[Geopolitical and Supply-Demand Factors Intertwined, SHFE and LME Aluminum Maintain a Range-Bound Weak Pattern in the Short Term] With the macro situation fluctuating, domestic aluminum prices underperformed LME aluminum under high inventory pressure. Attention should still be paid to whether the turning point in China's inventory can arrive smoothly.

[Geopolitical Disruptions Combined with Elevated Inventory Highlight LME Outperforming SHFE in Aluminum Market] Overall, the core pattern of LME outperforming SHFE in the aluminum market is difficult to reverse in the short term. LME strength will support room for SHFE aluminum to catch up after the holiday, but high domestic inventory and weak demand will cap overall gains. Going forward, the focus will be on the pace of aluminum ingot destocking in China and the strength of rigid demand release from downstream resumption of work and production resumptions.

[Geopolitical Tensions Boost LME, China Inventory Buildup and Weakening Demand Under Pressure] In the short term, the core pattern of LME outperforming SHFE in the aluminum market is difficult to reverse. The strength in LME will support room for SHFE aluminum to catch up after the holiday, but high inventory and weak demand in China will suppress overall gains. Going forward, the focus should be on the pace of aluminum ingot destocking in China and the strength of rigid demand release from downstream resumption of work and production resumptions.

In the short term, the core pattern of LME outperforms SHFE is unlikely to reverse. Strength in the overseas market will support SHFE aluminum's post-holiday catch-up potential, but high domestic inventory and weak demand will cap overall gains. Going forward, key focus will be on the pace of China aluminum ingot destocking and the strength of rigid demand release from downstream production resumptions.

Global Aluminum Market Review – April: Divergent Domestic & Overseas Trends and Marked Spot Structure Disparities The global aluminum market in April featured a core pattern of strength overseas and weakness domestically with diverging trends. The main Shanghai aluminum contract retreated from highs amid fluctuations, while LME aluminum maintained firm momentum supported by low inventories and geopolitical factors, with both markets seeing mild corrections toward month-end. Market drivers this month centered on macro policies, geopolitical conflicts, supply-demand fundamentals and inventory structures, with movements of key indicators further highlighting supply-demand imbalances between domestic and overseas aluminum markets. I. April Aluminum Price Review: Linked Movements with Distinct Strength Differentials Shanghai aluminum and LME aluminum shared similar price rhythms in April, both fluctuating higher initially before retreating. However, notable gaps emerged in upward momentum and correction ranges, with overseas aluminum prices significantly outperforming domestic counterparts. The average Shanghai-LME aluminum ratio dropped from 7.36 in March to 7.03 in April, reflecting stronger overseas aluminum pricing relative to Shanghai aluminum. The main Shanghai aluminum contract trended upward early in the month before softening overall, declining from elevated levels through range-bound trading. It opened lower at RMB 24,715 per ton at the start of the month and consolidated. Driven by escalating Middle East geopolitical tensions and rising LME aluminum prices, it surged to a monthly peak of RMB 25,675 per ton in mid-April. In late April, amid continuous domestic inventory accumulation, weaker-than-expected downstream demand, and risk-averse capital outflows ahead of the May Day holiday, prices corrected steadily. Closing at RMB 24,430 per ton on April 30, the contract recorded a monthly trading range of nearly RMB 1,360 per ton. LME March aluminum traded firmly with mild late-month declines. Opening at USD 3,459 per ton, it climbed to a monthly high of USD 3,672 per ton in mid-April, underpinned by overseas supply disruptions from geopolitical frictions and sustained inventory destocking. Prices edged down later due to fluctuating US-Iran negotiations, hawkish macro sentiment and profit-taking at high levels, settling at USD 3,476 per ton at month-end with a slight monthly loss. Overall, LME aluminum vastly outperformed domestic Shanghai aluminum. In terms of price drivers, geopolitics served as a shared upward catalyst for global aluminum prices, with production cuts and supply disruptions in the Middle East continuously boosting market risk aversion. Price divergence stemmed from dual disparities in macro policies and fundamentals: elevated domestic inventories and sluggish demand consistently capped aluminum price rebounds, while tight overseas inventories and strained spot supplies provided robust support for LME aluminum. II. Key Inventory Indicators: Divergent Inventory Movements and Contrasting Supply-Demand Landscapes As a core gauge of aluminum market supply and demand, domestic and overseas inventory trends diverged sharply in April, directly shaping the relative strength of regional aluminum prices. Domestic aluminum inventories kept rising and stood at a multi-year seasonal high. Social inventories maintained an upward trend throughout April, hitting 1.465 million tons in mid-month, the highest seasonal level in five years. A clear imbalance emerged between rigid supply release and lackluster downstream demand during the traditional peak "Silver April" period, leading to persistent spot market loosening. SHFE warehouse stocks expanded from 420,000 tons at the start of the month to 450,000 tons at month-end. Elevated warehouse stock levels further confirmed ample domestic spot supply, weighing continuously on aluminum prices. Overseas LME aluminum inventories declined steadily to a 20-year low. Total LME aluminum inventories fell from 410,000 tons to 370,000 tons in April, extending months of destocking to historic lows. Noticeable structural divergence persisted in inventory composition: Russian aluminum accounted for approximately 92% of total LME stocks in March, resulting in low market-circulating inventories and increasingly tight physical spot supply, which acted as the fundamental pillar for strong LME aluminum prices. In summary, April’s global aluminum market was governed by contrasting core dynamics: low overseas inventories, geopolitical disruptions and hawkish Federal Reserve policies on the overseas front, versus high domestic inventories, weak real demand and stable growth expectations domestically. This drove pronounced market divergence. Affected by intertwined internal and external factors, the main Shanghai aluminum contract corrected downwards from highs, while LME aluminum remained in a firm trading range, backed by historically low inventories, a tight spot balance and geopolitical risk premiums.

[Conflict Impact] The outbreak of the Middle East conflict on February 28, 2026, significantly disrupted global aluminum market dynamics, driving increased volatility in aluminum prices. Aluminum prices on the London Metal Exchange (LME) surged alongside escalating tensions, rising from an Official Price of $3,156.5/mt on February 27 to a peak of $3,519.5/mt in early March. Prices later retreated to the $3,200–3,300/mt range in late March, as market sentiment gradually stabilized. On March 28, in response to attacks on Iranian industrial zones, Iran reportedly targeted major regional aluminum producers including Aluminum Bahrain and Emirates Global Aluminum, while Qatar Aluminum declared force majeure. These developments constrained primary aluminum output in the Middle East, tightening market liquidity and increasing supply uncertainty. As a result of supply disruptions, global aluminum availability declined, particularly impacting regions outside China in Asia. Entering April, LME aluminum prices rebounded to $3,400–3,500/mt, breaking above $3,600/mt in mid-April and fluctuating within the $3,500–3,600/mt range. [Shipping Disruptions] The conflict initially disrupted transportation systems across the Middle East, with the Strait of Hormuz being most severely affected. Key aluminum exporters—including the UAE, Saudi Arabia, Qatar, Iran, and Kuwait—faced significant logistical constraints. Exports that traditionally passed through the Strait were heavily restricted, forcing market participants to adopt alternative logistics routes, including land transport to Red Sea ports. These adjustments significantly increased freight costs and extended delivery lead times. In April, the escalation of conflict into the Red Sea region further limited alternative shipping routes. Most Europe–Asia vessels opted to reroute via the Cape of Good Hope, driving both freight costs and transit times higher. According to SMM market research, cargo delivery delays reached 3–5 weeks, while container freight costs surged by as much as 60–70%. [Primary Aluminum and Processing] Reduced Middle Eastern exports tightened primary aluminum supply across major Asian consuming countries, particularly Japan, Thailand, India, and South Korea. In 2024, the Middle East exported 6.408 million mt of primary aluminum and key aluminum products, with these four countries accounting for approximately 20.8% (1.331 million mt). In 2025, exports declined to 6.071 million mt, with imports from these countries totaling approximately 1.215 million mt (~20%). Demand for primary aluminum alloys and billets (notably 6xxx series) remained strong. SMM data shows that following the outbreak of conflict, processing fees for 6063 billets in Southeast Asia rose from $200–250/mt to $250–300/mt, peaking at $300–310/mt. Market feedback indicates a recovery in demand for 6xxx billets, with both domestic and export transactions in Malaysia and Thailand increasing significantly in April. Downstream purchasing sentiment improved, offsetting weaker market conditions observed in January–February. Demand for primary foundry alloys also strengthened. Elevated aluminum prices, reduced Middle Eastern supply, and growth in downstream sectors such as automotive (particularly in Thailand) drove increased enquiries for alloys including A356, AlSi10MnMg, and AlSi10FeMg. Notably, interest in low-carbon aluminum has also increased, reflecting rising alignment with international decarbonization policies such as the EU’s Carbon Border Adjustment Mechanism (CBAM). Against a backdrop of tightening primary supply, importing semi-finished aluminum products from alternative regions may become an increasingly viable option. [Secondary Aluminum] Beyond primary production, the Middle East has also been a significant supplier of aluminum scrap and secondary alloys, serving as an emerging recycling and processing hub prior to the conflict. India and South Korea are key importers of Middle Eastern scrap. In 2024, the region exported 628,000 mt of aluminum scrap, with India and South Korea accounting for 62.6% and 13.5%, respectively. In 2025, total exports rose to 766,000 mt, with imports reaching 489,000 mt (India) and 101,000 mt (South Korea). Amid the conflict, buyers from Japan and South Korea diversified sourcing toward Southeast Asia, particularly Malaysia and Thailand, boosting demand for ADC12 secondary aluminum alloy. This shift supported both Southeast Asian FOB prices and Japan CIF prices. In April, continued conflict escalation drove additional demand from India, with SMM data indicating several thousand tonnes of incremental enquiries and transactions in Southeast Asia. SMM began tracking ADC12 FOB prices in Thailand and Malaysia in March 2026. Prices rose from $3,000/mt on March 2 to $3,365/mt by April 27, marking an increase of $365/mt. Market activity remained robust, with strong exports to Japan, South Korea, and India, alongside steady shipments to China, Singapore, and other regions. Some producers have reportedly secured orders through late June to July. On the raw materials side, rising LME aluminum prices pushed both imported and domestic scrap prices higher. In Thailand, aluminum cable scrap reached THB 115,000–120,000/mt ($3,560–3,710/mt) in April, significantly increasing blending costs for billet producers. As scrap prices climbed, some billet producers reduced scrap usage and increased reliance on primary aluminum. Meanwhile, higher prices for Tense scrap led to reduced trading volumes, prompting ADC12 producers to substitute alternative scrap types, including higher-copper materials, to optimize cost structures. Reduced scrap supply from the Middle East also intensified competition, particularly as India increased procurement from alternative markets, tightening supply and driving prices higher in Southeast Asia. [Outlook] The Middle East conflict has fundamentally reshaped aluminum trade flows across Asia and globally, increasing pressure on Southeast Asia’s aluminum processing sector. If the conflict persists, global aluminum trade is likely to become more regionalized, with tighter raw material availability in Asia and stronger internal circulation in Western markets. China may emerge as a key balancing supplier, as widening domestic-international price spreads could open export arbitrage opportunities for semi-finished aluminum products and secondary alloys. However, Southeast Asia may face mounting pressure from raw material shortages and intensified competition, particularly from India. At the same time, tightening low-carbon policies and Western supply chain reshoring may further challenge regional competitiveness. Conversely, a de-escalation of the conflict and normalization of logistics routes could ease supply constraints, potentially placing downward pressure on aluminum product and secondary alloy prices, gradually returning the market toward pre-conflict conditions. [Notes] The “18 Middle Eastern countries” referenced in this report include: Gulf Cooperation Council (GCC): Saudi Arabia, United Arab Emirates, Qatar, Kuwait, Oman, Bahrain Levant region: Israel, Jordan, Lebanon, Syria, Palestine Other key regional countries: Iran, Iraq, Turkey, Egypt, Cyprus, Libya, Yemen Primary aluminium and related key aluminium products include the following HS codes: 7601 – Unwrought aluminium 7604 – Aluminium bars, rods and profiles 7605 – Aluminium wire 7606 – Aluminium plates, sheets and strip, thickness > 0.2 mm 7607 – Aluminium foil 7608 – Aluminium tubes and pipes

The overseas secondary aluminum market continues to exhibit structural divergence. Elevated scrap prices provide strong cost support, but cautious downstream procurement and weak transaction follow-through are dampening demand-side momentum. As a result, prices remain firm while trading activity stays subdued.【SMM Analysis】

[Stagflation Expectations Heat Up Combined with China Inventory Buildup, Divergence Between SHFE and LME Aluminum Continues] Overall, geopolitical risks outside China persisted and supply tightened, keeping LME aluminum prices on a relatively strong footing; high inventory levels in China combined with weak demand limited SHFE upside room, with a clear divergence between SHFE and LME price trends.

As of April 24, the mainstream price in the south China market — SMM A00 aluminum (Foshan) was at a discount of 345 yuan/mt against the 2605 contract, while the mainstream price in the east China market — SMM A00 aluminum was at a discount of 130 yuan/mt against the 2605 contract. The price spread between the two regions had exceeded 200 yuan/mt, covering sea freight, short-haul transfer, and logistics costs, officially opening up the transshipment window between Guangdong and Shanghai...

According to SMM data, as of April 24, social inventory of aluminum ingots in China's major consumption regions stood at 1.465 million mt, up 42,000 mt WoW, maintaining an inventory buildup trend for multiple consecutive weeks, with the pace of buildup widening again WoW. Weekly warehouse withdrawals rebounded slightly by 14,200 mt WoW to 115,200 mt, but the improvement in withdrawals fell short of the recent increase in arrivals, indicating clearly insufficient momentum for inventory drawdown..