Before and after the Chinese New Year, the domestic spot aluminum market exhibited significant regional differentiation, with the spot price spread between South China (Foshan) and East China (Wuxi) drawing particular attention. Before the holiday, the Guangdong-Shanghai price spread reached a high of 150 yuan/mt on February 10, while by February 27 after the holiday, this spread had narrowed significantly to 10 yuan/mt.....

According to SMM, as of February 27, 2026, the days of inventories for domestic aluminum rod plants were recorded at 12.7 days, an increase of 8.6 days from before the holiday.In the first week after the holiday, the weekly operating rate of the domestic aluminum wire and cable industry rebounded to 57%, up 4 percentage points MoM, significantly higher than the pre-holiday low of 53%.

The Middle East turmoil triggered by the US-Iran conflict has become the major geopolitical black swan for the global primary aluminum market, potentially causing millions of tonnes of supply disruptions and raising smelting costs. Coupled with risk aversion, aluminum price volatility may intensify.

The Middle East turmoil triggered by the US-Iran conflict became the largest geopolitical black swan for the global primary aluminum market, potentially causing supply disruptions at a scale of millions of mt, while also pushing up smelting costs. Coupled with market risk-averse sentiment, the volatility of aluminum prices may be amplified. Going forward, it is necessary to remain vigilant against risks such as escalation of conflicts, strait blockades, and raw material supply interruptions, as well as further impacts on aluminum prices from macroeconomic disturbances, and to prudently address the operational and investment risks brought about by fluctuations in the supply chain.

SMM February 28 News: On February 28, the conflict between Iran and Israel escalated, with an attack on the Iranian capital, Tehran, drawing market attention. The following is an overview of the aluminum industry information in the Iran region: Bauxite & Alumina: There is only one alumina refinery in the Iran region, which also has associated bauxite mining operations. Annual alumina production and bauxite output are approximately 250,000 mt and 650,000 mt, respectively. Its alumina production cannot meet the domestic demand for electrolytic aluminum production, and it relies on alumina imports year-round. India is the main source, with Iran's alumina imports from India accounting for 40-80% of its total imports. Aluminum: Iran has four aluminum smelters, all currently in operation, with a national average operating rate above 90% and an annual output exceeding 600,000 mt. Its production exceeds domestic consumption, leading to some exports, mainly to Türkiye, China, and other countries. Net exports account for 30-50% of production. Overall, if the local aluminum industry production in Iran collapses due to the geopolitical conflict, overseas aluminum supply is expected to tighten, while the alumina surplus is expected to worsen further. However, there is a considerable spatial distance between Iran's aluminum industry plants and the attacked city of Tehran. The closest is the Arak aluminum plant, nearly 300 km away. Nevertheless, subsequent attention must be paid to whether the geopolitical conflict escalates, affecting other regions, such as near the Strait of Hormuz, or whether it will impact Iran's electricity supply or alumina import supply, consequently affecting electrolytic aluminum production.

Indonesia's aluminum smelting industry is undergoing a massive expansion, with electricity supply emerging as the single most critical factor determining its success. Aluminum production is extremely power-intensive, requiring a steady, high-volume baseload of electricity for the electrolysis process, typically 12-15 MWh per tonne of primary aluminum produced. Any interruptions can halt operations and cause significant losses, making reliable 24/7 power non-negotiable.

This week marked the first trading week after the Lunar New Year holiday. At the beginning of the week, the import window briefly opened, attracting importers to take cargo. However, as inventories both domestically and overseas continued to build significantly, the import window gradually closed thereafter.

The proportion of 2026 copper cathode long-term contracts has declined significantly compared with previous years, fundamentally reshaping global physical copper trade flows. With fewer volumes locked in under long-term agreements, a larger share of material is now exposed to the spot market, increasing pricing volatility and distribution uncertainty.

SMM February 28 News: In February 2026, China's metallurgical-grade alumina output decreased by 10.6% month-on-month and also fell by 4.83% year-on-year. By the end of February, the national installed capacity stood at approximately 110.32 million mt, while operating capacity decreased by 1.06% month-on-month and 4.83% year-on-year, indicating a continued downward trend for the industry. The main reasons for the output decline this month were, on one hand, the concentrated implementation of maintenance and production cuts by enterprises, and on the other hand, the fewer natural days in February, which further impacted production schedules. Around the middle of the month, a company in the northern region implemented large-scale production cuts, coupled with equipment maintenance and production line upgrades by some enterprises. Simultaneously, some southern companies reduced operating loads, leading to a slight contraction in overall monthly output. Looking ahead to March, the overall oversupply situation in the alumina market is unlikely to change in the short term. Although the earlier maintenance and production cuts have led to a decrease in enterprise inventories and slightly eased overall shipment pressure, operational pressure within the industry persists. In March, some enterprises may continue to carry out maintenance and production line upgrades, and the industry will enter a phase of gradual destocking. However, the gradual release of new production capacity in the Guangxi region will offset some of the reductions, and overall operating capacity is expected to show a slow downward trend. Overall, it is projected that operating capacity in March will be approximately 85.11 million mt, and the market will still face oversupply pressure.

[SMM Survey on Operating Rate of Steel Mills Using Externally Purchased Billets] According to an SMM survey, as of February 28, the operating rate of steel mills using externally purchased billets that mainly produce construction materials was 0%, down 24.49 percentage points MoM from the January operating rate and down 16.21 percentage points YoY.