[China Inventory Continued to Decline This Week, Aluminum Prices Show LME Outperforms SHFE in the Short Term] China inventory continued to decline this week but at a modest pace, limiting the upside elasticity of SHFE aluminum, with the divergence between domestic and overseas markets expected to persist in the short term. Key areas to watch going forward include whether China inventory destocking accelerates, whether the US-Iran deal can be formally signed, further clarity on the US Fed's rate path, and whether China is further tightening regulations on aluminum capacity operations. Overall, aluminum prices are expected to continue moving sideways in the short term, with LME outperforming SHFE.

SMM News, March 31: According to SMM statistics, China aluminum production in March 2026 (31 days) was up 1.6% YoY and up 10.7% MoM. This was mainly driven by the recovery in calendar days and the gradual resumption of work and production by downstream enterprises after the Chinese New Year. Operating rates across downstream sectors generally increased, and the proportion of liquid aluminum also rebounded, up about 9.3 percentage points MoM to 73.7%, above expectations at the beginning of the month. The main reason was that some aluminum plants saw considerable liquid aluminum sales, while sentiment for casting ingot was weaker than expected at the beginning of the month. Based on SMM data on the proportion of liquid aluminum, China aluminum casting ingot production in March was up 5.3% YoY and down 18.1% MoM. Capacity changes: As of month-end March, SMM statistics showed that China existing aluminum capacity was about 46.209 million mt, with no MoM change. Production forecast: Entering April 2026, as the peak season deepens, downstream enterprises are expected to see gradually stronger demand for primary aluminum. The proportion of liquid aluminum is expected to edge higher. Overall, the proportion of liquid aluminum is expected to rise by 1.8 percentage points to 75.5%. [Data source statement: Except for publicly available information, all other data is processed and derived by SMM based on public information, market communication, and SMM's internal database models, and is for reference only and does not constitute decision-making advice.] Source: SMM