The Middle East turmoil triggered by the US-Iran conflict has become the major geopolitical black swan for the global primary aluminum market, potentially causing millions of tonnes of supply disruptions and raising smelting costs. Coupled with risk aversion, aluminum price volatility may intensify.

The Middle East turmoil triggered by the US-Iran conflict became the largest geopolitical black swan for the global primary aluminum market, potentially causing supply disruptions at a scale of millions of mt, while also pushing up smelting costs. Coupled with market risk-averse sentiment, the volatility of aluminum prices may be amplified. Going forward, it is necessary to remain vigilant against risks such as escalation of conflicts, strait blockades, and raw material supply interruptions, as well as further impacts on aluminum prices from macroeconomic disturbances, and to prudently address the operational and investment risks brought about by fluctuations in the supply chain.

Before and after the Chinese New Year, the domestic spot aluminum market exhibited significant regional differentiation, with the spot price spread between South China (Foshan) and East China (Wuxi) drawing particular attention. Before the holiday, the Guangdong-Shanghai price spread reached a high of 150 yuan/mt on February 10, while by February 27 after the holiday, this spread had narrowed significantly to 10 yuan/mt.....

After the Chinese New Year holiday, the domestic aluminum market entered the traditional resumption cycle, but the problem of aluminum ingot inventory buildup became prominent. Warehouses in major consumption areas faced comprehensive capacity constraints, and congestion at railway stations was widespread. Overall inventory pressure is expected to persist until the end of March...

Overall, cost support remains, but has not yet formed strong upward momentum, combined with aluminum enterprises' strong push for lower prices, aluminum fluoride prices in March are expected to be mainly stable with a slight weakening trend.

SMM February 28 News: On February 28, the conflict between Iran and Israel escalated, with an attack on the Iranian capital, Tehran, drawing market attention. The following is an overview of the aluminum industry information in the Iran region: Bauxite & Alumina: There is only one alumina refinery in the Iran region, which also has associated bauxite mining operations. Annual alumina production and bauxite output are approximately 250,000 mt and 650,000 mt, respectively. Its alumina production cannot meet the domestic demand for electrolytic aluminum production, and it relies on alumina imports year-round. India is the main source, with Iran's alumina imports from India accounting for 40-80% of its total imports. Aluminum: Iran has four aluminum smelters, all currently in operation, with a national average operating rate above 90% and an annual output exceeding 600,000 mt. Its production exceeds domestic consumption, leading to some exports, mainly to Türkiye, China, and other countries. Net exports account for 30-50% of production. Overall, if the local aluminum industry production in Iran collapses due to the geopolitical conflict, overseas aluminum supply is expected to tighten, while the alumina surplus is expected to worsen further. However, there is a considerable spatial distance between Iran's aluminum industry plants and the attacked city of Tehran. The closest is the Arak aluminum plant, nearly 300 km away. Nevertheless, subsequent attention must be paid to whether the geopolitical conflict escalates, affecting other regions, such as near the Strait of Hormuz, or whether it will impact Iran's electricity supply or alumina import supply, consequently affecting electrolytic aluminum production.

According to SMM, as of February 27, 2026, the days of inventories for domestic aluminum rod plants were recorded at 12.7 days, an increase of 8.6 days from before the holiday.In the first week after the holiday, the weekly operating rate of the domestic aluminum wire and cable industry rebounded to 57%, up 4 percentage points MoM, significantly higher than the pre-holiday low of 53%.

SMM, February 28th， Driven by the global clean energy transition, the energy storage industry is achieving steady growth. Its core value lies in effectively mitigating the inherent intermittency and volatility of renewable energy sources like wind and solar power, providing critical assurance for stable clean electricity output. This development trend will sustainably drive demand for key metals across the energy storage supply chain. As one of the core materials, aluminum applications in energy storage systems primarily focus on aluminum sheets, strips, foils, and extrusions. I. Scale of Aluminum Consumption in ESS According to SMM calculations, each 1GWh energy storage system consumes approximately 1,780 tons of aluminum , of which aluminum extrusions account for about 44%, aluminum sheets and strips account for about 39%, and aluminum foil accounts for about 18%. From the perspective of industry growth drivers, global energy storage cell production is entering a period of rapid growth: According to SMM estimates, the global demand for energy storage cells will be approximately 559 GWh in 2025, and is expected to reach 779 GWh in 2026, with a year-on-year increase of 39%; even as the base expands, the annual demand from 2027 to 2030 will still maintain a growth rate of over 20%. In terms of aluminum demand, Chinese enterprises dominate the energy storage market, driving increased domestic aluminum consumption. SMM research indicates China's energy storage battery cabinet shipments will reach approximately 400GWh in 2025, accounting for over 80% of global share. Based on SMM's calculation of 1,780 tons of aluminum per GWh for energy storage systems and global battery cabinet shipments, the global aluminum demand for energy storage systems in 2025 will reach 850,000 tons, with China consuming approximately 710,000 tons. Domestic demand for aluminum in energy storage is projected to increase by 280,000 tons in 2026. However, it should be noted that with the continuous iteration of large-cell technology, the unit consumption of aluminum structural components in energy storage systems has room for reduction. In the long term, there is still potential for optimizing aluminum consumption per unit. II. Calculation of Aluminum Profile Materials per Unit of ESS Due to design variations across different energy storage products, this section separates aluminum consumption calculations for energy storage cells from other system components . 1.Core Application Scenarios of Aluminum Materials in EES Aluminum materials, with advantages such as lightweight, corrosion resistance, and excellent processing performance, have been deeply integrated into the core components of ESS, with their main applications concentrated in three major areas: Energy Storage Cell Component: Primarily used for cell aluminum foil, aluminum casings, and tabs. Pack Component : Primarily used for battery trays, liquid cooling plates, battery end plates, and battery enclosures, etc. Energy Storage System Component: Main applications include energy storage system enclosures, radiators, etc. 2.Aluminum Consumption in Energy Storage Cells Aluminum usage in energy storage cells primarily involves battery foil, aluminum casings, and tabs. Currently, the aluminum consumption per cell is approximately 615t/GWh, with aluminum foil accounting for 300-330 t/GWh. 3.Aluminum Consumption in ESS Due to variations in technical approaches and application scenarios, different manufacturers employ distinct design solutions for energy storage systems. When calculating aluminum consumption, we use industry average values: In industrial, commercial, and residential energy storage projects, each rack is on average configured with 4.5 battery packs. In grid-side energy storage projects, each rack averages 8 battery packs, with each system containing an average of 12 rack. The aluminum components of the battery pack include the tray, liquid cooling plate, box body, and end plate. The structure of the battery tray is similar to that of new energy vehicle battery trays, but the product specifications are smaller and the cross-sectional design is more simplified. SMM calculates the aluminum consumption of a single battery pack based on the average weight data of components provided by mainstream aluminum production enterprises. In addition, the core equipment of the energy storage system, the power conversion system (PCS), and its supporting radiator also need to consume aluminum materials.While aluminum enclosures exist for ESS, market research indicates steel enclosures currently dominate the market, with aluminum enclosures holding less than 20% market share. The weight range per unit is from several hundred kilograms to 2 tons. Based on the above parameter calculations: the comprehensive aluminum consumption of industrial, commercial, and residential energy storage systems is 2030 tons/GWh,while for grid-side energy storage systems it is 1,720 tons/GWh. Weighted by the shipment share of different energy storage system types, the final comprehensive aluminum consumption for energy storage systems is calculated as 1,780 t/GWh. 4.Consumption Structure of Aluminum Materials in Energy Storage Systems From a production process perspective, the manufacturing methods for core components such as aluminum casings and liquid cooling plates encompass multiple pathways including sheet metal stamping, profile processing, and casting. This section breaks down the consumption structure of aluminum material categories in energy storage systems based on the proportion of mainstream process applications: aluminum extrusions account for approximately 44%, aluminum sheets and strips account for approximately 39%, and aluminum foil accounts for approximately 18%.

SMM February 28 news: According to SMM data, the average tax-inclusive full cost of China's aluminum industry in February 2026 fell 0.9% MoM and dropped 5.7% YoY. During the period, alumina raw material costs and auxiliary material costs declined, and the total cost pulled back slightly. The average SMM A00 spot price (January 26–February 25) in February was largely stable, and aluminum profit margins expanded to 7,707 yuan/mt. If the industry calculates based on the monthly average price, 100% of domestic operating aluminum capacity was profitable in February. Cost breakdown: Alumina raw material side : SMM data showed the average SMM alumina index in February was 2,621 yuan/mt (January 26–February 25), down 1.7% MoM. Production cuts at alumina plants during the month shifted inventory to destocking, but after the holiday, some aluminum smelters proactively reduced inventory, resulting in actual demand being lower than theoretical demand. Prices saw only a slight rebound by month-end, and the monthly average price dropped MoM. Entering March, alumina prices face both bullish and bearish factors. On one hand, operating alumina capacity is expected to decline MoM; on the other hand, aluminum smelters’ proactive destocking is expected to reduce demand. Overall, alumina raw material prices are projected to change by a relatively small margin. Auxiliary material market side : Both prebaked anode and fluoride salt prices pulled back in February. In March, prebaked anode and aluminum fluoride prices are expected to maintain a slight downward trend, and auxiliary material costs are projected to decrease. Electricity price side : Electricity prices were generally stable in February, with slight declines in some regions, leading to a small drop in the national average aluminum power cost. Entering March, electricity prices are expected to remain largely stable, and aluminum power costs are projected to hold steady. Overall, SMM expects the weighted average tax-inclusive full cost of China's aluminum industry in March 2026 to be largely stable, averaging around 15,750–16,150 yuan/mt.

SMM February 28 News: According to SMM statistics, domestic aluminum production in February 2026 (28 days) increased 2.1% YoY but decreased 8.9% MoM. Affected by the Chinese New Year holiday, the overall operating rate of downstream industries was low during the month, and the proportion of liquid aluminum also saw a significant pullback, dropping 7.7 percentage points MoM to 64.4%, in line with expectations at the beginning of the month. The main reasons were that demand had not yet recovered amid the off-season, coupled with production halts for the holiday at some downstream enterprises. Based on SMM's proportion of liquid aluminum data, domestic aluminum casting ingot volume in February increased 25.8% YoY and 16.2% MoM. Capacity Changes: As of the end of February, SMM statistics show domestic existing aluminum capacity was approximately 46.209 million mt, and domestic operating aluminum capacity was approximately 45.109 million mt. Production Forecast: Entering March 2026, with the return of calendar days, aluminum production is expected to rebound MoM. Regarding the proportion of liquid aluminum, as downstream enterprises resume work after the holiday, raw material demand is gradually strengthening. The proportion of liquid aluminum is expected to rise significantly. Overall, the proportion of liquid aluminum is projected to increase 9.2 percentage points to 73.5%.