[SMM Analysis]Weak Supply-Demand Pattern; Secondary Aluminum Prices Were Expected to Come Under Pressure and Pull Back in April

[SMM Lithium Battery Electrolyte Market Weekly Review: Electrolyte Prices Remained Temporarily Stable This Week (2026.3.30-4.2)] From March 30 to April 2, 2026, electrolyte prices remained temporarily stable. Subsequent price trends will still need to focus on changes in upstream raw material prices

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:

[SMM Daily Chrome Commentary: Weak Trading Sentiment, Market Remained Temporarily Stable] April 1, 2026: The ferrochrome and chrome ore markets saw limited fluctuations...

Weekly average electricity prices dropped across most major European markets last week, driven by falling gas prices and increased solar and wind output, according to AleaSoft Energy Forecasting. Spain and Portugal recorded the lowest daily averages at €0.18/MWh on March 29, the lowest since 2013 for Spain. Meanwhile, Italy and Spain set new all-time daily solar generation records for March, reaching 139 GWh and 194 GWh, respectively. TTF gas futures also trended downwards following geopolitical developments, although low European storage levels caused a slight rebound late in the week. AleaSoft anticipates further electricity price declines in early April, noting that 'gas price trends will continue to shape European electricity market prices.'

SMM News, March 31， In Q1 2026, amid macro tailwinds, expectations of a supply gap, and successive geopolitical conflicts in the Middle East, aluminum prices repeatedly hit new highs. The quarterly average SMM A00 aluminum price reached 24,028 yuan/mt, up 17.5% YoY; the quarterly average closing price of the LME aluminum 3M contract at 15:00 Beijing time reached $3,196/mt, up 21.8% YoY. High prices suppressed downstream consumption: At the end of 2025, SMM expected China’s primary aluminum consumption growth in 2026 to be 2.0%; as of February, that growth rate had fallen to 1.1%. As a result, the proportion of liquid aluminum in the aluminum industry declined significantly, and aluminum social inventory hit a nearly three-year high. As of March 31, the inflection point in China’s aluminum social inventory was still unclear, while the absolute inventory level had already entered the upper range of SMM’s previous forecast of 1.35-1.4 million mt. However, affected by geopolitical conflicts in the Middle East, aluminum supply and demand were both weak, fundamental risks increased, and prices saw wild swings. Under the impact of high prices, aluminum ingot inventory may continue to build further. According to SMM, as of the end of March, some aluminum ingots in certain regions were still backlogged at rail platforms and outside warehouses. High prices also accelerated supply growth: As of the end of Q1, average profits in China’s aluminum industry exceeded 8,000 yuan/mt. Stimulated by high profits, China’s aluminum supply growth is expected to exceed expectations. At the end of 2025, SMM expected China’s aluminum supply growth in 2026 to reach 1.7%; as of the end of Q1 2026, SMM expected that growth rate had risen to 1.9%. Outside China, supply growth was also boosted by high prices: 1) A smelter in Spain had originally planned to resume full production by 2026, and according to foreign media reports in March, it had already resumed to 90% of operating load; 2) In October 2025, an Icelandic smelter cut production on one line due to equipment failure. It had originally planned to resume production in September-October 2026, but has now moved the plan forward to start by the end of April; 3) At the end of 2025, expectations were that Indonesia’s operating aluminum capacity would reach 2 million mt by the end of 2026; that expectation has now been raised to 2.2-2.5 million mt. Q2 Outlook: At present, one of the decisive factors for global aluminum fundamentals and price trends is the geopolitical situation in the Middle East. SMM analysis showed that outside China, aluminum capacity that had already cut production or faced substantial production reduction risk exceeded 3 million mt. If subsequent production cuts from this portion of capacity are confirmed, outside China aluminum supply is expected to maintain negative YoY growth for an extended period, and global aluminum fundamentals are expected to face a large gap, with the gap outside China far exceeding that in China. In this case, aluminum prices in and outside China are expected to rise sharply again, with overseas prices expected to outperform domestic prices. China’s net aluminum imports are expected to decline, while exports from downstream aluminum plants are expected to increase. However, if actual production cuts come in below expectations, while consumption sees a marked reduction due to factors such as energy and inflation, the upward move in aluminum prices may face insufficient momentum. At present, geopolitical conflicts in the Middle East are disrupting the global aluminum supply-demand pattern, and SMM will continue to follow related developments.

Recently, China’s manganese-based battery materials market has shown an overall pattern of cost-driven dynamics, product differentiation, and gradually recovering demand. Manganese sulphate and Mn3O4 were supported by rising upstream raw material costs and freight rates, with prices trending upward; MnO2 remained stable; LMO held steady amid fluctuations in lithium carbonate, awaiting a recovery in demand in April.

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

【SMM Copper Cathode Rod Flash News】Copper prices remained rangebound, and overall new orders for copper cathode rod enterprises were still relatively weak. Today was the last day of month-end, and enterprises expected mediocre order intake. Market processing fees held steady without change, with no obvious adjustments for the time being. Most market participants remained on the sidelines, mainly focusing on subsequent copper price trends and the recovery of downstream consumption.

After the Lantern Festival, the operating rate of copper cathode rod was the first to rebound continuously, driving a gradual recovery in downstream consumption and pushing social inventory to officially enter a destocking channel from mid-March. However, as copper prices have recently rebounded and risen, downstream procurement sentiment has become more cautious, the pace of destocking has slowed somewhat, and the growth in the operating rate of copper cathode rod has also narrowed accordingly. Operating Rates Rose First, and the Inventory Inflection Point Emerged as Expected After the Chinese New Year, copper prices pulled back in phases, effectively boosting downstream restocking willingness. According to SMM, the operating rate of copper cathode rod enterprises was the first to respond, showing a WoW upward trend for several consecutive weeks. As of the latest data, the operating rate of copper cathode rod enterprises further climbed to 83.17, reflecting the continued release of end-use demand. Driven by the continued rise in operating rates, downstream procurement gradually increased in volume, and rigid-demand orders were steadily placed. As a result, copper inventories in major regions nationwide ended their sustained inventory buildup on March 12, officially marking an inflection point in inventories. Thereafter, the degree of destocking increased week by week, and as of March 26, inventories had declined for three consecutive weeks. With inventories being digested rapidly, the increase in total inventories compared to the same period last year also gradually narrowed from the post-holiday high to 92,900 mt. By region, this round of destocking showed broad-based characteristics. Consumption in Guangdong recovered most notably, coupled with localized tightening on the supply side, and the pace of inventory decline was relatively fast, making it the first to establish a destocking trend; driven by downstream consumption, warehouse withdrawals in Shanghai continued to exceed warehouse inflows, and against the backdrop of normal arrivals of imported and domestic cargoes, inventory steadily pulled back; Jiangsu likewise benefited from the recovery in consumption, jointly driving the rapid drawdown of overall inventory. Copper Price Rebound Curbed Willingness to Chase Gains, Destocking Momentum Weakened Significantly Entering late March, market sentiment shifted. As copper prices rose, downstream enterprises became more cautious, and the previously more active procurement pace slowed down. As of March 30, copper inventories in major regions nationwide fell 13.81% WoW. Although the destocking trend continued, the single-week decline had narrowed from 14.54% in the previous week. Regional performance also diverged. In Shanghai, arrivals of imported and domestic cargoes were normal, downstream consumption continued to recover, and inventory steadily destocked; in Guangdong, consumption remained highly robust, and coupled with tight supply, the inventory decline was still considerable; however, in Jiangsu, affected by another rise in copper prices, downstream procurement turned more wait-and-see, the pace of destocking slowed markedly, reflecting that the restraining effect of rebounding prices on demand had begun to emerge. Meanwhile, the upward momentum in the operating rate of copper cathode rod cooled somewhat. SMM expected the operating rate of copper cathode rod to rise to 83.76% this week, up only 0.59 percentage points WoW, in contrast to the pattern of consecutive sharp increases in previous weeks, indicating insufficient willingness among downstream buyers to chase higher prices, with more shifting to just-in-time procurement and adopting a wait-and-see stance toward subsequent copper prices. Market Outlook: Short-Term Destocking Continues as Momentum Gradually Weakens Overall, supply side, imported cargoes continued to arrive, while arrivals of domestic cargoes were relatively limited due to maintenance and other factors, and the overall pattern of tight supply persisted; demand side was more heavily affected by fluctuations in copper prices, with downstream players holding a wait-and-see attitude toward subsequent price trends, making it difficult in the short term to replicate the intensity of the previous concentrated restocking. Social inventory is expected to continue destocking in the short term, but as copper prices remain at a relatively high level, downstream procurement is turning more rational, and destocking momentum is expected to weaken further. As for subsequent market direction, attention still needs to be paid to copper price trends and the actual fulfillment of end-user orders.