Gold has lost significant ground in recent weeks, but for Wells Fargo, this apparently changes little in the long-term picture. The US bank has reaffirmed its positive outlook for the precious metal and significantly raised its price target for the current year.

For almost four weeks, the war against Iran has kept the world on edge – a conflict that leaves deep marks not only geopolitically but also economically. Volatility and uncertainty in global markets are increasing daily.

[SMM Lead Morning Meeting Summary: Macro Factors and Fundamentals Present Both Bullish and Bearish Signals, and Lead Prices May Continue to Consolidate in the Short Term] Fed Chairman Powell released dovish signals, and the market once again bet on the possibility of an interest rate cut within the year. Recently, production at primary lead and secondary lead smelters has resumed, supply has been relatively ample, and imported lead has continued to flow into China...

Since the beginning of this year, the spot treatment charge market for copper concentrates has shown an unprecedented and severe downward trend. The SMM Copper Concentrate Spot Index has fallen from -45 USD/dmt at the start of the year to near -70 USD/dmt, with the speed and magnitude of the decline being historically rare. A negative treatment charge means that when smelters purchase copper concentrates, they not only fail to receive traditional processing income from miners but instead must pay the sellers. Based on the current TC of -70 USD/dmt, the actual cost smelters pay sellers in the copper smelting process is equivalent to a TC of 70 USD, or further converted to a TC+RC of approximately 112 USD. This extreme price signal has quickly drawn high market attention to smelter profitability and even sparked concerns about the sustainability of domestic copper smelting production. Despite treatment charges falling to historic lows, copper cathode production by Chinese smelters remains at high levels, currently around 1.2 million tons per month. This phenomenon of "producing more while losing more" appears, on the surface, to contradict market logic, but actually reflects smelters' passive choices and structural supporting factors in the current complex environment. Historically, extreme treatment charge scenarios are not unprecedented. In past industry downturns, smelters often relied on one or several factors—exchange rate fluctuations, rising sulfuric acid prices, or treatment charges themselves—to barely maintain cash flow balance. In the current cycle, the sharp rise in sulfuric acid prices has become a key variable supporting smelter survival. Currently, the ex-factory prices of smelter acid sold by domestic copper smelters generally range from 800 to 1,600 yuan per ton. The latest SMM Copper Smelting Acid Index stands at 1,235.5 yuan/ton. As a crucial byproduct of copper smelting, sulfuric acid price fluctuations significantly impact smelters' comprehensive earnings. Typically, smelters produce approximately one ton of sulfuric acid for every dry metric ton of copper concentrate processed. Based on the current sulfuric acid price of 1,235.5 yuan/ton, after deducting value-added tax (at a 13% rate) and converting to US dollars (using an exchange rate of 6.9), each ton of sulfuric acid can contribute about 158 USD in revenue for the smelter, equivalent to an additional 158 USD per dry metric ton of copper concentrate. If further converted to the TC+RC metric, this amounts to about 99 USD. Thus, the rise in sulfuric acid prices has significantly offset the loss pressure from negative copper concentrate treatment charges, with some more efficient smelters even achieving marginal profitability. It is precisely this "stabilizer" role of sulfuric acid that allows smelters to maintain high operating rates under extreme treatment charge conditions. However, the support of sulfuric acid for smelting profits is not unlimited, as its price trend is itself influenced by more complex international geopolitical factors. The recent sharp escalation of the Middle East situation has brought significant uncertainty to the global sulfuric acid and sulfur supply chain. Since the joint US-Israeli military strike against Iran on February 28, 2026, the Strait of Hormuz, the world's most critical energy transport route, has rapidly fallen into a severe transit crisis. After taking office, Iran's new Supreme Leader, Mojtaba Khamenei, immediately declared that the strait would remain closed as a strategic lever against the US-Israeli alliance and suggested that neighboring countries close US military bases. The Islamic Revolutionary Guard Corps subsequently explicitly announced a ban on any vessels associated with the US or Israel from passing through the Strait of Hormuz, warning of severe consequences for unauthorized passage. The Strait of Hormuz is a critical chokepoint for global sulfur transport. Statistics show that before the conflict, over 100 ships passed through the strait daily. However, after the conflict erupted, transit traffic plummeted by over 90%, with extreme cases of no ships passing for an entire day, leaving over 3,000 vessels stranded in nearby waters. This effective blockade has not only directly impacted the crude oil market—with Brent crude futures rising over 50% within a month to exceed 114 USD per barrel—but has also severely disrupted the global supply chain for sulfur and sulfuric acid. War risks have caused shipping insurance costs to soar to over 20% of the cargo value, further increasing logistics costs and plunging global sulfur supply into a logistical crisis. Although Iran claims to allow passage for vessels from "non-hostile" countries, requiring them to obtain prior permission, actual transit volumes remain extremely low, far below global trade demand. Simultaneously, the Houthi armed group in Yemen has announced its involvement, posing new security threats to the Red Sea-Suez route. The compounding pressure on the two major shipping chokepoints of the Strait of Hormuz and the Red Sea is posing a systemic challenge to the global supply chains for energy and chemical raw materials. As the primary raw material for sulfuric acid production, the disruption in sulfur supply directly drives international and domestic sulfuric acid prices progressively higher. Given the current situation, geopolitical conflicts show no signs of easing in the short term, implying further room for sulfuric acid price increases. The continued rise in sulfuric acid prices will have a dual impact on the domestic copper smelting industry. On the one hand, increased sulfuric acid revenue will continue to provide crucial profit supplementation for smelters, enabling them to maintain production even at lower TC levels and potentially further depressing spot copper concentrate treatment charges. On the other hand, this surge in sulfuric acid prices, driven by geopolitical conflict, also makes smelter profitability highly dependent on external unstable factors, rendering the industry's overall risk resilience increasingly fragile. Notably, the extreme treatment charge environment has begun to have a tangible impact on the global layout of copper smelting capacity. Mitsubishi Materials of Japan recently announced its plan to cease operations at its Onahama copper smelter by the end of March 2027. The smelter has a crude and refined capacity of 230,000 tons, and the main reason for the closure is precisely the intensified competition in the global copper smelting industry, leading to a sharp deterioration in copper concentrate TC/RC and persistent pressure on business prospects. This decision sends a clear signal: against the backdrop of continuously bottoming treatment charges and industry profits highly dependent on byproducts and external environments, some high-cost smelting capacity or those lacking comprehensive recovery capabilities are facing pressure to exit the market. In summary, China's copper smelting industry is currently at a highly unusual cyclical juncture. On one hand, smelters, benefiting from high sulfuric acid prices, have temporarily weathered the impact of negative treatment charges, maintaining high output. On the other hand, sulfuric acid prices themselves are heavily dependent on geopolitical situations, and external variables like the Strait of Hormuz blockade introduce significant uncertainty into the sustainability of smelting profits. If tensions in the Middle East persist, sulfuric acid prices may continue to rise, leaving room for TC to fall further, potentially enhancing smelters' tolerance for extreme treatment charges in phases. However, if geopolitical tensions ease, sulfur supply chains recover, and sulfuric acid prices retreat from their highs, smelters would face the risk of a "double blow" from both low treatment charges and reduced byproduct revenue, potentially heralding a genuine phase of capacity reduction and deep adjustment for the industry. Therefore, the current apparent "resilience" of the copper smelting industry is essentially built upon a fragile balance between geopolitical factors and the byproduct market. For market participants, besides monitoring TC trends, it is crucial to closely track changes in sulfuric acid prices and the underlying geopolitical factors to make more accurate judgments regarding the production sustainability and profitability prospects of the smelting industry.

【SMM Scrap Aluminium Market Analysis】Navigating the Choke Point: How Middle Eastern Geopolitics are Rewiring Global Aluminum Scrap Flows I. Introduction: The Macroeconomic Catalyst The global secondary aluminum market is currently navigating a severe logistical gauntlet. While physical smelting and processing facilities across the Middle East are facing their own localized pressures, the maritime arteries connecting the region to the rest of the world are fundamentally compromised. With vessel traffic heavily restricted through traditional waterways like the Red Sea, carriers are executing widespread, mandatory rerouting around the Cape of Good Hope. This geographical detour has introduced hard, quantifiable friction into global trade flows. Transit times from Europe and the Middle East to major Asian main ports have stretched by an additional 12 to 14 days. Consequently, freight costs per container have also reported increases by up to 60-70%. Beyond the immediate ticket price of shipping, this delay translates to millions of dollars in working capital abruptly tied up in floating inventory, severely squeezing liquidity for global traders. To understand the future of secondary aluminum pricing and availability, the market must look at how this disruption cascades across the supply chain. The logistical fallout has created a massive supply shock that is permanently altering working capital dynamics and regional pricing. This structural shift can be traced from Western supply hubs, through the starved processing centers in Southeast Asia, and ultimately to the end-user markets in China and Other Asia, where tightened margins are reshaping the landscape of global scrap procurement. II. The Middle East: The Epicenter of the Bottleneck The Middle East serves as a critical reservoir of scrap aluminum, and current export metrics underscore the massive scale of the material caught in this logistical bottleneck. The United Arab Emirates and Saudi Arabia stand as the undisputed dominant suppliers in the region. Recent mirrored customs data shows the UAE exporting upwards of 309,000 metric tons (MT) in 2025, while Saudi Arabia commands a similar volume, exporting over 277,000 MT in 2024 and up to 260,000 MT by October 2025. Historically, a massive majority of this tonnage has been earmarked for Asian buyers, flowing seamlessly through previously unencumbered maritime routes. India and Korea respectively have been the top 2 export destinations for both the UAE and Saudi Arabia since 2020, with both Asian destinations encompassing a total of 81% for Saudi Arabia’s (2020-2024) and 74% for the UAE’s (2020-2025) total exports of scrap aluminum. Mid-tier exporters further supplement this outward flow. Nations such as Israel (exporting roughly 88,000 to 95,000 MT annually) and Kuwait (over 41,000 to 44,000 MT), alongside consistent volumes from Jordan, Bahrain, and Iran, collectively push significant supplementary tonnage into the global market. Similar to Saudi Arabia and the UAE’s situation, South Asia and South Korea remains the most affected: between the years 2020 to 2025, India, Pakistan and South Korea import 60% of the Middle Eastern mid-tier exporters’ scrap aluminum. However, getting this material onto the water, especially through the Strait of Hormuz has become increasingly complex, expensive and operationally untenable. In response to the waterway risks, localized workarounds are emerging: suppliers are increasingly bypassing traditional choke points by trucking upstream material overland to alternative, safer ports before loading it onto eastbound vessels. Meanwhile, traditional transit bridges are feeling the strain. Typical scrap flows rely on the Red Sea in the Middle East to ship scrap between Europe and Asia, and this traditional trade route is feeling the strain from the current war in the Middle East. Although the Houthis in Yemen have not enforced shipment closures through the Red Sea, the threat of them doing so in extension of Iran’s closure of the Straits of Hormuz is enough to force certain companies and insurance policies off of Middle Eastern shipment routes, and to reroute around Africa and the Cape of Good Hope. This leads to partial extensions of freight times for up to 12-14 days, and some 60% to 70% surge in per container shipment costs between Europe and Asia. The extended transit time is not just a scheduling issue; it translates to millions of dollars in working capital abruptly tied up in floating inventory. As outward flows from the Middle East and Europe slow down under these compounding pressures, the knock-on effect creates an immediate feedstock starvation for the processing hubs waiting further East. III. Asia: The Primary Impact Zone While the logistical friction originates in the West, the financial and operational shockwaves are most acutely felt in the "Other Asia" region, specifically within the Indian and South Korean markets. These nations serve as the primary off-takers for Middle Eastern scrap, and the sudden disruption to their traditional supply lines has triggered a rapid repricing of the market. India: Demand Absorbing the Freight Shock India represents the most immediate example of a market forced to reconcile surging logistics costs with robust domestic demand. As a direct result of the freight spike and logistical difficulties, CIF India prices for key imported grades from Europe like Tense and Taint/Tabor have seen approximately $50 USD per metric ton price hikes over the past week. Critically, this cost burden is not being borne by the sellers alone. Analysis of the current buyer/seller split suggests that recent increases in Indian domestic demand for scrap are providing significant upward pressure on prices. This has allowed a portion of the inflated freight costs to be absorbed by Indian buyers who are prioritizing material security over margin preservation. However, this absorption is not infinite; the $50 USD spike is beginning to significantly tighten margins for local secondary producers, raising concerns about how long this price elasticity can be maintained if transit delays persist. Korea and Japan: Strategic Stockpiling and Regional Procurement In East Asia, the response to the Middle Eastern bottleneck has been characterized by strategic stockpiling and a pivot toward Southeast Asian (SEA) supply. As both Japan and South Korea commonly purchase scrap and secondary products (like ADC12) from the Middle Eastern region, there is a sudden need to replace material sources that have been disrupted directly by the US/Israel-Iran conflict. Primary market intelligence from Southeast and East Asia has seen Japanese (and to a smaller extent, Korean and Indian) players engaging in large-scale procurement of secondary products from Southeast Asia at significant prices. SMM’s data reveals that over the first and second weeks of the Middle Eastern conflict, ADC12 CIF Japan prices have seen significant rises, reaching highs at 3350-60 USD/mt between the 11 th to 17 th of March 2026. This coincides with large amounts of stock clearance and/or signing of procurement deals that extend up till mid-April to early-May. These purchases are occurring at high price points, driven by robust Japanese demand that is effectively outbidding local processors. This "procurement blitz" is rapidly depleting regional liquidity, leaving Southeast Asian hubs starved of the very feedstock they traditionally rely on to serve their own domestic industries. Thailand local ADC12 prices have been observed to be lagging behind FOB prices by 100-200USD/mt, creating a supply starvation for local downstream needs. As of the 26 th of March, market intelligence has revealed a possible second wave of procurement from East Asian nations in Southeast Asia due to increasing worries over the extended war. Prices for ADC12 FOB Thailand and Malaysia deals have been stabilizing around the 3200-3230 USD/t mark as demand slowly creeps back up for both local and foreign demands. Thailand local and FOB ADC12 prices have just closed the gap to be roughly equal, and deals can be observed both within Thailand and exporting towards East and South Asian markets. IV. China: The Regional Exception While the rest of Asia grapples with supply starvation and skyrocketing premiums, China remains a notable outlier in the current crisis. Historically, China’s secondary aluminum sector has maintained a lower direct reliance on Middle Eastern scrap compared to its neighbors in South and East Asia, providing an initial layer of insulation. However, the primary reason for China’s relative stability is internal: a combination of sluggish domestic demand and historically high inventory levels. As of late March 2026, China’s social aluminum inventories have reached a five-year high, effectively acting as a massive buffer against global supply shocks. Furthermore, the LME-SHFE arbitrage window has remained largely unfavorable for primary imports, keeping Chinese buyers on the sidelines. On the secondary side, the lack of specificity and details regarding the reverse invoicing policy have generally led to the secondary aluminum market shifting towards a more passive stance. Downstream demand for secondary aluminum has pivoted towards immediate and small amounts of material to reduce risks associated with reverse invoicing, leading to weak demand within China. While higher global freight costs have increased the baseline cost for any incoming material, the lack of domestic "buy-side" pressure means that China has avoided the aggressive price spikes seen in India, Southeast Asia and Japan. For now, the Chinese market is a spectator to the volatility, characterized more by weak spot fundamentals and unclear policy than by the procurement panic gripping the rest of the continent. V. Strategic Outlook: The New Reality of Trade The current landscape suggests that the global aluminum scrap market is moving toward a "new normal" characterized by higher logistical floors and reduced liquidity. Increasing political and institutional instability in Iran and the wider Middle East creates ever-increasing tension and uncertainty for global trade through the Middle East. The transition from the Middle East to the Cape of Good Hope could possibly no longer be a temporary detour but a structural shift that traders must eventually consider as a safer alternative. In extension to the Middle Eastern conflict, the endurance of the "procurement blitz" in East Asia will serve as a bellwether for the long-term stability of scrap flows in Asia. If the inventory buffer in Southeast Asia remains depleted by aggressive Japanese and Korean bidding, the upward price pressure on Indian buyers will likely move from a temporary spike to a permanent baseline. Local downstream industries from Thailand and Malaysia might also find it hard in the medium-long term to cope with constantly spiking ADC12 prices and competition from East and South Asia. Ultimately, the traditional metrics of secondary aluminum pricing, such as the LME-SHFE spread or local collection rates, are being overshadowed by the premium on logistical certainty. As available aluminum scrap becomes increasingly scarce due to supply disruptions in the Middle East and increased costs for material from Europe, this creates price-side pressure for both producers and downstream industries across Asia. This leads to a zero-sum environment in which increasing costs are either burdened by buyers through increasing prices, heightened competition and larger local-export arbitrages that put pressure on local downstream industries, or burdened by producers and traders through shrinking margins and intense inter-producer competition. As the market adapts to this fragmented landscape, the value proposition of a successful trader is fundamentally shifting: it is no longer defined solely by the ability to source metal, but by the ability to guarantee its arrival through an increasingly volatile and high-risk global supply chain.

Precious metals staged their first coordinated rally in nearly two weeks on Tuesday as the prospect of a diplomatic resolution to the U.S.-Iran conflict continued to lift market sentiment and weaken the dollar.

Gold is doing the opposite of what it should. The metal is falling for a reason most investors did not see coming. Wall Street's biggest banks have not changed their outlook. Here is why that matters.

The gold price is currently causing nervousness once again. Since the start of the war involving the USA and Israel against Iran, the precious metal has recorded a daily loss of 4% for the second time.

[Price Review] During the week, silver prices remained in the doldrums. In China, the Ag (T+D) contract on the Shanghai Gold Exchange broke below the support level of 18,000 yuan/kg, while LBMA silver prices kept probing lower after falling below $75/oz. From a macro perspective, escalating geopolitical conflict in the Middle East pushed oil prices to repeated new highs, while intensifying inflation concerns significantly cooled expectations for US Fed interest rate cuts and delayed the timing of the first cut to year-end. The simultaneous strength in the US dollar index and US Treasury yields became the core factors suppressing silver prices. On Wednesday local time, the US Fed announced that it would keep interest rates unchanged. In the statement released that day, it noted that the impact of the Middle East situation on the US economy remained uncertain and that uncertainty surrounding the US economic outlook was still elevated. In addition, speculative demand and ETF holdings continued to decline, and market sentiment kept cooling. As for the gold/silver ratio, because silver posted a deeper decline, the ratio continued to rise. As of March 18, the LBMA gold/silver ratio had climbed to 63, a recent high. [Important Data] Bullish: US preliminary March one-year inflation expectations came in at 3.4%, above expectations and unchanged from the previous reading Bearish: US API crude oil inventory for the week ended March 13 increased by 6.556 million barrels, above expectations and the previous reading US EIA crude oil inventory for the week ended March 13 increased by 6.156 million barrels, above expectations and the previous reading Data and macro releases to watch next week include: Continued hawkishness from the US Fed, the ECB rate decision, US inflation/employment data, COMEX silver delivery, together with the Boao Forum and geopolitical risks On March 19, the FOMC kept rates unchanged at 3.50%–3.75%, raised its 2026 PCE forecast to 2.7%, and expectations for US Fed interest rate cuts cooled sharply. US-Iran Situation: As of March 19, the military strikes by the US and Israel against Iran had entered their 19th day, with high-intensity confrontation, no sign of a ceasefire, and the conflict spreading to multiple Gulf countries. In terms of the current impact on precious metals, financial suppression outweighed safe-haven demand. Against the backdrop of surging inflation expectations, the US dollar and US Treasury yields continued to rise, the timing of US Fed interest rate cuts was delayed, and silver prices were suppressed. [Price Forecast] Silver prices are expected to maintain a fluctuating trend in the doldrums amid the interplay between macro disruptions and fundamentals. On the macro front, caution is still warranted over the risk of continued US dollar strength and heightened volatility from any further escalation in the US-Iran conflict. On the fundamentals side, as PV export rush orders gradually approached their end, rigid demand for raw material procurement by silver nitrate enterprises declined in late March, weakening support from industrial demand. In China's spot market, as investment demand and rigid industrial demand softened, coupled with replenishment from imported silver ingots, circulating supply of silver ingots in the spot market became ample, and suppliers generally lowered spot premium quotes to facilitate transactions. The abnormally high spot premiums in China's spot market will come to an end. At the same time, profitability on imported silver ingots will also decline sharply, and spot premium quotes in actual spot silver ingot transactions are expected to return to rational levels.

[SMM Morning Meeting Summary: The US Fed Held Rates Unchanged, and LME Zinc Came Under Pressure] Overnight, LME zinc opened at $3,220.5/mt. In early trading, LME zinc briefly rose to a high of $3,227/mt, after which bulls reduced their positions, and LME zinc fluctuated downward throughout the session, hitting a low of $3,130/mt near the close. It finally closed down at $3,132.5/mt, a decrease of $100.5/mt, or 3.11%. Trading volume increased to 16,556 lots, and open interest fell by 6,295 lots to 208,000 lots.