—layer. Passenger EVs typically carry battery packs in the range of tens of kWh, whereas electric heavy-duty trucks, construction vehicles, and specialty vehicles often require 300–600 kWh or more. This means that a single electric truck can generate battery demand equivalent to multiple passenger EVs . Even with a smaller sales base, incremental penetration in commercial vehicles can significantly amplify overall battery demand. Rising oil prices further accelerate this trend by improving the total cost of ownership (TCO) of electric commercial vehicles, particularly in high-utilization, heavy-load, and fixed-route applications. In such scenarios, electrification becomes economically compelling much faster. As a result, while commercial vehicles are not the largest segment by volume, they are likely to become one of the most powerful “energy leverage” drivers of battery demand in the near term. 5. Exports, Inventory Cycles, and Production Scheduling Are Increasing the Mismatch In addition to end-market dynamics, midstream factors such as exports, inventory cycles, and production scheduling are further widening the gap between vehicle sales and battery demand. On one hand, changes in export policies, overseas customer stocking behavior, and shifts in trade flows can either front-load or delay battery and materials production. On the other hand, inventory cycles are once again becoming a central analytical framework. Automakers and distributors are no longer maintaining stable inventory levels; instead, they dynamically adjust stocking based on sales trends and pricing competition. This means that battery production is increasingly influenced by inventory drawdowns, restocking cycles, and order visibility—rather than simply mirroring real-time vehicle sales. Analyst SMM Lithium Battery Analyst Lesley Yang yangle@smm.cn

DKEM (300842.SZ) reported attributable net profit of -276 million yuan in 2025, down 176.80% YoY, mainly due to fluctuations in raw material silver powder prices and the impact of non-recurring gains and losses. The company recorded operating revenue of 18.046 billion yuan, up 17.56% YoY; net profit excluding non-recurring items was 163 million yuan, down 62.78% YoY. The board of directors proposed not to distribute cash dividends. Operationally, full-year sales of PV conductive paste were 1,829.16 mt, down 10.23% YoY, of which N-type TOPCon battery paste accounted for 95.72%. The company will continue to increase R&D in N-type battery paste technology to consolidate its industry-leading position.

On March 27, the 2026 SMM (21st) Lead & Zinc Conference and Industry Expo, organized by SMM, wrapped up successfully at Howard Johnson Agile Plaza in Chengdu, Sichuan!

On 30 March, India is scheduled to participate in consultations with Argentina, Indonesia, and Oman at an upcoming steel industry conference to discuss raw materials including iron ore and coking coal, with a focus on fostering technical cooperation. Oman and Brazil remain India's primary sources of iron ore imports. For the fiscal year 2025/26, India’s iron ore imports are projected to reach between 12 and 14 million tones—its highest level in seven years—with approximately 70% sourced from Brazil and Oman.