[Macro Pressures Combined With High Inventory, SHFE Aluminum Remained Under Pressure at Elevated Levels in the Short Term] Continued destocking in LME inventory provided bottom support for LME aluminum, but amid tightening fund liquidity and profit-taking by bulls, upward momentum was insufficient, and the backwardation structure weakened somewhat. In China, social inventory rose to a high for the same period in nearly five years, and the inventory buildup cycle had not ended. High inventory and weak spot fundamentals jointly weighed on upward momentum. The divergence between domestic and overseas drivers continued, the SHFE/LME price ratio kept weakening, and SHFE aluminum fell below the key threshold of 25,000 yuan/mt, remaining mainly under pressure at elevated levels in the short term.

[Geopolitical Tensions Combined With Deferred Interest Rate Cut Expectations Leave SHFE Aluminum Under Short-Term Pressure but Fluctuating at Highs] Against the backdrop of continued tightening LME liquidity, LME aluminum still has upward momentum, with strong support from prices outside China, and is expected to maintain a backwardation structure in the short term. China remains in a phase of high inventory coupled with weak fundamentals, and its upward momentum is significantly weaker than that outside China. Amid divergent domestic and external drivers, the SHFE/LME price ratio is expected to continue weakening, and aluminum prices are still expected to fluctuate at highs in the short term.

Structurally, by end-February, Russian aluminum's share in LME available inventory rose to 60% from 58% in January, while circulation of non-Russian aluminum remained persistently scarce. Spot buying from Europe and Asia flooded into LME warehouses in a concentrated manner, further accelerating inventory depletion. Against the backdrop of continued tightening LME liquidity, LME aluminum still had upward momentum, with strong support from prices outside China, and the Back structure is expected to persist in the short term. In China, however, the market remained in a phase of high inventory plus weak spot fundamentals, and upward momentum was clearly weaker than outside China. Amid diverging domestic and overseas drivers, the SHFE/LME price ratio is expected to continue weakening.

Following the Chinese New Year holiday, the electrolytic copper market has entered its traditional post-holiday resumption validation period. The Yangtze River Delta region, as the national core for copper processing and consumption, serves as a bellwether for assessing supply-demand dynamics through the operating rates and raw material procurement pace of its leading enterprises. Our survey indicates that the region is currently characterized by "excessively high inventory accumulation, a divergence in resumption rates, and cautiously recovering procurement sentiment," leading to a downward revision of market expectations for the start of the peak season in March. According to SMM research, as of February 26, 2026, social inventories of electrolytic copper stood at 531,700 metric tons, an increase of 178,100 metric tons from February 12. This pace of inventory buildup significantly exceeds levels seen in previous years. The Yangtze River Delta region contributed the bulk of this increase: inventories in Shanghai rose to 305,800 metric tons, while Jiangsu Province reached 93,100 metric tons, up by 97,500 metric tons and 45,200 metric tons respectively from February 12. This round of inventory accumulation is characterized as "passive delivery into warehouses." As the first trading day after the holiday (February 25) coincided with the last trading day for the SHFE 2602 contract, smelters concentrated their deliverable cargoes into exchange-designated warehouses just before the holiday. This led to an increase of 80,400 metric tons in SHFE copper warrants, bringing the total to 277,100 metric tons, a portion temporarily locked in the form of warrants. Concurrently, with the narrowing of import losses and the emergence of a profit window before the holiday, arrivals of imported copper in March are expected to increase, putting dual pressure on domestic social inventories from both domestic production and imported supply. Based on operational feedback from enterprises, downstream processing sectors in the Yangtze River Delta exhibit significant contrasting dynamics: The battery materials sector maintains robust performance. Copper foil producers either had short production stoppages or operated continuously during the holiday. Downstream battery manufacturers are running at high utilization rates, with some reporting that their March production schedules already display peak-season characteristics. This sustains rigid demand for purchasing electrolytic copper. In contrast, the resumption of operations in the traditional cable and copper processing sectors is sluggish. Performance in traditional copper-consuming segments like wire and cable, copper rod, and copper tube is relatively weak. In the first week after the holiday, leading cable companies saw a decline in new orders. Apart from high copper prices dampening downstream acceptance, the fact that end-user projects have not yet fully commenced is a major constraint. According to enterprise feedback, construction and infrastructure projects typically resume gradually after the Lantern Festival (which falls after the standard holiday), and the market is currently in a lull for new orders. Copper rod processors generally have high finished goods inventory, and some orders from before the holiday are still pending delivery. Consequently, their procurement of electrolytic copper primarily focuses on consuming existing inventory and making ad-hoc spot purchases based on immediate needs, showing a weak willingness to stock up on raw materials. Overall, downstream consumption in the region currently presents a pattern of rigid demand from the battery sector versus pending demand from the cable sector. The transmission of genuine end-user consumption to the electrolytic copper procurement stage will still require time. According to information obtained by SMM through communication with enterprises: Enterprise 1: Normal operations resumed on the 6th day of the first lunar month. The downstream battery industry is operating at a high utilization rate; current copper foil production has increased from 20% to approximately 50% compared to previous levels. However, the wire and cable sector has seen relatively few new orders recently. The main reasons are persistently high copper prices, and, consistent with previous years, end-user projects typically do not fully commence until after the Lantern Festival, leading to a temporary lag in demand transmission. Enterprise 2: The company reached full production capacity immediately after resuming work on the 6th day of the first lunar month, requiring approximately 1,000 tons of electrolytic copper daily. Raw material inventory is maintained at a reasonable level, adopting a cautious procurement strategy of daily spot purchases. However, finished goods inventory is higher than before the holiday, with some pre-holiday orders still pending delivery. Regarding downstream orders, pre-holiday withdrawals were relatively concentrated, while the performance of new orders after the holiday is weak, as some downstream customers have yet to restart operations. Enterprise 3: Production workshops ran continuously during the Chinese New Year. Recently, production has remained stable, with orders from key clients holding steady. Raw material inventory is kept at a low level, and electrolytic copper purchases are made based on order volume. However, the volume of recent spot purchases has decreased compared to the previous period. Enterprise 4: Recently, there has been a decrease in new downstream orders, resulting in sluggish market transactions. Pressure from finished goods inventory is not significant, but some pre-holiday orders are still awaiting delivery. Raw material inventory is maintained within a normal and manageable range. On February 24, the Purchasing Sentiment Index recorded 2.08, remaining in a weak range, indicating low enthusiasm among downstream companies for market inquiries in the first week after the holiday. Subsequently, it recovered day by day to 2.58 on February 26. Over the same period, the Shipment Sentiment Index rose from 2.09 on February 24 to 2.80 on February 26, showing a continuous upward trend and consistently remaining higher than the Purchasing Sentiment Index. H istorical data can be queried in the database. This reflects that, as the resumption of work progresses, some rigid demand has begun to emerge, with certain downstream companies entering the market for inquiries. However, the absolute levels remain low, indicating limited acceptance of current copper prices among downstream users. Their stocking strategy remains predominantly "hand-to-mouth procurement." Holders, under pressure from high inventories, exhibit a strong willingness to liquidate, while market transactions are primarily circulating within the trading sphere, with genuine downstream offtake yet to pick up significantly. Looking ahead, the unexpected inventory accumulation has already triggered a market correction to previous supply-demand expectations. In the short term, social inventories in the Yangtze River Delta region still face pressures from two fronts: first, the arrival of imported copper resources, and second, the need for time to digest high downstream finished goods inventories. Channels for inventory outflow are also obstructed, with LME inventories continuing to climb and maintaining a Contango structure, making it difficult to absorb the domestic surplus. A positive factor on the supply side lies in the concentrated maintenance window for domestic smelters during March-May in the first half of the year, with substantial impacts expected to emerge starting in April. If demand-side support materializes by then, an inventory drawdown cycle could potentially commence between late March and April. However, due to the exceptionally high post-holiday inventory starting point, even entering a destocking phase is unlikely to replicate the high BACK structure and high premiums seen during the same periods in previous years. Overall, the post-holiday resumption in the Yangtze River Delta region is characterized by high inventory levels, cautious procurement, and pending orders. The market is now awaiting the substantive return of end-user orders after the Lantern Festival. The short-term price-driving logic may shift from validation of "expected destocking" to "actual destocking."

[SMM Analysis] Having just experienced the contract rollover and delivery of the SHFE copper 2506 contract, aside from warrants matched for delivery, there are still tens of thousands of warrants that will be released in advance. Additionally, there have been concentrated arrivals of Russian copper supplies recently, so the overall market supply is not tight. After entering the SHFE copper 2507 contract, spot suppliers will start quoting prices at premiums of 200-300 yuan/mt. However, the continuous impact of imports makes it difficult for suppliers to achieve high premiums for their shipments. It is expected that spot premiums will be quoted high but will decline in the future market.

[SMM Spot Copper] Looking ahead to tomorrow, copper prices are expected to decline, and downstream purchasing sentiment is improving. However, downstream players currently prefer to purchase after contract rollover under the backwardation structure. For suppliers, there is currently almost no willingness to sell at a discount, and it is expected that the market will continue to see small contango transactions tomorrow.

[Premiums Continue to Decline Amid Weak Downstream Consumption]: This week, spot premiums in Tianjin declined slightly, falling by approximately 40 yuan/mt WoW. As of Friday this week, domestic common brands were quoted at premiums of 240-310 yuan/mt against the 2507 contract, while high-end brands were quoted at premiums of 340-400 yuan/mt against the 2507 contract. Tianjin was quoted at a discount of approximately 80 yuan/mt against Shanghai, with contract rollover quotes offered during the week.

In March 2024, the 2024 SMM Zero Carbon Pathway - PV & ESS Summit , hosted by SMM, successfully concluded in Dubai! The summit brought together over 100 speakers from more than 60 countries, who delivered groundbreaking keynote speeches and participated in panel discussions. The event facilitated high-level dialogues with policymakers to discuss solar energy development strategies and gathered industry leaders to explore cutting-edge PV technologies and future trends. In 2025, SMM will continue its efforts by hosting the 2025 SMM Zero Carbon Pathway - European PV & ESS Summit at the Hilton Barcelona in Spain from November 3 to November 4. The summit aims to showcase the latest PV and ESS technologies, bringing together over 1,000 industry leaders, policymakers, and innovators, attracting more than 500 companies to participate. Together, they will explore industry trends and market opportunities, contributing to the achievement of Europe's green development goals. At this summit, Cenew Technology will attend as a sponsor, joining forces with peers in the PV industry to analyze pain points and challenges in the industry's development and promote high-quality growth. Company Profile Hangzhou Cenew Technology Co., Ltd. Founded in 2012, the company focuses on new energy battery management technologies and products, building an energy digital brain. It holds over 100 international and domestic patents and intellectual property rights, employs over 600 staff members, including over 350 R&D personnel and more than 80 after-sales service personnel. The company has repeatedly led the evolution and development of third-party BMS industry technologies and has been honored as the top third-party ESS BMS producer in both domestic and global markets for several consecutive years. According to SMM, in 2024, the global ESS market continued to maintain rapid growth, driven by both policy support and market demand. Based on SMM's statistics, global ESS battery cell shipments increased significantly YoY in 2024, reaching 334 GWh, with LFP ESS battery cell shipments as high as 317 GWh. For battery management systems (BMS), an indispensable component of ESS, the global ESS BMS market exhibited significant differentiation in 2024. For most second- and third-tier ESS integrators and battery producers, collaborating with third-party suppliers that have long-term expertise in BMS products remains the optimal choice in the short term. Professional third-party BMS providers are irreplaceable. Despite the increasing concentration in the system integration sector, the vast majority of small and medium-sized integrators still prefer to procure third-party BMS. Even some leading integrators have begun to adopt a dual-track approach of "in-house R&D + third-party procurement." Against this backdrop, in 2024, Synergy Technology once again secured the top position in global third-party BESS BMS shipments. Moreover, Synergy Technology proposed the concept of "full life cycle management of energy storage systems." This management approach encompasses all stages from planning and operation to decommissioning, covering the entire process of scrap recycling or reuse. Its goal is to maximize the operational lifespan and efficiency of the system, enhance its value, while ensuring the system is impeccable in terms of safety, compliance, and environmental responsibility. The core content is based on a new-generation battery management system (BMS) platform solution that integrates "active balancing + cloud-edge collaboration + multi-algorithm fusion." This solution not only manages operations at the battery cell level but also covers system-level safety, comprehensively demonstrating Synergy Technology's breakthroughs and practices at the technological forefront, from predictive maintenance of faults to closed-loop tracking of full life cycle data. Against the backdrop of the continuous advancement of the "dual carbon" goals, Synergy Technology, with technological innovation as its core driving force, has deepened its layout around full life cycle battery management, developing a new generation of active balancing BMS products, achieving three major technological breakthroughs, and addressing the core pain points of BESS BMS. Breakthrough 1: Full-time dynamic active balancing, significantly improving capacity efficiency To address the challenge of consistency in large-capacity battery cells, Synergy Technology innovatively adopted an adaptive full-time balancing algorithm. By utilizing parameters such as SOC difference estimation and temperature monitoring, it dynamically adjusts the balancing current within the range of 0.5A-4A. For acquisition loops with different wire diameters, it adjusts the applicable current through software, eliminating the need for custom wire harnesses. Based on cascaded bidirectional DC-DC technology, the balancing efficiency exceeds 96%. The design of an independent balancing module for each battery cell breaks through the inefficient bottleneck of traditional passive balancing, which is limited to only 0.1A, significantly improving the system's available capacity and operational efficiency. Breakthrough 2: 3*3mm chip integration, reducing both size and cost The new-generation active balancing chip highly integrates power circuits, sampling circuits, control circuits, etc., into an extremely small 3*3mm package, reducing the module area by 75% compared to traditional solutions. By eliminating redundant discrete components through chip-level design, it achieves a 40-fold increase in balancing capability while maintaining the same volume, reduces the cost of active balancing by 25%, and thoroughly resolves the industry pain points of large size and high cost associated with traditional active balancing solutions. Breakthrough 3: Minimalist and reliable architecture, reducing the failure rate by 80% Innovatively adopting a bidirectional Buck-Boost circuit to replace complex flyback structures, paired with standard inductive energy storage components, it eliminates the problem of transformer air gap leakage flux and significantly reduces EMI. The new-generation highly integrated chip solution reduces the number of solder joints by 70% compared to the traditional discrete component solution, significantly lowering the failure probability and achieving automotive-grade reliability standards. Xie Neng Technology aims to fill the domestic gap in chip-level active balancing technology. Currently, this technology has been successfully applied in various energy storage systems (ESS), as well as in scenarios such as low-altitude aircraft for new energy vehicles (NEVs), helping customers extend the lifespan of their systems by over 20%. In the current market environment, independent third-party BMS enterprises are undergoing a critical transformation from "scale competition" to "quality competition." Represented by top-tier enterprises such as Xie Neng Technology, by constructing a new-type trinity competitiveness of "technology-data-service," they not only effectively resist the concentration pressure in the system integration link but also conform to the trend of deepening professional division of labor, further consolidating their market positions. In the future, the industry will exhibit a "dumbbell-shaped" pattern—dominated jointly by top-tier third-party enterprises and top battery manufacturers, while the survival space for mid-tier enterprises will gradually narrow. In this process, continuous technological iteration capabilities and a global service network will become the keys to success.

[SMM Analysis:The Back structure is difficult to sustain ]

Recently, news has been circulating widely in the market that an energy giant has established aluminum positions exceeding 1 million mt on the London Metal Exchange (LME). The scale of this position is staggering—as of May 15, LME aluminum inventory stood at only 397,300 mt (with Rusal accounting for approximately 90% of it), and the giant's position is 2.5 times larger than the existing inventory. Affected by this, the near-month LME aluminum contract has shifted from a futures contango structure of $28 to a slight spot premium (back) structure, intensifying market concerns about a rise in the near-month LME aluminum contract price. Many investors are beginning to wonder if LME aluminum will replicate the previous strong back rally in LME copper, which was triggered by tariff policy risks that led to changes in global trade flows.​ SMM believes that despite the uncertainty surrounding the 232 aluminum tariffs, which has introduced volatility into the global aluminum trading landscape and, coupled with the continuous drawdown of inventory, has led to repeated shifts in short-term trading expectations, from the perspective of overseas aluminum fundamentals, the LME back structure does not have the conditions to be sustained for an extended period.​ In terms of spot market performance, spot premiums for aluminum ingots globally are mostly on a downward trend, particularly in Asia. Influenced by expectations of the off-season, there is no shortage of aluminum ingots in the market, which poses an obstacle to the continuation of the back structure.​ From the perspective of open interest logic, market participants holding large spot positions typically maintain a certain amount of short hedging positions in the futures market. It can thus be inferred that the primary purpose of the operation on the LME this time may be for futures/futures market arbitrage, rather than a simple bet on a unilateral rise in aluminum prices.​ Regarding tariff policies, even if there is a breakthrough in negotiations between China and the US on the 232 steel and aluminum tariff issues, leading to changes in global aluminum trade flows, it will still be difficult to support a strong back structure. The reason is that the US currently still has a portion of hidden aluminum ingot inventory and has not yet faced a situation of supply depletion.​ On the international front, the end of the Russia-Ukraine war does not mean the end of Western sanctions on Russian metals. There is a high degree of uncertainty regarding the lifting of sanctions on Russia, which brings higher capital cost pressures and risks.​ Currently, trade frictions triggered by global tariffs still exist, and the low inventory situation has further strengthened the resilience of aluminum prices. However, the subsequent off-season pressure on the demand side limits its upside potential. If China and the US make substantive progress in the 232 steel and aluminum tariff negotiations, global aluminum trade flows will be reshaped, supply pressures in markets outside the US are expected to be alleviated, and market sentiment will also be boosted. However, fundamentally, this will still be difficult to bring about a substantive reversal in overseas aluminum fundamentals. Market participants need to closely monitor relevant developments and cautiously respond to the complex changes in the LME aluminum market. [The information provided is for reference only. This article does not constitute direct advice for investment research and decision-making. Clients should make decisions cautiously and should not replace their own independent judgment with this information. Any decisions made by clients are not related to SMM.] 》Subscribe to view historical spot prices of SMM metals