SMM Morning Meeting Summary: Overnight, LME copper opened at $12,216/mt and dipped to $12,181.5/mt in early trading. Copper prices then fluctuated upward in center and, near the close, touched a high of $12,420/mt, finally closing at $12,382.5/mt, up 1.64%. Trading volume reached 18,800 lots, and open interest stood at 298,900 lots, an increase of 3,875 lots from the previous trading day. Overnight, the most-traded SHFE copper 2605 contract opened at 95,730 yuan/mt and fluctuated rangebound in early trading, hitting a low of 95,550 yuan/mt. It then fluctuated upward all the way to a high of 96,780 yuan/mt, finally closing at 96,760 yuan/mt, up 1.26%. Trading volume reached 56,200 lots, and open interest stood at 186,300 lots, an increase of 598 lots from the previous trading day, mainly driven by increased long positions.

[SHFE Aluminum Night Session Closed Higher, with Geopolitics and Fundamentals Jointly Supporting Aluminum Prices] Overall, the geopolitical situation in the Middle East remained the core factor affecting the global aluminum market. A series of production cuts and damage incidents at Middle Eastern aluminum plants is expected to provide strong upward momentum for aluminum prices in and outside China, together with support from expectations of the gradual release of peak-season demand in China. In the short term, aluminum prices are expected to remain in a high-level consolidation pattern.

[SMM Cast Aluminum Alloy Morning Comment: Weak Trading in the Aluminum Alloy Night Session, ADC12 to Move Sideways in the Short Term] The aluminum alloy 2605 contract showed a pattern of opening higher and then fluctuating lower in the night session. It opened at 23,985 yuan/mt, hit an intraday high of 23,985 yuan/mt, dipped to a low of 23,705 yuan/mt, and finally closed at 23,745 yuan/mt, up 50 yuan/mt from the previous trading day, or 0.21%. Trading volume was 2,253 lots, down 5,248 lots from the previous trading day, while open interest stood at 6,784 lots, down 174 lots. Both trading volume and open interest pulled back, indicating weak trading sentiment in the night session.

In Q1 2026, China’s aluminum semis exports showed a pronounced pattern of product-category divergence amid the interplay of three factors: the long-term impact of the cancellation of export tax rebates in December 2024, the divergence in demand structures outside China, and the sudden outbreak of geopolitical conflict in the Strait of Hormuz.....

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

With utilization rates among Korean battery manufacturers remaining around 50% and reflecting a timing mismatch between demand and supply, utilization is increasingly emerging as a key indicator of cost structure and operational efficiency in a context where capacity expansion has preceded demand realization.

Markets frequently mistake an industry's sudden breakout for its origin. China's long-duration energy storage (LDES, ≥4 hours) sector did not abruptly emerge in 2026. Following policy incubation (2023-2024) and initial scaling (2025), 2026 marks a definitive inflection point, driven by a validated, closed-loop business model and exponential growth in grid-connected capacity.

[China Iron Ore Brief Review: Iron Ore Concentrate Prices in the Tangshan Region May Hold Up Well] In Shandong, the pre-tax dry-basis price of 64-grade alkaline fines at mines and beneficiation plants fell by 5 yuan to 894 yuan, and steelmakers lowered prices in tandem. Most miners maintained normal production, with no significant inventory buildup and basically no inventory at most operations. Steelmakers continued to purchase under long-term contracts, mainly purchasing as needed while maintaining low inventory operations. On the news front, external market disruptions remained unabated, and imported ore prices stayed at a relatively high level, which may provide some support for domestic iron ore

SMM News, March 31 According to SMM data, the average tax-inclusive full cost of domestic aluminum industry in March 2026 rose 0.5% MoM and fell 5.7% YoY, mainly due to a slight rebound in alumina raw material costs during the period. In March, Middle East production cuts pushed up aluminum prices in and outside China. The SMM A00 monthly average spot price (February 26-March 25) rose 2.9% MoM, and aluminum profit margins expanded to 8,316 yuan/mt. Based on monthly average price calculations, 100% of China’s operating aluminum capacity was profitable in March. From the cost breakdown side: Alumina raw materials : According to SMM data, the monthly average of the SMM alumina index in March was 2,685 yuan/mt (January 26-February 25), up 2.4% MoM. During the month, total operating alumina capacity was basically stable, but the Middle East geopolitical conflict raised ocean freight rates for alumina and bauxite, and domestic alumina costs are expected to move higher. Futures prices drove spot prices higher, lifting the monthly average alumina price. Entering April, the upward momentum in spot alumina prices at month-end March appeared slightly insufficient. Some new projects are expected to come online in April or ramp up operating capacity, but as the base price at the beginning of the month was already at a high level, alumina raw material costs in April are expected to post a slight increase. Auxiliary materials market : In March, both prebaked anode and fluoride salt prices pulled back, lowering aluminum auxiliary material costs. Entering April, the Middle East geopolitical conflict raised international oil prices, and higher costs continued to push up petroleum coke prices, which in turn supported higher prebaked anode prices. The April prebaked anode tender price at a large aluminum plant in Shandong rose 300 yuan/mt MoM; for aluminum fluoride, prices are also expected to rise significantly in April due to higher raw material costs. Overall, auxiliary material costs are expected to increase significantly in April. Electricity prices : Electricity prices were generally stable in March. Entering April, power prices are expected to remain broadly stable, and aluminum power costs are expected to hold steady. Overall, in March 2026, SMM expected the weighted average tax-inclusive full cost of dometstic aluminum industry to rise slightly; in April, it was expected to increase significantly MoM, with the average at around 16,150-16,550 yuan/mt.