Zhang Haideng, deputy director of the Raw Materials Industry Department of the Ministry of Industry and Information Technology, said at the 2023 (14th) China Iron and Steel Development Forum on March 25 that capacity replacement shall be implemented in great efforts and new capacity shall be prohibited this year.

According to media reports citing sources, during trade negotiations with the US, India proposed a mutual tariff exemption scheme for steel, auto parts, and pharmaceutical products, but only for a certain volume of imports. Sources familiar with the matter said that industrial products imported beyond a certain volume threshold would revert to normal tariff levels. This proposal was made by Indian trade officials during their visit to Washington at the end of last month to expedite negotiations on a bilateral trade agreement, which is expected to be reached this autumn. It is understood that the US and India are prioritizing consultations on some key industries, aiming to reach a preliminary trade agreement before the end of the 90-day suspension period of the "reciprocal tariff" imposed by US President Trump. In early April, Trump announced that reciprocal tariffs would be imposed on more than 180 trading partners, with India facing a 26% tariff rate. However, Trump soon announced a 90-day tariff "suspension period" for most countries, temporarily shelving the additional reciprocal tariffs, but still imposing a 10% benchmark tariff. US Treasury Secretary Bessent said last week that India may be one of the first countries to sign a trade agreement with the US. Trump said last Sunday that some trade agreements could be finalised as early as this week. Asian economies, including South Korea, Japan, and India, are actively engaging with the US to take the lead in reaching provisional agreements. Sources also said that the US has asked India to address its concerns about the "Quality Control Orders" (QCO), which the US believes constitute non-tariff barriers to its exports. The QCO requires local and foreign manufacturers to meet mandatory quality standards before entering the Indian market, but these regulations have been criticized for lacking transparency and fairness. India is willing to revisit its existing QCO system in industries such as medical devices and chemicals and has proposed signing a "Mutual Recognition Agreement" with the US to achieve mutual recognition of regulatory standards and enforcement rules between the two countries. It is not yet clear whether the above proposals will be included in the final agreement. It is worth mentioning that, according to previous media reports, India had considered eliminating import taxes on US liquefied natural gas (LNG) to expand procurement and help reduce its trade surplus with the US. Last year, India's total trade surplus with the US reached $45.4 billion.

Stainless steel futures prices hovered around 15,100 yuan/mt last week, once growing to over 15,300 yuan/mt.

June 4 News: According to SMM statistics, on June 4, the inventory of aluminum ingots in Guangdong was 206,000 mt; in Wuxi, it was 130,000 mt; and in Gongyi, it was 55,500 mt. The total inventory across these three locations was 391,500 mt, a decrease of 10,500 mt from the previous trading day.

March 25th, SMM News: On March 25th, the Shanghai nickel main contract opened at 135,110 yuan/ton and closed at 133,330 yuan/ton, a decrease of 1,380 yuan/ton compared to the previous trading day's closing price. Intraday trading weakened compared to the previous trading day, with a decrease in trading volume of 43,048 lots and a decrease in open interest of 5,215 lots...

LME copper prices opened at $10321/mt and closed at $10282/mt in last evening trading, a gain of 2.05%, with the low-end of $10124/mt and the high-end of $10335/mt. Trading volume was 44,000 lots, and open interest stood at 337,000 lots.

Lotte Aluminium Materials USA LLC and SMS group have joined forces in a strategic partnership to revolutionise the production of ultra-thin aluminium cathode foils for electric vehicle batteries.

[SMM Zinc Morning Comment] Overnight, SHFE zinc recorded a bearish candlestick, with resistance formed by various moving averages above. Dragged down by the decline in the overseas market and the continuous drop in ferrous metals prices, SHFE zinc fluctuated downward. However, the absence of a significant inventory buildup in the social inventory limited the decline in zinc prices.

[SMM Analysis: January Refined Tin Production Continues to Decline; Most Smelters Plan to Halt Production for Maintenance During Chinese New Year]: According to data processed by SMM based on market exchanges, in January 2024, China's refined tin production decreased by 4.62% MoM, but achieved a slight YoY increase of 0.65%. Affected by the tightening supply of tin ore and scrap, the overall domestic tin ingot output showed a downward trend in January. In Yunnan, the persistent low volume of tin ore imports from Myanmar, coupled with a decline in tin ore imports from other countries, has posed severe challenges to raw material supply for local smelters. Under these circumstances, most smelters opted to maintain the status quo or moderately reduce production scales. If Myanmar's tin ore production ban policy remains unchanged, we expect smelter production in Yunnan to continue declining. Additionally, the recent continuous drop in tin concentrate TC has fallen below the cost line for some smelters, forcing a few to halt production for maintenance during the Chinese New Year holiday.

On April 16, at the AICE 2025 SMM (20th) Aluminum Industry Conference and Aluminum Industry Expo—Alumina and Aluminum Raw Material Forum , hosted by SMM Information & Technology Co., Ltd. (SMM), SMM Metal Trading Center, and Shandong Aisi Information Technology Co., Ltd., and co-organized by Zhongyifeng Jinyi (Suzhou) Technology Co., Ltd. and Lezhi County Qianrun Investment Promotion Service Co., Ltd., Lin Jinyu, a researcher at SPIC Aluminum International Trading Co., Ltd., shared a study on "Research on Aluminum Price Changes in 2025 Under Green Transition." Does Supply and Demand Really Determine Prices? The End of the Last Cycle Is the Beginning of the Next For producers, inflation is both an opportunity and a challenge. Rising commodity prices allow producers to gain more profit, but if raw materials cannot be secured, it may lead to production halts. Therefore, it is necessary to ensure raw material reserves and hedging. For processing enterprises, there is no need to overly focus on price differences over 3-5 days or even about a month. Instead, they should aim to lock in the "quantity" and "price" of raw materials in the broader trend, as tomorrow's orders will always be more profitable than today's. For traders, it is crucial to seize structural market opportunities. Supply vs. Price Perspective 1. What Determines the Change in Commodity Prices? In past studies, we always believed that reduced supply leads to price increases, increased demand leads to price increases, and declining inventory leads to price increases, among others. 2. A Real Case of Aluminum However, from the operational mechanism of aluminum prices from 2012 to 2024, the above conclusions are not accurate. Only during certain periods in 2012-2013 and 2020-2021 did rising supply lead to falling aluminum prices. 3. Actual Patterns More often, rising supply is accompanied by rising prices, while declining supply is often accompanied by falling prices. Over the past decade, this has been a more probable event behind the operation of aluminum prices. 4. Why Is This the Case? Because high aluminum prices always stimulate producers to increase production, while low aluminum prices often force high-cost capacity to exit the market due to unprofitability. This indirectly proves the scientific logic behind price increases leading to production growth and price decreases leading to production cuts. The conclusion that increased supply will lead to price declines is at least not rigorous. Demand vs. Price Perspective 1. What Determines the Change in Commodity Prices? From the demand perspective, declining inventory indicates increased apparent demand, which should also be accompanied by rising prices. 2. A Real Case of Aluminum However, from the operational mechanism of aluminum prices from 2012 to 2024, the above conclusions are also not precise. From 2016 to 2024, there were multiple cases of rising inventory with rising prices and declining inventory with falling prices. 3. Actual Patterns This indicates that supply and demand fundamentals based on quantity (inventory) cannot precisely predict the operation of aluminum prices. Balance vs. Price Perspective 1. What Determines the Change in Commodity Prices? From the balance perspective, shortages of commodities mean rising prices, while surpluses mean falling prices. 2. A Real Case of Aluminum However, from cases since 2018, the green box areas reflect the above patterns, while the red circle areas show the opposite. 3. Actual Patterns More often, surpluses do not drive prices down but instead drive prices up or cause fluctuations. Similarly, shortages do not necessarily lead to price increases, and significant shortages are often accompanied by price declines or fluctuations. 4. Why Is This the Case? Therefore, the conclusion that shortages or surpluses based solely on quantity will lead to price increases or decreases is at least not rigorous. Supply and Demand Do Not Fully Determine Prices Historical data tells us that reduced supply does not necessarily mean price increases, and increased supply does not necessarily mean price increases. Historical data tells us that increased demand (declining inventory) does not necessarily mean price increases, and decreased demand (rising inventory) does not necessarily mean price increases. Historical data also tells us that shortages do not necessarily drive prices up, and surpluses do not necessarily drive prices down. What Determines Supply? The Development History of China's Aluminum Industry It elaborated on the development history of the aluminum industry based on aluminum production. Four Stages of China's Aluminum Development • 1980-1997: Initial Stage Domestic: External sanctions were lifted, and large-scale loans introduced advanced Western industries. Overseas: The Latin American economic crisis led to industrial outflows, which Asia, including China, benefited from. • 1997-2007: Development Stage Domestic: To address domestic economic bottlenecks and the Asian financial crisis, investments were driven by government bonds. Overseas: China's accession to the WTO attracted significant foreign investment. • 2007-2015: Takeoff Stage Domestic: The 4 trillion yuan government bond investment to address the subprime crisis led to excess funds flowing into real estate, boosting aluminum demand. Overseas: QE1, QE2, QE3 injected $4 trillion, with over 60% flowing into commodity markets. • 2016-2025: Restriction Stage Domestic: A ceiling was set to protect enterprises and prevent disorderly expansion. Overseas: The pandemic, $10 trillion from the US and India, and similar measures from the UK, EU, and Japan entered the commodity market, with aluminum prices peaking and profits nearing 7,000 yuan/mt. Summary of Development History Capital Circulation Drives Supply From the four cycles of aluminum development, none were without the driving force of capital circulation. Since 2015, China has effectively refused to use resources, the environment, and labor as costs to export deflation to currency-producing countries. However, US dollar hegemony remained unshakable at the time. The real game began with the 2015 exchange rate reform. The imported inflation in 2020 was already the swan song of US dollar hegemony. What Determines Demand? It elaborated on the decisive role of US dollar tides on commodity prices over the past 50 years, the events triggered by each wave of US dollar tides, and the commodity price fluctuations caused by these tides. Three Capital Flows Determine Commodity Prices Capital Flow Volume: The most critical factor determining prices is the total volume of circulating capital. Both Friedman and Keynes stated that inflation is a monetary phenomenon. Irving Fisher: MV=PQ Capital Flow Direction: The direction of capital flow between regions also has a decisive impact on prices. Large-scale inflows into the securities market drive stock prices up, while large-scale inflows into the commodity market drive commodity prices up. Capital Flow Speed: Flow speed refers to the interest rates of various currencies. Interest rates are the time cost of prices. When interest rates are low, the speed of currency circulation accelerates, leading to faster asset price increases. Future Projections for Aluminum Supply and Demand It analyzed monetary flow volume, monetary flow speed (US fiscal revenue and expenditure), China's monetary flow speed (RRR cuts and interest rate cuts indicate faster currency circulation in China), and EU and Japan's flow volume and speed (increased flow volume and faster speed in Europe; stable flow volume and slower speed in Europe). Analysis of Monetary Flow Direction Spatial Flow Direction: Monetary flow direction is divided into spatial flow and inter-product flow. Spatial flow refers to the flow within countries. For example, the recent sharp decline in the US dollar index indicates capital outflows from the US, leading to simultaneous declines in US exchange rates, stocks, bonds, and commodity markets. Inter-Regional Flow: The Secret of Capital Circulation It also summarized and analyzed the secrets of trade wars, the different spheres of influence between China and the US, whether currency depreciation equals increased exports, whether tariff wars equal decreased exports, and extreme measures focusing on Russia-Ukraine and the Middle East. Analysis Results • Additions: Mostly Concentrated in Indonesia In 2025, overseas aluminum production is expected to increase by 1.1 million mt, with 750,000 mt concentrated in Indonesia, accounting for 67%. In the long term, of the 8.2 million mt capacity, 4.5 million mt will be commissioned in Indonesia, accounting for 55%. • Limitations: Indonesia's Geopolitical Landscape and Culture Limit Aluminum Efficiency Indonesia, composed of over 17,000 islands, inherently faces challenges in industrial development due to transportation and other factors. Central Asia, the Middle East, and North Africa have excellent resource endowments, rapid logistics, and prime geographical locations. However, conflicts have hindered industrialization. Significant growth in global aluminum supply and scale will only be achieved when these regions meet the conditions of "harmony among people." It also analyzed the trends of M, V, and Q. Conclusion Price Forecast In the short term, market concerns persist. Whether demand will increase due to tariff reductions requires market validation. In the long term, based on analysis results, M and V increase while Q remains stable. P is bound to rise. There is strong confidence in the medium and long-term trends of aluminum prices. Click to view the AICE 2025 SMM (20th) Aluminum Industry Conference and Aluminum Industry Expo Special Report