[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.

The global aluminum market is currently characterized by a distinct divergence between overseas and domestic markets. Overseas markets have performed strongly amid supply-side disruptions, while the domestic market has also strengthened due to similar supply disturbances but remained relatively weak compared with the LME. Details on supply, demand, trade and market structure are as follows: I. Overseas Aluminum Market: Prominent Supply Tightness and Sustained Pressure on Inventories The core contradiction in overseas aluminum markets lies in supply contraction and low inventory levels, exacerbated by geopolitical conflicts, further intensifying supply tightness. In terms of LME inventory data, current inventories remain on a continuous downward trend, greatly weakening their supportive role in the market. Historically and recently, LME cancelled warrants peaked at 178,000 tonnes earlier, accounting for 39% of total inventory. As a result, the effectively available LME inventory has dropped to its lowest level since May 2025, further highlighting tight overseas supply. Supply contraction has widened the market deficit, with production cuts at two key projects—EGA and Alba—having a particularly significant impact.On March 28, EGA’s Al Taweelah smelter in the UAE and Alba’s plant in Bahrain were attacked, causing equipment damage and sharply raising risks of capacity disruptions. This came on top of earlier disruptions: March 15: Alba reduced output at three production lines due to shipping disruptions in the Strait of Hormuz; March 12: Qatar’s Qatalum smelter suspended 40% of capacity due to natural gas supply cuts. Overseas primary aluminum supply deficits are expected to continue widening. Meanwhile, high energy costs in Europe have also reduced local semi-fabricated aluminum output, further tightening supply. Supply tightness has directly driven a sharp rise in overseas spot premiums. Amid supply concerns from escalating Middle East geopolitical conflicts, the Q2 MJP premium rose by approximately USD 156.5/t to USD 351.5/t. Specifically, major regional premiums rose markedly at end-March: CIF South Korea: from USD 168/t (early March) to USD 292/t; CIF Thailand: from USD 183/t to USD 317/t; European Duty Unpaid: from USD 345/t to USD 400/t; US Midwest DDP: from 103.75 cents/lb to 105.5 cents/lb. This fully reflects that expectations of tight primary aluminum supply have enabled sellers to push up quotations. Downstream demand and purchasing patterns vary significantly across regions: South Korea: Phase-wise restocking completed; weak downstream restocking sentiment, limited demand support. Southeast Asia: Dominated by term contract execution with limited spot restocking; insufficient incremental buying momentum. Europe: Rising supply shortage concerns amid production cuts in Qatar and Bahrain; downstream restocking underway, relatively strong demand. United States: Low inventories entering a restocking cycle, providing moderate market support. II. Domestic Aluminum Market: High Inventory Pressure, Weak and Constrained Demand In contrast to strong overseas markets, the domestic aluminum market has strengthened amid supply disruptions but underperformed relative to the LME, characterized by high inventories and constrained demand. High domestic aluminum prices have continued to suppress downstream purchasing. Current buying is mainly order-based rigid demand, with low willingness for active restocking, providing limited upward support. Domestic inventory pressure has not eased effectively: primary aluminum inventories remain elevated, and inventory destocking has progressed slower than expected, likely prolonging the digestion period.High inventories and high prices form dual constraints. Although the domestic market has upward momentum, it is weaker than overseas. Domestic spot premiums are expected to remain under pressure and further widen in the short term.

The current global aluminum market showed a clear divergence between markets outside and inside China. LME remained strong amid supply-side disruptions, while the Chinese market also strengthened under supply disruptions, though its overall performance was still relatively weaker than LME. Details on supply and demand, trade flows, and market structure are as follows: I. Overseas Aluminum Market: Tight Supply Became More Pronounced, Inventory Remained Under Pressure The core issue in the overseas aluminum market centered on supply contraction and low inventory, compounded by disruptions from geopolitical conflicts, with the tight supply pattern continuing to intensify. Based on LME inventory data, current inventory remained on a sustained downward trend, and the support provided by inventory to the market weakened significantly. Historical and recent data showed that LME cancelled warrants previously peaked at 178,000 mt, accounting for as much as 39 of total inventory. As a result, LME's actually available effective inventory fell to the lowest level since May 2025, further highlighting the tight supply situation outside China. The contraction on the supply side further amplified the deficit in markets outside China, with the impact of production cuts at the two key projects, EGA and Alba, being particularly prominent. On March 28, EGA's Al Taweelah production site in the UAE and Alba's plant in Bahrain were both attacked, and equipment damage sharply increased the risk of capacity disruptions. In addition, Alba had already started production cuts on three lines on March 15 due to shipping disruptions in the Strait of Hormuz, while Qatar's Qatalum aluminum smelter shut 40 of its capacity on March 12 due to a natural gas supply interruption. Against this backdrop, the supply gap in overseas aluminum ingot is expected to continue widening. Meanwhile, high energy costs in Europe also led to production cuts and volume reductions in local fabricated products, further exacerbating supply tightness. Tight supply directly pushed premiums in overseas spot markets sharply higher. Affected by supply concerns triggered by the escalation of geopolitical conflict in the Middle East, the Q2 MJP price rose by about $156.5/mt to $351.5/mt. Specifically, by month-end, premiums in major regions all showed a significant upward trend: CIF South Korea premiums rose from $168/mt at the beginning of the month to $292/mt; CIF Thailand premiums rose from $183/mt to $317/mt; Europe duty-unpaid premiums rose from $345/mt to $400/mt; and US Midwest DDP premiums rose from 103.75¢/lb at the beginning of the month to 105.5¢/lb, fully reflecting that current expectations of tight overseas aluminum ingot supply pushed sellers to raise offers. From the perspective of downstream demand and procurement pace across overseas regions, clear divergence was evident: South Korea: phased restocking had already been completed earlier, and downstream purchase and restocking sentiment was currently weak, with demand providing limited support to the market; Southeast Asia: the market was currently focused on digesting inventories, with only partial spot order restocking demand, and overall momentum for new purchases was insufficient; Europe: affected by production cuts in Qatar and Bahrain's aluminum industries, market concerns over a supply deficit continued to intensify, and downstream players were gradually carrying out restocking purchases, with demand showing relatively strong performance; US: inventory was currently at a low level and was entering a restocking cycle, providing some support to the market. II. China’s Aluminum Market: Under Pressure from Inventory at High Levels, with Suppressed and Weak Demand In contrast to the strength of the LME, although China’s aluminum market was likewise supported by supply disruptions and showed an upward trend, its overall performance remained relatively weaker than the LME, with the core pattern characterized by “elevated inventory and suppressed demand.” On the price front, persistently high aluminum prices in China continued to restrain downstream purchasing demand. At present, the downstream procurement pace is mainly driven by order-based just-in-time procurement, while willingness to restock proactively remains subdued, making it difficult to form stronger demand support. China has not effectively eased inventory pressure—domestic aluminum ingot remains at inventory at high levels, and the pace of inventory drawdown was slower than expectations. Inventory drawdown is expected to take even longer going forward. Inventory at high levels and high aluminum prices have formed a dual constraint, leaving the Chinese market with upward momentum, but weaker than that of the LME. In the short term, spot premiums in China are expected to remain under pressure and widen further. Source: SMM

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.....

Recently, Xinjiang Blue Diamond Lithium Energy Technology Co., Ltd. published the first official public notice for the environmental impact assessment of its lithium salt production project. The project is located in Toksun County, Turpan City, Xinjiang, with a total investment of 2.5 billion yuan. It will include a production line capable of producing 35,000 tons of battery-grade lithium carbonate and 935 tons of anhydrous lithium chloride per year, along with supporting facilities such as a raw material preparation area, pyrometallurgical area, leaching and electrolysis area, and production area.

SMM March 31 News: For Lithium battery recycling, the purchase volume of black mass by downstream hydrometallurgy recycling enterprises, up 48% MoM,

Recycling Industry Events This Week (December. 29-31)

SMM News, March 31: According to SMM statistics, total aluminum production outside China in March 2026 edged up 0.2% YoY, while daily average production fell 2.7% MoM, mainly due to widespread production cuts and shutdowns at aluminum plants in Mozambique and the Middle East during March. According to an announcement on Hydro's official website, Qatalum smelter in Qatar initiated an orderly shutdown on March 3, and announced on March 12 that it had decided to stop further production cuts and maintain a 60% operating rate. On March 16, according to South32's official website, Mozal Aluminium (Mozal) was confirmed to have entered maintenance status on March 15, involving 580,000 mt of capacity. On March 15, according to an announcement on Alba's official website, Alba initiated the shutdown of Lines 1, 2, and 3 under controlled and safe conditions, involving capacity equivalent to 19% of its total capacity of 1.623 million mt, or about 310,000 mt; around March 25, the market reported that its Line 4 might also see production cuts or shutdowns, involving 320,000 mt of capacity; on March 28, according to an announcement on Alba's official website, its aluminum plant facilities were hit on March 28, the extent of equipment damage was still being assessed, and it would maintain operational flexibility and employee safety. On March 28, according to EGA's official website, facilities at its Al Taweelah aluminum plant suffered severe damage, with the extent of the damage still under assessment. The market expects large-scale production cuts and shutdowns there, and the plant has aluminum capacity of about 1.55 million mt. Looking ahead to April 2026 , although the Mount Holly aluminum plant in the US and the Grundartangi aluminum plant in Iceland are expected to begin resuming production, production resumptions at Spain's San Ciprián aluminum plant continue to advance, and operating capacity at new aluminum projects in Indonesia and Angola is expected to continue ramping up, given the large scale of production cuts and shutdowns at aluminum plants in the Middle East and Mozambique in March and the further emergence of their impact, aluminum production outside China in April is expected to decline significantly both YoY and MoM. Overall, if the situation in the Middle East proves difficult to ease, monthly aluminum production is expected to shift into sustained negative YoY growth from Q2 to Q4 2026. Continued attention should be paid to subsequent announcements from relevant aluminum plants in the Middle East and trends in global aluminum inventory.

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.

Zijin Mining's 2025 annual report sent a clear industry signal: its lithium business has officially moved from strategic reserve to the stage of scaled monetization.