China's stainless steel futures gave back ground sharply in the first trading week after the May Day holiday, as a sudden easing of Middle East tensions deflated the risk premium that had carried prices to recent highs. With the cost-side narrative unwinding and physical demand showing little follow-through, the market is searching for a new floor

Risk appetite has improved notably in the market recently, and SHFE tin rode the momentum to rally sharply in succession. Futures prices have successfully breached the 400,000 mark, hitting a new high in over two months, with extremely strong performance. What factors are supporting the tin price rally that is in full swing? Can the bullish stance continue? Middle East Tensions Ease, Risk Appetite Recovers Since the sudden escalation of Middle East geopolitical tensions in late February, affected by changes in inflation expectations caused by wild swings in energy prices, global equities and most commodity prices have exhibited a seesaw effect with energy products. Recently, the Middle East situation has been rapidly evolving, market risk appetite has fluctuated accordingly, and SHFE tin futures—whose price movements have always been susceptible to sentiment—have seen significantly amplified fluctuations. During the holiday, the US pushed the so-called operation to clear stranded vessels in the Strait of Hormuz, US-Iran conflict escalated sharply, the ceasefire agreement was in jeopardy, and market risk appetite weakened at one point. However, after the holiday, positive news from US-Iran negotiations emerged repeatedly. US President Trump posted on social media on the evening of May 5 (Eastern Time), stating that the "Freedom Plan" to "clear" vessel passage through the Strait of Hormuz would be suspended in the short term. On May 6, Trump expressed optimism multiple times about reaching a deal with Iran, saying the US and Iran had "productive" dialogue over the past 24 hours and that a final agreement was "very likely." Additionally, according to multiple White House officials and informed sources, both sides are extremely close to reaching a one-page memorandum of understanding. Based on the current statements from both sides, hopes for ending the conflict are rising, energy prices have pulled back sharply, risk appetite has improved notably, providing fertile ground for tin price gains. Semiconductor Stocks Launch a Bull Feast, Optimism Spills Over It is currently earnings season for publicly listed firms. The latest quarterly results and outlooks from US chip giants have been quite impressive, with Intel, Micron, and others surging collectively, and the US Nasdaq index hitting new highs repeatedly. South Korea's two memory chip giants Samsung Electronics and SK Hynix have soared sharply, while A-share listed Cambricon touched a high of 1,966 yuan, reflecting the resonance between booming industry performance and macro tailwinds. Since tin is an indispensable material in chip manufacturing and packaging, against the backdrop of semiconductor stocks rallying collectively and the computing-power metal narrative continuing to unfold, demand expectations for the tin market are highly optimistic. Leading tin stocks surged sharply on the boost, and driven by futures-equity linkage sentiment, capital has flooded in. SHFE tin saw significant increases in open interest over two consecutive days while rising, and futures prices are now just one step away from the previous high. Demand Side Rich in Narratives, Social Inventory Running at Low Levels Returning to tin's own supply-demand fundamentals, structural tightness on the ore side continues to constrain tin ingot output, and policy uncertainties along with supply disruption news from major overseas producing regions frequently impact tin prices. Currently, Myanmar's production resumptions are progressing slower than expected, and with the rainy season approaching, production may remain constrained. Although Indonesia's export quotas have increased somewhat, policy remains unstable, and recently a phased supply gap has emerged due to export license renewal procedures. Customs data showed that tin ore imports exceeded 17,000 mt in each of the first three months of this year, all with significant YoY increases. China's refined tin output is in the ramp-up stage, and institutions will also successively release April production data soon, so supply recovery warrants continued attention. The tin market's demand side has relatively strong support, and under the computing-power metal concept, there are many tradeable themes that frequently provide upward momentum for tin prices. Since AI servers and other high-end chips require 3-5 times more tin solder than ordinary servers, the semiconductor industry's prosperity has become the main driver supporting tin price trends. Currently, the Philadelphia Semiconductor Index is at a high level of prosperity, having steadily broken through the 10,000-point mark, and global semiconductor sales also grew significantly in Q1, with tin solder demand expected to continue growing. NEV side, although growth has slowed down somewhat, NEV production and sales have rebounded quickly, and their tin consumption demand remains relatively stable. PV side, new PV installations are not expected to grow, but policy floor expectations exist. Meanwhile, traditional production and sales expectations for home appliances, consumer electronics, and other sectors are also relatively weak, and tin chemicals are unlikely to see much additional demand growth. During the traditional peak demand season of March-April, China's tin market performed moderately, with tin ingot social inventory declining to a nearly four-month low, reflecting seasonal destocking. However, with the recent sharp rally in tin prices, spot premiums for tin in China have narrowed significantly, and the sustainability of demand under high prices still warrants attention going forward. Overall, the recent tin price surge was truly a confluence of favorable timing, conditions, and sentiment—support from the macro front, sentiment, and supply-demand fundamentals were all indispensable. Currently, geopolitical tensions have eased, the constraint on risk assets has loosened, the prosperity of global semiconductor-related stocks continues, and optimistic sentiment still easily transmits to SHFE tin futures. The low open interest characteristic of SHFE tin also amplifies futures price fluctuations. However, it is worth noting that the Middle East situation is prone to reversals, and after the semiconductor sector has repeatedly hit new highs, one should also be wary of potential pullback risks—caution is advised before rushing to buy amid continuous price rises. (Webstock Inc.)

Vale reported first-quarter net revenue of $9.26 billion, up 14% year on year, though slightly below analysts’ forecast of $9.37 billion. The company said higher sales volumes across its key products, including iron ore, copper, and nickel, were among the main drivers of revenue growth. The figures suggest a clear recovery in Vale’s core business revenue as commodity prices improved.

The NBS Service Industry Survey Center and the China Federation of Logistics and Purchasing released China's PMI for April today. The manufacturing PMI continued to operate in expansion territory after rebounding into expansion territory in March, indicating that the manufacturing sector maintained a generally stable level of prosperity and continued its favorable operating trend. In April, China's manufacturing PMI was 50.3%, down 0.1 percentage points MoM, operating in expansion territory for the second consecutive month. China's PMI Performance in April 2026 I. China's Manufacturing PMI Performance In April, the manufacturing PMI stood at 50.3%, down 0.1 percentage points from the previous month, with the manufacturing prosperity level remaining generally stable. By enterprise size, the PMI for large enterprises was 50.2%, down 1.4 percentage points MoM but still above the threshold; the PMIs for medium and small enterprises were 50.5% and 50.1% respectively, up 1.5 and 0.8 percentage points MoM, both above the threshold. By sub-indices, among the five sub-indices constituting the manufacturing PMI, the production index and new orders index were both above the threshold, while the raw material inventory index, employment index, and supplier delivery time index were all below the threshold. The production index was 51.5%, up 0.1 percentage points MoM, indicating that manufacturing production activity accelerated somewhat. The new orders index was 50.6%, down 1 percentage points MoM but still above the threshold, indicating that manufacturing market demand maintained expansion. The raw material inventory index was 49.3%, up 1.6 percentage points MoM, indicating that the decline in major raw material inventory in manufacturing narrowed significantly. The employment index was 48.8%, up 0.2 percentage points MoM, indicating a rebound in the employment prosperity level of manufacturing enterprises. The supplier delivery time index was 49.5%, unchanged from the previous month and below the threshold, indicating that delivery times of raw material suppliers in manufacturing continued to lengthen MoM. II. China's Non-Manufacturing PMI Performance In April, the non-manufacturing business activity index was 49.4%, down 0.7 percentage points from the previous month, with the non-manufacturing prosperity level declining somewhat. By sector, the construction business activity index was 48.0%, down 1.3 percentage points MoM; the services business activity index was 49.6%, down 0.6 percentage points MoM. Within the services sector, industries such as railway transportation, postal services, and telecommunications, broadcasting, television, and satellite transmission services all had business activity indices above the relatively high prosperity zone of 55.0%; industries such as wholesale, retail, and resident services all had business activity indices below the threshold. The new orders index was 44.3%, down 0.7 percentage points MoM, indicating a decline in non-manufacturing market demand. By sector, the construction new orders index was 41.6%, down 1.9 percentage points MoM; the services new orders index was 44.8%, down 0.5 percentage points MoM. The input price index was 51.7%, down 0.6 percentage points MoM but still above the critical point, indicating that input prices for non-manufacturing business activities continued to rise overall. By sector, the construction input price index was 54.9%, up 2.2 percentage points MoM; the services input price index was 51.2%, down 1 percentage points MoM. The selling price index was 48.1%, down 1.8 percentage points MoM, indicating an overall decline in non-manufacturing enterprise selling prices. By sector, the construction selling price index was 49.0%, down 0.3 percentage points MoM; the services selling price index was 47.9%, down 2.1 percentage points MoM. The employment index was 45.5%, up 0.3 percentage points MoM, indicating improved employment conditions in non-manufacturing enterprises. By sector, the construction employment index was 39.6%, up 0.5 percentage points MoM; the services employment index was 46.5%, up 0.3 percentage points MoM. The business activity expectations index was 54.7%, up 0.5 percentage points MoM, indicating strengthened confidence among non-manufacturing enterprises in market development. By sector, the construction business activity expectations index was 50.5%, unchanged MoM; the services business activity expectations index was 55.4%, up 0.6 percentage points MoM. III. China Composite PMI Output Index In April, the composite PMI output index was 50.1%, down 0.4 percentage points MoM but above the critical point, indicating that China's enterprise production and business activities continued to expand overall. Manufacturing PMI Remained in Expansion Territory in April — Interpretation of China's April 2026 PMI by Huo Lihui, Chief Statistician of the NBS Service Industry Survey Center On April 30, 2026, the NBS Service Industry Survey Center and the China Federation of Logistics and Purchasing released China's PMI. Huo Lihui, Chief Statistician of the NBS Service Industry Survey Center, provided an interpretation. In April, the manufacturing PMI was 50.3%, slightly lower than the previous month by 0.1 percentage points, remaining in expansion territory; the non-manufacturing business activity index was 49.4%, down 0.7 percentage points MoM; the composite PMI output index was 50.1%, down 0.4 percentage points MoM but still above the critical point, with China's overall economic output maintaining expansion. I. Manufacturing PMI Remained above the Critical Point for Two Consecutive Months In April, the manufacturing PMI was 50.3%, with the overall prosperity level remaining stable and the manufacturing sector sustaining a sound operating trend. (I) Both production and demand continued to expand. The production index was 51.5% and the new orders index was 50.6%, both remaining above the critical point, indicating that manufacturing production and market demand stayed in expansion. By industry, the production and new orders indices for railway, shipbuilding, aerospace equipment, electrical machinery and equipment, and computer, communication and electronic equipment sectors were all at or above 53.0%, with production and demand in these industries being released at a faster pace; the two indices for petroleum, coal and other fuel processing, and chemical raw materials and chemical products sectors were both below the critical point, indicating relatively weak market activity. Driven by continued expansion in production and demand, enterprise purchase willingness further strengthened, with the purchasing volume index at 51.1%, up 0.2 percentage points from the previous month. (II) PMIs for large, medium and small enterprises all remained in expansion territory. The PMI for large enterprises was 50.2%, staying above the critical point for five consecutive months; PMIs for medium and small enterprises were 50.5% and 50.1% respectively, up 1.5 and 0.8 percentage points from the previous month, both rising into expansion territory with prosperity levels rebounding notably. (III) Three key industries sustained expansion. PMIs for high-tech manufacturing and equipment manufacturing were 52.2% and 51.8% respectively, up 0.1 and 0.3 percentage points from the previous month, with these industries maintaining a positive development trend; the PMI for consumer goods industries was 50.7%, remaining in expansion territory. The PMI for high energy-consuming industries was 47.9%, down 1 percentage point from the previous month, with the prosperity level pulling back. (IV) Price indices fluctuated at highs. Affected by recent high-level fluctuations in some bulk commodity prices, the raw material purchase price index and ex-factory price index were 63.7% and 55.1% respectively, remaining at highs in recent years, with the overall price level in the manufacturing market rising notably. By industry, both price indices for petroleum, coal and other fuel processing, and chemical raw materials and chemical products sectors remained above 70.0% for two consecutive months, with raw material procurement prices and product selling prices in these industries continuing to rise. (V) Market expectations continued to strengthen. The business activity expectations index was 54.5%, up 1.1 percentage points from the previous month, rebounding for three consecutive months, indicating that manufacturing enterprises' confidence in near-term market development continued to strengthen. By industry, the business activity expectations indices for food, beverages and refined tea, automobile, and railway, shipbuilding and aerospace equipment sectors were all in the relatively high prosperity zone above 58.0%, with enterprises in these industries being more optimistic about industry development. II. Non-Manufacturing Business Activity Index Pulled Back In April, the non-manufacturing business activity index was 49.4%, down 0.7 percentage points from the previous month, indicating a pullback in non-manufacturing prosperity. (1) Service sector prosperity pulled back. The service sector business activity index was 49.6%, down 0.6 percentage points from the previous month. By industry, the business activity indices for railway transportation, postal services, and telecommunications, radio, television and satellite transmission services were all in the relatively high prosperity range above 55.0%, with rapid growth in total business volume; the business activity indices for wholesale, retail, and resident services were all below the critical point, indicating weak market activity. In terms of market expectations, the service sector business activity expectations index was 55.4%, up 0.6 percentage points from the previous month, rising into the relatively high prosperity range above 55.0%, indicating that service sector enterprises had strengthened confidence in future market development. (2) Construction sector prosperity remained weak. The construction sector business activity index was 48.0%, down 1.3 percentage points from the previous month, with prosperity pulling back. In terms of market expectations, the construction sector business activity expectations index was 50.5%, unchanged from the previous month, indicating that construction enterprises maintained stable expectations for near-term industry development. III. Composite PMI Output Index Remained in Expansion In April, the composite PMI output index was 50.1%, down 0.4 percentage points from the previous month, indicating that overall production and business activities of China's enterprises continued to expand. The manufacturing production index and non-manufacturing business activity index, which constitute the composite PMI output index, were 51.5% and 49.4%, respectively.

In-depth Interpretation & Review of Indonesia’s Aluminum Industry Policies Centering on bauxite and extending to the entire aluminum industrial chain, the Indonesian government has rolled out a series of policies focusing on three core dimensions: volume control, pricing mechanisms, and tax rates. These measures aim to gradually improve the regulatory system, standardize industrial development, and accelerate the transformation from raw ore exports to integrated domestic downstream aluminum production. This article sorts out relevant policy details and their impacts in detail as follows: I. Volume Control: Strengthen Quota Management & Full-process Digital Supervision to Achieve Precise Supply Regulation ① Bauxite Quota: RKAB Approval Cycle Adjusted to Enhance Government Regulation Capacity Regulation Capacity Indonesia standardizes the full-process mining and sales of bauxite across all mines via the RKAB (Mining Work Plan and Budget) system. The core policy adjustment focuses on optimizing the approval cycle, mainly based on Permen ESDM No.17/2025 issued by the Ministry of Energy and Mineral Resources (ESDM) on October 3, 2025. New regulations shall be officially implemented starting from 2026: Approval Cycle Revision: The RKAB approval model for all mining enterprises is changed from once every three years to annual application and annual approval. Mines must submit RKAB applications for the next year between October 1 and November 15 each year, with all approvals completed by the end of the year to guarantee orderly production in the subsequent year. Transition & Application Timeline: In Q1 2026, if the new annual RKAB quota is still under review, the original 2026 quota can be adopted temporarily. Quota adjustment applications for the current year shall be submitted by the end of July annually, while the centralized submission window for the next year’s quota is set from October 1 to November 15, forming a dual management model of annual approval plus dynamic adjustment. Scenario Analysis & Policy Impacts Original Three-Year Approval Model: Unable to accurately forecast market demand for the next two years, this model easily triggers supply-demand mismatches and overall oversupply, putting downward pressure on bauxite prices. It also limits flexible government regulation, resulting in significant policy lag as quotas cannot be adjusted timely in response to market changes. New Annual Approval Model: The government gains stronger annual regulatory authority to dynamically adjust total annual quotas based on international bauxite prices, global supply-demand fundamentals and domestic smelting demand, improving price stability. Meanwhile, it strengthens fiscal revenue guarantees and regulatory efficiency through a more transparent and streamlined approval process, reduces rent-seeking behaviors, and advances compliant industrial development. ② SIMBARA System: Full-chain Digital Supervision to Curb Illegal Mineral Trading In accordance with Perpres 94/2025 (Presidential Regulation No.94/2025), the SIMBARA system (Inter-Ministerial Mineral and Coal Information System) officially incorporated bauxite into its regulatory scope in 2025, establishing a full-process digital supervision system covering operations from mines to end users. Through the SIMBARA official portal, the Indonesian government tracks real-time bauxite sales data and monitors the entire transportation chain from mining to downstream processing, including inter-island logistics, with precise linkage to mining quotas. It covers all key links: mining sites, processing, transportation and exports. The implementation of this system not only aligns Indonesian bauxite mining with global industry standards, but also effectively restrains irregular activities such as illegal mining, child labor and environmental damage, promoting green and compliant development of the sector. All bauxite mines are required to submit full-operation documents via the SIMBARA system, including production reports, inventory statements and raw material procurement records, for joint reviews by four core authorities: the Ministry of Energy and Mineral Resources, Ministry of Industry, Ministry of Trade, and Ministry of Transportation. The mechanism realizes data sharing, joint supervision and full traceability. II. Tax Rate: Standardize Billing Rules & Optimize Tax Burden Structure ① Indonesia’s Bauxite Tax Framework: Fixed Fee + Ad Valorem Royalty The country’s bauxite taxation policy adopts a dual structure of fixed administrative fees and floating royalties, clarifying differentiated charging rules for various mining rights. Combined with revisions to the HPM pricing mechanism, the overall tax burden structure has been optimized. Fixed Fee: Paid in a lump sum on an annual basis Core Formula: Fixed Fee = Mining Concession Area × Corresponding Unit Rate Floating Royalty: Charged per sales transaction and highly linked to commodity prices Core Formula: Royalty = Sales Volume × Transaction Price × Applicable Rate Transaction bonuses and premiums shall be included in invoice amounts for unified tax calculation; Pricing benchmark confirmation: If the premium is negative (actual transaction price benchmark price), tax calculation shall adopt HPM plus premium. Calculation Example Assume HPM = USD 44/ton, bauxite indicators: Al₂O₃=49%, Reactive Silica=2%. Actual transaction price: USD 35/ton (Premium = -9 USD/ton), Bonus = USD 1/ton, net transaction price = USD 36/ton. Given the negative premium, royalty is calculated based on HPM: Royalty = 44 USD/ton × 7% (standard bauxite royalty rate) = 3.08 USD/ton. ② Revised HPM Pricing Mechanism Effective April 15, 2026 (Kepmen ESDM No. 144/2026) Core Revisions: Pricing unit adjusted: Dry Metric Ton (DMT) → Wet Metric Ton (WMT) New deduction factor: Reactive Silica (R-SiO₂) New moisture adjustment clause added Regulators require bauxite enterprises to cooperate with inspection institutions and add key indicators including alumina content, reactive silica and moisture content to official Certificate of Analysis (COA). Data updates on the e-PNBP and MVP systems are also mandated to ensure accurate royalty calculation. The revised HPM mechanism lowers benchmark prices and overall royalty costs, reducing comprehensive bauxite mining costs and accelerating mine shipments as well as downstream industrial integration layouts. ③ Optimized HPM Pricing Cycle: Higher Flexibility to Align with Global Markets The pricing cycle has been shortened to reduce policy lag and better reflect LME aluminum price fluctuations. Old Rules (Before March 1, 2025): Monthly single HPM release. The pricing reference window covered the 20th of the month before last to the 19th of the previous month, with a pricing lag of around 45 days, failing to reflect timely international price changes. New Rules (Effective March 1, 2025): Semi-monthly HPM releases on the 1st and 15th of each month. 1st Issue (1st of each month): Calculated by average LME aluminum spot prices from the 5th to the 25th of the prior month (21-day cycle, 5-day lag); 2nd Issue (15th of each month): Calculated by average LME aluminum spot prices from the 26th of the prior month to the 4th of the current month (10-day cycle, 5-day lag). Core Benefits Improved market sensitivity: The shortened cycle enables HPM to reflect real-time LME movements, strengthens linkage with global pricing, and avoids price distortion caused by long-term average calculations; Optimized revenue management: The government can adjust domestic mineral benchmark prices more precisely in response to global aluminum volatility, balancing reasonable profit margins for mining enterprises and stable national tax revenue. III. Pricing Policy: Abolish HPM Floor Price to Boost Market Circulation & Downstream Development A landmark adjustment in Indonesia’s bauxite price regulation is the cancellation of the mandatory HPM minimum settlement price, implemented in phases to balance fiscal revenue and market vitality. Old Regulation (Kepmen ESDM No.72/2025): Bauxite transaction prices were strictly prohibited from falling below HPM. This rule triggered supply-demand imbalance, sluggish ore sales and suspended shipments by major miners, severely restricting normal market circulation. New Regulation (Kepmen ESDM No.268/2025): Signed on August 8, 2025, and officially implemented in late August 2025. The core revision abolishes the HPM floor price and allows transactions below benchmark prices. Nevertheless, taxes and royalties are still calculated based on standard HPM values to shield national fiscal revenue from price declines. Core Advantages of the Revised Policy Government Perspective: HPM-based tax collection guarantees stable fiscal revenue independent of market fluctuations. Loosened price controls revitalize trading activity, resolve the supply glut dilemma, support mine capacity expansion and local employment, and secure long-term industrial stability. Industrial Perspective: Discounted transactions ease inventory pressure for miners and accelerate capital turnover. Lower raw material procurement costs reduce production expenses for domestic smelters, incentivize downstream capacity commissioning, and help Indonesia achieve its 2040 strategic goal of full aluminum chain integration.

[SMM Tin Midday Review: The Most-Traded SHFE Tin Contract Broke Above the 390,000 Mark, High Prices Suppressed Spot Cargo Transactions]

This week, ferrous metals were in the doldrums. The main logic during the week was still the weakening of cost support. On Tuesday, Iran proposed to levy transit fees on the Strait of Hormuz, while Trump released conciliatory remarks that he was "willing to end military action against Iran even if the Strait of Hormuz remains largely closed." Market expectations for tightening crude oil supply weakened, the energy sector declined and dragged down the coal sector, and the cost logic weakened. During the week, inventory of the five major steel products continued to decline, but apparent demand remained at low levels compared to the same period in previous years, and fundamentals provided limited impetus for futures. Spot market side, market enthusiasm for purchasing was lukewarm, with restocking mainly at low prices. Spot prices remained relatively firm, and the spot-futures price spread widened...

Q1 SHFE Aluminum Price Review (By Stage) January: Market traded on Fed rate-cut expectations, decoupled from fundamentals Fundamentals: Spring Festival low season + demand vacuum + inventory accumulationAluminum prices rose continuously and hit a historical high for the period, squeezing downstream profit margins and weighing on primary aluminum demand.Environmental production restrictions in some regions constrained raw material consumption.Social inventories of primary aluminum kept accumulating. By the end of January, SMM social aluminum ingot inventory rose to 782,000 tonnes, the highest level for the same period in nearly three years. Macroeconomics: The Federal Reserve was in a rate-cut cycle in January. The U.S. dollar weakened notably, and large capital inflows into commodity futures boosted broad commodity prices.Coupled with positive domestic consumption-boosting policies, aluminum prices were well supported. February: Market traded on Fed rate-hold expectations, decoupled from fundamentals Fundamentals: Aluminum prices traded in a weak range.Domestic downstream fabricators sharply reduced purchases due to the Spring Festival holiday, while smelters raised ingot-casting activity, leading to continued accumulation in primary aluminum social inventories.After the holiday, SMM social aluminum ingot inventory climbed to 1.108 million tonnes. High inventory provided little upward support for aluminum prices. Macroeconomics: Diminished U.S. rate-cut expectations drove the DXY stronger. Profit-taking capital outflows triggered a pullback in aluminum prices, reinforcing the weak sideways pattern. March: Market swung between Middle East supply disruptions and demand headwinds Intensive long-short competition drove aluminum prices into a “rally – correction – rebound” volatile structure. Supply side: Frequent overseas production cuts continued to roil the market.Mozal entered maintenance. Qatar Aluminum announced it would halt further cuts and maintain 60% operating rate.Alba Bahrain shut down Lines 1, 2 and 3 under controlled and safe conditions, with market rumors later emerging that Line 4 may also face production cuts or shutdowns.EGA suffered severe facility damage, with the extent still under assessment; the market expects large-scale production cuts or shutdowns.Worsening concerns over global supply shortages became the key driver of periodic aluminum price gains. Escalating Middle East conflicts and safety concerns over shipping through the Strait of Hormuz heightened uncertainty over global primary aluminum supply, injecting sustained geopolitical risk premium and supporting high price levels. Demand side: Rising stagflation fears boosted risk aversion, pressuring aluminum prices to correct and limiting upside. Downside risks in overseas demand became prominent, as downstream fabricators faced multiple constraints:(1) High aluminum prices significantly suppressed purchasing willingness and restrained demand realization;(2) Shortages of natural gas, crude oil and other energy resources forced some fabricators to cut or halt production;(3) Sharply rising freight and smelting costs squeezed downstream margins, further dampening demand indirectly.

I. Review of SHFE Aluminum Price Trends in Q1 2026 (by Stage) January: The market’s core trading logic deviated from fundamentals and centered on macro expectations for US Fed interest rate cuts Fundamentals: Chinese New Year off-season + demand vacuum + inventory buildup Aluminum prices continued to climb and hit a record high for the period, while downstream profit margins came under pressure, leading to weaker demand for primary aluminum. Repeated environmental protection-driven production restrictions in some regions constrained demand for raw materials. Aluminum social inventory continued to accumulate. As of end-January, SMM aluminum ingot social inventory rose to 782,000 mt, a high for the same period in the past three years. Macro front: In January, the US Fed was in an interest rate cut cycle, and the US dollar weakened significantly. Large amounts of capital flowed into the commodities futures market, driving broad commodity prices higher; together with favorable support from China’s consumption stimulus policies, this jointly supported aluminum prices. February: The market’s core trading logic deviated from fundamentals and centered on macro expectations for the US Fed to keep interest rates unchanged Fundamentals: Aluminum prices were generally in the doldrums. Affected by the Chinese New Year holiday, procurement demand from China’s downstream processing enterprises dropped sharply, aluminum plants showed stronger willingness to cast ingots, and aluminum social inventory continued to accumulate. After the Chinese New Year holiday, SMM aluminum ingot social inventory rose to 1.108 million mt. Elevated inventory levels struggled to provide effective upward support for aluminum prices. Macro front: Cooling expectations for US Fed interest rate cuts pushed the US dollar index higher, and profit-taking outflows triggered a pullback in aluminum prices, further reinforcing their weak and rangebound trend. March: The market’s core trading logic repeatedly switched between supply-side disruptions in the Middle East and demand-side suppression. The tug-of-war between longs and shorts intensified, dominating aluminum prices in a volatile pattern of “surge - correction - rebound.” Supply side: I. Production cut events occurred frequently on the overseas supply side, and disruptions continued to intensify. Mozal entered maintenance status. Qatar Aluminium Smelter announced its decision to stop further production cuts and maintain a 60% operating rate. Aluminium Bahrain initiated shutdowns of Production Lines 1, 2, and 3 under controlled and safe conditions, and the market later heard that Line 4 might also face production cuts or suspension. EGA’s aluminum plant facilities suffered severe damage, and the extent of the damage was still under assessment. The market expected it to undergo large-scale production cuts or suspensions. Ongoing concerns over continued tightening on the overseas supply side became the core driver pushing aluminum prices higher in stages. II. As the Middle East conflict continued to escalate, shipping security in the Strait of Hormuz drew widespread market attention, further increasing uncertainty over global aluminum supply and continuously injecting a geopolitical risk premium into aluminum prices, supporting prices fluctuating at highs. Demand Side: 1. From a macro perspective, concerns over stagflation continued to intensify, risk-off market sentiment picked up, dragging aluminum prices into a pullback and limiting upside room. 2. Hidden concerns on the demand side outside China became more prominent. Some downstream processing enterprises were constrained by multiple factors, triggering market concerns over weak demand: 1) high aluminum prices significantly suppressed downstream purchase willingness, hindering demand release; 2) shortages of energy resources such as natural gas and oil put some processing enterprises under pressure to reduce or suspend production; 3) costs such as freight rates rose sharply, and together with higher smelting costs, further squeezed the profit margins of downstream enterprises, indirectly suppressing demand release. Source: SMM

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.