[SMM Lead Morning Meeting Minutes: Increasing Maintenance at China's Secondary Lead Enterprises VS Easing Spot Premiums in Southeast Asia, Lead Prices May Remain in the Doldrums] US President Trump ordered the sinking of any vessels laying mines in the Strait of Hormuz, claiming the strait had been "completely blockaded." Recently, the off-season trend in the lead-acid battery market intensified, with some downstream enterprises expanding production cuts, and enthusiasm for lead ingot procurement declined...

Early this week, the market continued to trade around expectations of US-Iran peace talks and fluctuations in the Middle East situation. The US and Iran maintained contact, with expectations of an extended ceasefire and subsequent talks driving a recovery in risk appetite. The pullback in the US dollar provided support for copper prices. Meanwhile, the US March PPI came in below expectations, temporarily easing inflation concerns and supporting copper prices to rise. However, as the US continued to expand its shipping blockade against Iran, disruptions to passage through the Strait of Hormuz had not been fully eliminated, and geopolitical uncertainties persisted. Overall, the macro theme this week remained warming expectations of US-Iran peace talks and a weaker US dollar being bullish for copper prices, but geopolitical fluctuations kept copper prices hovering at highs. On the fundamentals side, the ore supply tightness narrative continued to ferment. Amid Middle East disruptions, some sulphuric acid supplies to the DRC were obstructed, with some enterprises already cutting usage or even facing production reduction risks, as ore-side disruptions further transmitted to the production stage. Meanwhile, although Panama's Cobre Panama was authorized to process and export stockpiled materials, this did not signify a formal restart of the mine, and actual short-term incremental supply remained relatively limited. Overall, the current fundamentals still pointed to deepening ore supply tightness. Although longer-term supply expectations saw marginal improvement, this offered limited relief to the near-term tight landscape. Looking ahead to next week, the macro narrative is expected to remain largely unchanged. If US-Iran negotiations continue to advance, a weaker US dollar is expected to continue supporting copper prices; however, given the potential for renewed Middle East tensions, upside for copper prices is expected to remain constrained. On the fundamentals side, ore supply tightness and rising costs continue to provide support below prices, and copper prices are expected to most likely continue to fluctuate at highs in the near term. LME copper is expected to fluctuate between $13,000-13,500/mt, and SHFE copper between 100,500-103,500 yuan/mt. On the spot side, as absolute prices rise, downstream willingness to chase higher prices may be suppressed. Inventory destocking is expected to slow down, but spot cargo is still expected to find support due to tight spot circulation. Spot prices against the SHFE copper front-month contract are expected to range from a discount of 30 yuan/mt to a premium of 80 yuan/mt.

[SMM Silicon-Based PV Morning Meeting Summary: Some Module Makers Looking to Hold Prices Firm, Silicon Metal in the Doldrums] Over the weekend, N-type recharging polysilicon was quoted at 34-36.5 yuan/kg. Weekend market prices remained temporarily stable. The market is currently approaching its lows, providing some price support, but the surplus remains significant, and downstream buyers still have a mindset to push for lower prices.

[China’s Aluminum Ingot Inventory Continues to Build Up, Aluminum Prices Remain in a High-Level Consolidation Pattern ]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, coupled with support from expectations of a 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， 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.

SMM, March 20: Imports: According to data from the General Administration of Customs, China’s primary aluminum imports were about 189,000 mt in January, down 0.1% MoM and up 17.1% YoY; in February, China’s primary aluminum imports were about 202,000 mt, up 6.6% MoM and up 0.7% YoY. In January-February 2026, China’s cumulative primary aluminum imports totaled about 391,000 mt, up 8.0% YoY. Exports: According to data from the General Administration of Customs, China’s primary aluminum exports were about 13,000 mt in January, down 64.6% MoM and up 56.6% YoY; in February, China’s primary aluminum exports were about 10,000 mt, down 24.6% MoM and up 187.9% YoY. In January-February, cumulative primary aluminum exports totaled about 23,000 mt, up about 94.8% YoY. Net imports: According to data from the General Administration of Customs, China’s net primary aluminum imports were 176,000 mt in January, up 15.9% MoM and up 14.9% YoY; in February, China’s net primary aluminum imports were 192,000 mt, up 9.0% MoM and down 2.6% YoY. In January-February, China’s cumulative net primary aluminum imports were about 367,000 mt, up 5.0% YoY. (The above import and export data are based on HS codes 76011090 and 76011010.) Although China’s net primary aluminum imports maintained positive growth in January-February 2026, expectations of a sharp rise in regional aluminum premiums outside China will challenge this situation. As of March 20, SMM’s Japan MJP spot premiums for aluminum ingot stood at $255/mt, up 45.7% from month-end February. Currently, some market participants were quoting Japan MJP CIF premiums for Q2 at around $350-353/mt, up about 80% from $195/mt in Q1; the US Midwest DDP aluminum premium stood at 105.25¢/lb, equivalent to $2,110/mt. As of March 13, Europe’s P1020A aluminum ingot duty-paid premiums stood at $470/mt, up about 27.0% from month-end February, while Europe’s P1020A aluminum ingot duty-unpaid premiums stood at $375/mt, up 27.2% from month-end February. The sharp rise in regional aluminum premiums outside China is expected to divert some aluminum originally planned to flow into China, and China’s net aluminum imports are expected to decline YoY in 2026. The reason for this phenomenon lies in expectations of a contraction in aluminum supply outside China caused by reduced aluminum supply in the Middle East. As of March 20, Qatar Aluminum announced that it would maintain a 60% operating rate, involving 260,000 mt of shut capacity; Bahrain Aluminum announced the shutdown of Lines 1-3, involving about 310,000 mt of capacity. In total, 570,000 mt of aluminum capacity in the Middle East has been affected. Iran is at the center of the conflict, and the stability of its production faces severe challenges. In addition, some raw and auxiliary materials in the Middle East rely on imports, and the geopolitical conflict in the region has affected passage through the Strait of Hormuz, to some extent undermining raw material supply stability at certain aluminum plants. At present, aluminum plants in Saudi Arabia and Turkey have domestic upstream bauxite and alumina support and can achieve self-sufficiency, with room for exports; Bahrain Aluminum and Qatar Aluminum rely entirely on imported alumina, while the UAE has 2.5 million mt of alumina capacity, but its bauxite relies 100% on imports. Although Oman’s aluminum plants also depend on imported raw materials, their geographic location is outside the Strait of Hormuz, so the level of risk is relatively low. If transport routes remain closed and no new routes can be opened, aluminum production in the Middle East is expected to be significantly affected. However, according to the latest foreign media reports, Bahrain Aluminum is exporting 40-60% of its aluminum ingots through Saudi Arabia’s Port of Jeddah, with an overland transport distance of 1,400 kilometers, and UAE’s Emirates Global Aluminium is attempting to import alumina raw materials through ports in Oman. If new transport routes are opened, the production reduction risk at aluminum plants in the Middle East is expected to decline markedly. Going forward, continued attention should be paid to production developments at aluminum plants in the Middle East, transport route conditions, and trends in LME aluminum inventory.

[Large Lead-Acid Battery Enterprise in Central China Plans 7-Day Maintenance] It is reported that a large lead-acid battery enterprise in Central China recently issued a notice stating that, due to recent increases in raw material prices, the company has sufficient product inventory, and high lead prices pose significant risks. After deliberation, the company has decided that all production sites will undergo short-term production reduction or shutdown adjustments, during which key production equipment will be maintained. The planned period is from October 28, 2025, to November 2, 2025, expected to last 7 days.

According to official news from JX Nippon Mining & Metals Corporation, in light of the declining profitability of copper concentrate smelting in recent years, the company has been actively promoting the expansion of the proportion of high-margin recycled raw materials. However, due to the significant deterioration of current ore purchasing conditions, the group has begun to consider implementing production cuts at its operating smelters. Meanwhile, in response to the rapid increase in demand for raw materials for cutting-edge materials such as semiconductor materials and the growing awareness of the circular economy, there is a need to further accelerate the transformation of the business structure from concentrate smelting to recycling smelting. Discussions are underway regarding changes to the production and business systems, with considerations to scale down production. According to SMM, the production cut plan involves two smelters, Saga and Yokohama, with specific production reduction volumes still to be determined.

[SMM Analysis]According to the SMM survey, the operating rate of the secondary aluminum industry in May 2025 declined by 0.8 percentage points MoM to 41.3%, and fell by 2.7% YoY.

SMM June 13: Overnight, LME lead opened lower with a gap at $1,988.5/mt. After touching a low of $1,983/mt in the Asian session, it fluctuated upward. Entering the European session, it reached a high of $1,999.5/mt, pulled back slightly in the tail end, and finally closed at $1,992/mt, down 0.08%. Overnight, the most-traded SHFE lead 2507 contract opened higher with a gap at 16,990 yuan/mt. After touching a low of 16,890 yuan/mt in the early session, it fluctuated upward and reached a high of 16,950 yuan/mt, finally closing at 16,925 yuan/mt, up 0.15%. This week, the production of primary lead smelters has steadily increased, while secondary lead enterprises are generally in a state of production reduction or suspension due to factors such as environmental protection, losses, and insufficient scrap supply, leading to a regional tightening of lead ingot supply. As there are not many sellers from secondary lead enterprises and prices remain firm, lead consumption has shifted towards the primary lead market. However, as the lead consumer market is still in the off-season, the improvement in spot lead market transactions has been limited. Next week, the front-month SHFE lead contract will enter delivery. The expectation of suppliers transferring inventory to delivery warehouse before delivery may still leave room for an increase in social inventory of lead ingots. In addition, we need to continue to monitor the impact of factors such as environmental protection inspections and scrap battery supply on the production of secondary lead enterprises, as well as the impact of maintenance at smelters producing delivery brand primary lead during the mid-month delivery period on the trend of lead prices.