As of now, the FOB price of nickel in Indonesian MHP was $15,383/mt Ni, and the FOB price of cobalt in Indonesian MHP was $51,364/mt Co. MHP payables (against the SMM battery-grade nickel sulphate index) were 86.5-87.5, and the payable indicator for cobalt element in MHP (against SMM refined cobalt (Rotterdam warehouse)) was 94. The FOB price of Indonesian high-grade nickel matte was $15,666/mt Ni.

SMM Morning Meeting Summary: Overnight, LME copper opened at $12,402.6/mt. In early trading, it fluctuated downward to a low of $12,334.5/mt. Subsequently, the center of copper prices gradually moved higher, rising to $12,482.5/mt near the close, and finally closed at $12,472.6/mt, up 0.73%. Trading volume reached 24,900 lots, and open interest stood at 291,200 lots, down 7,698 lots from the previous trading day, mainly due to bears reducing positions. Overnight, the most-traded SHFE copper 2605 contract opened at 96,300 yuan/mt. In early trading, it fluctuated downward to 96,210 yuan/mt. Subsequently, the center of copper prices fluctuated upward, touching a high of 96,970 yuan/mt near the close, with a gain of 0.45%. Trading volume reached 40,900 lots, and open interest stood at 183,400 lots, down 2,869 lots from the previous trading day, mainly due to bears reducing positions.

SMM News, March 31， In Q1 2026, amid macro tailwinds, expectations of a supply gap, and successive geopolitical conflicts in the Middle East, aluminum prices repeatedly hit new highs. The quarterly average SMM A00 aluminum price reached 24,028 yuan/mt, up 17.5% YoY; the quarterly average closing price of the LME aluminum 3M contract at 15:00 Beijing time reached $3,196/mt, up 21.8% YoY. High prices suppressed downstream consumption: At the end of 2025, SMM expected China’s primary aluminum consumption growth in 2026 to be 2.0%; as of February, that growth rate had fallen to 1.1%. As a result, the proportion of liquid aluminum in the aluminum industry declined significantly, and aluminum social inventory hit a nearly three-year high. As of March 31, the inflection point in China’s aluminum social inventory was still unclear, while the absolute inventory level had already entered the upper range of SMM’s previous forecast of 1.35-1.4 million mt. However, affected by geopolitical conflicts in the Middle East, aluminum supply and demand were both weak, fundamental risks increased, and prices saw wild swings. Under the impact of high prices, aluminum ingot inventory may continue to build further. According to SMM, as of the end of March, some aluminum ingots in certain regions were still backlogged at rail platforms and outside warehouses. High prices also accelerated supply growth: As of the end of Q1, average profits in China’s aluminum industry exceeded 8,000 yuan/mt. Stimulated by high profits, China’s aluminum supply growth is expected to exceed expectations. At the end of 2025, SMM expected China’s aluminum supply growth in 2026 to reach 1.7%; as of the end of Q1 2026, SMM expected that growth rate had risen to 1.9%. Outside China, supply growth was also boosted by high prices: 1) A smelter in Spain had originally planned to resume full production by 2026, and according to foreign media reports in March, it had already resumed to 90% of operating load; 2) In October 2025, an Icelandic smelter cut production on one line due to equipment failure. It had originally planned to resume production in September-October 2026, but has now moved the plan forward to start by the end of April; 3) At the end of 2025, expectations were that Indonesia’s operating aluminum capacity would reach 2 million mt by the end of 2026; that expectation has now been raised to 2.2-2.5 million mt. Q2 Outlook: At present, one of the decisive factors for global aluminum fundamentals and price trends is the geopolitical situation in the Middle East. SMM analysis showed that outside China, aluminum capacity that had already cut production or faced substantial production reduction risk exceeded 3 million mt. If subsequent production cuts from this portion of capacity are confirmed, outside China aluminum supply is expected to maintain negative YoY growth for an extended period, and global aluminum fundamentals are expected to face a large gap, with the gap outside China far exceeding that in China. In this case, aluminum prices in and outside China are expected to rise sharply again, with overseas prices expected to outperform domestic prices. China’s net aluminum imports are expected to decline, while exports from downstream aluminum plants are expected to increase. However, if actual production cuts come in below expectations, while consumption sees a marked reduction due to factors such as energy and inflation, the upward move in aluminum prices may face insufficient momentum. At present, geopolitical conflicts in the Middle East are disrupting the global aluminum supply-demand pattern, and SMM will continue to follow related developments.

Recycling Industry Events This Week (December. 29-31)

Wuzhou Yongda Stainless Steel Project secured 2.55 million yuan in central government funding. Meanwhile, Guangdong Zhongqing Environmental Protection received approval for its 600,000-ton/year stainless steel scrap recycling project, which includes sorting and baling production lines. On the raw materials front, Indonesian ferronickel has successfully arrived at Jiangsu ports and entered warehouses, ensuring a steady supply for the domestic market.

After the Lantern Festival, the operating rate of copper cathode rod was the first to rebound continuously, driving a gradual recovery in downstream consumption and pushing social inventory to officially enter a destocking channel from mid-March. However, as copper prices have recently rebounded and risen, downstream procurement sentiment has become more cautious, the pace of destocking has slowed somewhat, and the growth in the operating rate of copper cathode rod has also narrowed accordingly. Operating Rates Rose First, and the Inventory Inflection Point Emerged as Expected After the Chinese New Year, copper prices pulled back in phases, effectively boosting downstream restocking willingness. According to SMM, the operating rate of copper cathode rod enterprises was the first to respond, showing a WoW upward trend for several consecutive weeks. As of the latest data, the operating rate of copper cathode rod enterprises further climbed to 83.17, reflecting the continued release of end-use demand. Driven by the continued rise in operating rates, downstream procurement gradually increased in volume, and rigid-demand orders were steadily placed. As a result, copper inventories in major regions nationwide ended their sustained inventory buildup on March 12, officially marking an inflection point in inventories. Thereafter, the degree of destocking increased week by week, and as of March 26, inventories had declined for three consecutive weeks. With inventories being digested rapidly, the increase in total inventories compared to the same period last year also gradually narrowed from the post-holiday high to 92,900 mt. By region, this round of destocking showed broad-based characteristics. Consumption in Guangdong recovered most notably, coupled with localized tightening on the supply side, and the pace of inventory decline was relatively fast, making it the first to establish a destocking trend; driven by downstream consumption, warehouse withdrawals in Shanghai continued to exceed warehouse inflows, and against the backdrop of normal arrivals of imported and domestic cargoes, inventory steadily pulled back; Jiangsu likewise benefited from the recovery in consumption, jointly driving the rapid drawdown of overall inventory. Copper Price Rebound Curbed Willingness to Chase Gains, Destocking Momentum Weakened Significantly Entering late March, market sentiment shifted. As copper prices rose, downstream enterprises became more cautious, and the previously more active procurement pace slowed down. As of March 30, copper inventories in major regions nationwide fell 13.81% WoW. Although the destocking trend continued, the single-week decline had narrowed from 14.54% in the previous week. Regional performance also diverged. In Shanghai, arrivals of imported and domestic cargoes were normal, downstream consumption continued to recover, and inventory steadily destocked; in Guangdong, consumption remained highly robust, and coupled with tight supply, the inventory decline was still considerable; however, in Jiangsu, affected by another rise in copper prices, downstream procurement turned more wait-and-see, the pace of destocking slowed markedly, reflecting that the restraining effect of rebounding prices on demand had begun to emerge. Meanwhile, the upward momentum in the operating rate of copper cathode rod cooled somewhat. SMM expected the operating rate of copper cathode rod to rise to 83.76% this week, up only 0.59 percentage points WoW, in contrast to the pattern of consecutive sharp increases in previous weeks, indicating insufficient willingness among downstream buyers to chase higher prices, with more shifting to just-in-time procurement and adopting a wait-and-see stance toward subsequent copper prices. Market Outlook: Short-Term Destocking Continues as Momentum Gradually Weakens Overall, supply side, imported cargoes continued to arrive, while arrivals of domestic cargoes were relatively limited due to maintenance and other factors, and the overall pattern of tight supply persisted; demand side was more heavily affected by fluctuations in copper prices, with downstream players holding a wait-and-see attitude toward subsequent price trends, making it difficult in the short term to replicate the intensity of the previous concentrated restocking. Social inventory is expected to continue destocking in the short term, but as copper prices remain at a relatively high level, downstream procurement is turning more rational, and destocking momentum is expected to weaken further. As for subsequent market direction, attention still needs to be paid to copper price trends and the actual fulfillment of end-user orders.