Inter-product price spreads are a segment of the rebar spread system characterized by complex logic and abundant trading opportunities. Unlike the spot-futures price spread, which reflects the spot-futures structure, and calendar spreads, which reflect near- and far-term expectations, the core of inter-product price spreads lies in macroeconomic structural adjustment and profit distribution across the industry chain. From the perspective of the industry chain, inter-product price spreads for long steel products are mainly concentrated in the following four areas:

Today, the most-traded BC copper 2605 contract opened at 84,640 yuan/mt. In early trading, the center of copper prices bottomed at 84,620 yuan/mt, then rose to a high of 86,140 yuan/mt, and finally moved sideways to close at 86,020 yuan/mt, up 1.68%. Open interest stood at 6,205 lots, down 74 lots from the previous trading day, while trading volume reached 4,289 lots, up 991 lots from the previous trading day. On the macro front, the Iranian president said he was willing to end the war, provided that its demands were met and guarantees against further attacks were secured. The US defense secretary said the next few days would determine the direction of the conflict, and Trump planned to end the fighting within two to three weeks; meanwhile, the Iranian foreign minister said there had been no negotiations with the US, though information had been exchanged, and there had been no response yet to the "15-point plan." The current Middle East conflict has somewhat eased, crude oil prices plunged, inflation expectations cooled, and the US dollar index came under pressure and pulled back, all of which were bullish for copper prices. Fundamentals, supply side, imported cargoes have continued to arrive recently, and overall spot availability was relatively ample; demand side, affected by the rebound in copper prices, the market mainly maintained just-in-time procurement during the day. The SHFE copper 2605 contract closed at 97,030 yuan/mt. Based on the BC copper 2605 contract price of 86,020 yuan/mt, its tax-inclusive price was 97,203 yuan/mt. The price spread between the SHFE copper 2605 contract and BC copper was -173 yuan/mt, with the inversion maintained and widening from the previous day.

[SMM Tin Midday Commentary: Initial Signs of Geopolitical Peace Emerge, SHFE Tin Prices Rebound Amid Improved Market Sentiment]

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 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.

For almost four weeks, the war against Iran has kept the world on edge – a conflict that leaves deep marks not only geopolitically but also economically. Volatility and uncertainty in global markets are increasing daily.

[Supply Tightening Coupled With Macro Tailwinds Keeps Aluminum Prices Firmly at High Levels] Overall, the geopolitical situation in the Middle East remains 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 gradually releasing peak-season demand in China. In the short term, aluminum prices are expected to remain in a high-level consolidation pattern.

In recent years, the most common and straightforward framework for assessing demand across the lithium battery value chain has been to anchor it to EV sales. The logic was simple: the more vehicles sold, the stronger the battery demand; conversely, a slowdown in vehicle sales would imply weaker battery demand. This relationship held true in the early stages of the industry, when EV penetration was rapidly increasing, product structures were relatively simple, and battery demand exhibited a strong linear correlation with vehicle sales. However, this linear relationship is now clearly weakening. Increasing evidence suggests that battery demand is no longer solely determined by vehicle sales , but is increasingly driven by multiple factors, including average battery capacity per vehicle, product mix, commercial vehicle electrification, and export dynamics. 1. The “Vehicle Sales = Battery Demand” Formula Is Breaking Down At its core, vehicle sales represent the number of units sold, while battery demand reflects total energy consumption, i.e., total installed battery capacity. These two metrics only move in tandem when the average battery capacity per vehicle remains stable. Once average battery size increases, or when the sales mix shifts across BEV vs. PHEV, passenger vs. commercial vehicles, the direct linkage between vehicle sales and battery demand begins to decouple. As a result, assessing battery demand today requires answering several additional questions beyond headline vehicle sales: What is the average battery capacity per vehicle? Which vehicle segments are driving incremental growth? Are export flows and regional differences amplifying demand volatility? In other words, the industry is transitioning from a “unit-driven” model to an “energy-driven” model . 2. Rising Battery Capacity per Vehicle: The Primary Driver The most direct reason for the decoupling is the continuous increase in battery capacity per vehicle. This trend is driven by three key factors. First, vehicle upsizing. Both in China and overseas, EV consumption is shifting from basic electrification to enhanced user experience. The rising share of SUVs, pickup trucks, larger sedans, and premium vehicles naturally drives higher battery capacity per vehicle. Larger vehicle size, longer range requirements, and higher performance expectations all translate into higher kWh configurations. Second, the range competition is not over. While the industry has moved beyond the most aggressive phase of “range-at-all-costs,” consumers still place strong emphasis on real-world range, low-temperature performance, highway efficiency, and charging convenience. Even amid intense price competition, automakers are reluctant to reduce battery capacity, as it remains a core determinant of product competitiveness. Third, the growth of premium BEVs and heavy-duty applications. Although EV sales growth is expected to moderate going forward, battery demand is still projected to grow at a faster pace, with increasing battery capacity per vehicle being a key contributor. This reflects a critical shift: vehicles may not be selling faster, but each vehicle is consuming more battery capacity. Therefore, relying solely on slowing vehicle sales growth to infer weaker battery demand may significantly underestimate the offsetting effect from rising battery capacity per vehicle. 3. Product Mix Matters More Than Total Sales Volume Beyond battery capacity, changes in product mix are also reshaping battery demand. For instance, selling one million EVs with a higher BEV share will result in stronger battery demand than the same volume with a higher PHEV share, due to differences in battery size. In other words, shifts between different powertrain technologies directly impact overall battery intensity. Globally, this structural divergence is becoming more pronounced. In Europe, policy adjustments have led to a temporary rebound in PHEVs, which dilutes average battery capacity per vehicle. In contrast, China continues to maintain a high share of BEVs and higher-capacity vehicles, supporting stronger battery demand intensity. Thus, evaluating battery demand today requires understanding not just how many vehicles are sold, but what types of vehicles are driving the growth . 4. Commercial Vehicle Electrification: The Most Undervalued Growth Driver If rising battery capacity per vehicle represents the first layer of demand restructuring, then the electrification of commercial vehicles represents the second—and arguably the most underestimated—layer. Passenger EVs typically carry battery packs in the range of tens of kWh, whereas electric heavy-duty trucks, construction vehicles, and specialty vehicles often require 300–600 kWh or more. This means that a single electric truck can generate battery demand equivalent to multiple passenger EVs . Even with a smaller sales base, incremental penetration in commercial vehicles can significantly amplify overall battery demand. Rising oil prices further accelerate this trend by improving the total cost of ownership (TCO) of electric commercial vehicles, particularly in high-utilization, heavy-load, and fixed-route applications. In such scenarios, electrification becomes economically compelling much faster. As a result, while commercial vehicles are not the largest segment by volume, they are likely to become one of the most powerful “energy leverage” drivers of battery demand in the near term. 5. Exports, Inventory Cycles, and Production Scheduling Are Increasing the Mismatch In addition to end-market dynamics, midstream factors such as exports, inventory cycles, and production scheduling are further widening the gap between vehicle sales and battery demand. On one hand, changes in export policies, overseas customer stocking behavior, and shifts in trade flows can either front-load or delay battery and materials production. On the other hand, inventory cycles are once again becoming a central analytical framework. Automakers and distributors are no longer maintaining stable inventory levels; instead, they dynamically adjust stocking based on sales trends and pricing competition. This means that battery production is increasingly influenced by inventory drawdowns, restocking cycles, and order visibility—rather than simply mirroring real-time vehicle sales. Analyst SMM Lithium Battery Analyst Lesley Yang yangle@smm.cn

According to SMM data, the week of March 23–27, 2026 marked the final stretch of China’s traditional peak-demand season known as “Golden March.” During the week, the most-active stainless steel futures contract ( SS2605 ) posted a firmer, rangebound rebound as weak fundamentals clashed with renewed macro support. By the close on March 27 , the contract had risen to RMB 14,355/mt (about USD 2,076/mt) , up RMB 205/mt (about USD 29.65/mt) from RMB 14,150/mt (about USD 2,047/mt) a week earlier. The week’s defining feature was a sharp contrast between weak spot fundamentals and resilient market expectations. Physical demand remained mediocre, and social inventories moved back into accumulation. Even so, stainless futures found strong support from easing concerns over the Middle East, policy-related uncertainty in Indonesia’s nickel sector, and liquidity support from China’s central bank. As a result, prices managed to hold the lower end of the recent trading range and rebound from there. Macro backdrop: easing geopolitical stress, but rates remain a headwind At the macro level, both overseas and China-related developments saw important shifts. In the Middle East, the nearly month-long Strait of Hormuz crisis showed signs of easing after Iran’s mission to the United Nations said that non-hostile vessels could still pass safely through the strait in coordination with Iranian authorities. That helped cool fears of a major energy supply disruption. However, the inflation fallout from the earlier oil price spike has already shown up in global rates markets. US Treasury yields remained elevated, further reducing room for aggressive Fed easing expectations. In China, the central bank conducted a RMB 500 billion one-year MLF operation , equivalent to about USD 72.32 billion , helping keep liquidity conditions reasonably ample. While this was largely a routine move, it did help ease some of the valuation pressure created by a high global interest-rate environment and offered a degree of support to the market floor. Fundamentals: destocking stalls as inventories edge higher again On the fundamentals side, the destocking trend came to an abrupt halt, and “Golden March” ended on a disappointing note. The latest SMM data showed that social inventories failed to extend the declines seen over the previous two weeks and instead edged up to 982,000 mt , from 979,300 mt the week before, an increase of 2,700 mt . That renewed inventory build hit a sensitive spot for the market. In the spot market, downstream buyers continued to replenish only as needed, with very little appetite for stocking up. Throughout March, trading activity never showed the kind of momentum normally associated with a true seasonal demand peak. At the same time, mills have maintained relatively high production schedules, creating a mismatch between concentrated arrivals and lukewarm demand. As a result, inventory digestion is becoming more difficult rather than less, placing a clear cap on further upside in both futures and spot prices. Cost support stays firm as Indonesia policy rumors stir the market The cost side remained notably resilient, with fresh policy speculation adding another layer of support. As of March 27 , high-grade NPI was quoted at RMB 1,083.5 per nickel unit (about USD 156.71 per nickel unit) , while high-carbon ferrochrome held firm at RMB 8,650 per 50-basis mt (about USD 1,251.07 per 50-basis mt) . Although weak spot fundamentals still left mills inclined to push back against expensive raw materials, the market was unsettled this week by reports and rumors surrounding possible Indonesian export taxes and windfall taxes on nickel products. That policy uncertainty quickly revived bullish sentiment and helped upstream prices stabilize even as the market faced correction pressure. With raw material costs remaining elevated, downside room in stainless steel futures continued to look limited. Outlook: macro support sets the floor, weak demand caps the upside Overall, this week’s market was a clear example of macro support defining the downside floor while weak fundamentals capped the upside. “Golden March” ended without delivering the demand strength many had hoped for, and the return to inventory accumulation undermined the bullish case from a fundamental perspective. Even so, the combined effect of China’s RMB 500 billion MLF injection, easing Middle East tensions, and Indonesian tax-related speculation helped prevent a breakdown and instead allowed prices to rebound. Looking ahead, the market is now moving into the “Silver April” period. With inventories still high and mill output still elevated, there is little in the current fundamentals to support a strong one-way rally. At the same time, cost support remains firm enough to make a deep decline difficult. In the near term, the most-active stainless steel futures contract is expected to remain in a broad trading range. Market participants should pay close attention to whether Indonesian policy measures are formally implemented and how quickly spot inventories are absorbed after the holiday period. For now, chasing prices higher aggressively still looks risky. Written by: Bruce Chew | bruce.chew@smm.cn +601167087088