[SMM Cast Aluminum Alloy Morning Comment: Aluminum Prices Halted Their Decline, but Wait-and-See Sentiment Remained Unchanged; Rangebound Movement May Continue in the Short Term] Spot market, yesterday the overall ADC12 market continued to hold prices steady. Aluminum prices showed signs of halting their decline, but market sentiment recovered only limitedly, and enterprises generally chose to postpone price adjustments and mainly adopt a wait-and-see stance. Demand side, downstream orders did not improve significantly, and just-in-time procurement remained the main approach, with mediocre transaction performance. Against the backdrop of easing cost-side fluctuations and insufficient demand support, ADC12 prices may continue to fluctuate within a range and remain relatively stable 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.

[Overnight, LME Aluminum and SHFE Aluminum Edged Up Slightly, but Aluminum Prices Faced Short-Term Pressure at High Levels] Continued destocking in LME inventory provided bottom support for LME aluminum, but amid tightening fund liquidity and profit-taking by bulls, upward momentum remained insufficient, and the backwardation structure weakened somewhat. China’s social inventory rose to a high for the same period in nearly five years, and the inventory buildup cycle had yet to end, with high inventory and weak spot fundamentals jointly weighing on upward momentum. The 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 operating rate of major copper cathode rod enterprises in China stood at 81.51% last week (March 13–March 19), marking the fourth consecutive week of MoM improvement since the Chinese New Year, with industry sentiment continuing to recover. The strong rebound in the operating rate in this round was mainly driven by two factors: first, the relatively weak operating rates of secondary copper rod enterprises, coupled with the price difference between copper cathode and copper scrap remaining at a relatively low level, significantly weakened the substitution effect between copper cathode and copper scrap, leaving more market room for copper cathode rod; second, improving orders for downstream wire and cable and enamelled wire boosted a faster drawdown in enterprises' finished product inventories. As copper prices broke above low-level support, downstream procurement sentiment continued to heat up, and new orders for copper cathode rod enterprises showed a pattern of concentrated volume release. Most enterprises reported that their production pace could no longer keep up with shipment progress, and some had already begun to proactively control the pace of taking orders to ensure contract fulfillment. From the downstream industry perspective, wire and cable as well as enamelled wire enterprises also benefited from the pullback in copper prices, with operating rates steadily rebounding, further boosting demand for copper rod. Inventory side, although the pullback in copper prices boosted enterprises' willingness to restock, constrained by limited room for capacity release, enterprises did not excessively stockpile on dips and mostly maintained normal production raw material reserves. Meanwhile, due to continued downstream pick-up of goods, enterprises' capacity was unable to fully match order demand, accelerating the drawdown of finished product inventories. Enterprises Raise Processing Fees and Increase Margin Requirements to Control Risks After copper prices pulled back sharply, downstream purchase willingness increased significantly, and order concentration rose markedly. To reasonably control the pace of taking orders, some enterprises urgently raised processing fees. At the same time, affected by the increased uncertainty in the pace of cargo pick-up caused by concentrated downstream order placement, as well as the continued decline in copper prices, enterprises became more concerned about the default risk of earlier high-priced orders, and some enterprises simultaneously increased margin ratios to strengthen risk control. Looking ahead, with copper prices rising at present, downstream procurement sentiment has clearly weakened. To ensure stable deliveries, copper cathode rod enterprises are expected to maintain relatively high operating loads. Although rigid demand is gradually being fully released, against the backdrop of low finished product inventories, enterprises will still maintain high operating rates to replenish inventory. Accordingly, SMM expects the operating rate of China's copper cathode rod enterprises to fluctuate at highs in March.

SMM Morning Meeting Summary: Overnight, LME copper opened at $12,016.5/mt. After dipping to $11,955.5/mt in early trading, its center rose sharply to a high of $12,160/mt, and then continued to hover at highs, finally closing at $12,092.5/mt, down 1.05%. Trading volume reached 23,000 lots, open interest stood at 293,000 lots, up 406 lots from the previous trading day, mainly reflecting increased short positions overall. Overnight, the most-traded SHFE copper 2605 contract opened at 93,600 yuan/mt and touched a low of 93,480 yuan/mt at the open. Its center then moved higher to a high of 94,990 yuan/mt, after which copper prices maintained a fluctuating trend at highs, finally closing at 94,670 yuan/mt, up 0.17%. Trading volume reached 51,000 lots, open interest stood at 198,000 lots, down 533 lots from the previous trading day, mainly reflecting reduced short positions throughout the day.

[SMM Midday Tin Commentary: Improving Macro Sentiment Drove a Rebound in Tin Prices, While Follow-Through in Spot Transactions Remained Limited]

Dalian iron ore was generally weak today. The most-traded contract, I2605, finally closed at 806.5 yuan/mt, down 1.83% from the previous trading session. Spot prices fell by about 10-15 yuan from the previous trading day. Traders actively offered quotes, while steel mills mainly made inquiries and purchases based on rigid demand, with cautious inquiries; overall, the spot market trading atmosphere was average. According to the latest SMM survey data, hot metal daily average production reached 2.4049 million mt this week, an increase of 15,000 mt WoW, with demand showing a steady improvement. In terms of supply, some iron ore originally planned for shipment to the Middle East began to be redirected to the Chinese market, including some ore grades used for direct reduced iron (DRI), increasing market supply options and putting some pressure on prices. From a macro perspective, the situation in the Middle East remained tense, and the escalation of war triggered a sharp rise in energy prices, driving up global inflationary pressure. Expectations for US dollar interest rate cuts weakened significantly, leading to a certain pullback in commodity prices, including iron ore prices. Overall, iron ore prices faced strong resistance in the short term, but downside room was limited, and the market is expected to continue moving in a sideways range.