[Environmental Protection in Northern China Affected Galvanizing Operating Rates]: This week, the operating rate of the galvanizing industry was 58.75, down 0.13 percentage points WoW. Raw material side, zinc prices fluctuated at highs this week, and galvanising enterprises mainly digested inventories, but with only small volumes of earlier price-fixed purchases and long-term contracts, zinc ingot inventories at galvanising enterprises edged down. The operating rate declined this week, mainly due to environmental protection-driven production restrictions in some northern regions, which affected operations.

Q1 SHFE Aluminum Price Review (By Stage) January: Market traded on Fed rate-cut expectations, decoupled from fundamentals Fundamentals: Spring Festival low season + demand vacuum + inventory accumulationAluminum prices rose continuously and hit a historical high for the period, squeezing downstream profit margins and weighing on primary aluminum demand.Environmental production restrictions in some regions constrained raw material consumption.Social inventories of primary aluminum kept accumulating. By the end of January, SMM social aluminum ingot inventory rose to 782,000 tonnes, the highest level for the same period in nearly three years. Macroeconomics: The Federal Reserve was in a rate-cut cycle in January. The U.S. dollar weakened notably, and large capital inflows into commodity futures boosted broad commodity prices.Coupled with positive domestic consumption-boosting policies, aluminum prices were well supported. February: Market traded on Fed rate-hold expectations, decoupled from fundamentals Fundamentals: Aluminum prices traded in a weak range.Domestic downstream fabricators sharply reduced purchases due to the Spring Festival holiday, while smelters raised ingot-casting activity, leading to continued accumulation in primary aluminum social inventories.After the holiday, SMM social aluminum ingot inventory climbed to 1.108 million tonnes. High inventory provided little upward support for aluminum prices. Macroeconomics: Diminished U.S. rate-cut expectations drove the DXY stronger. Profit-taking capital outflows triggered a pullback in aluminum prices, reinforcing the weak sideways pattern. March: Market swung between Middle East supply disruptions and demand headwinds Intensive long-short competition drove aluminum prices into a “rally – correction – rebound” volatile structure. Supply side: Frequent overseas production cuts continued to roil the market.Mozal entered maintenance. Qatar Aluminum announced it would halt further cuts and maintain 60% operating rate.Alba Bahrain shut down Lines 1, 2 and 3 under controlled and safe conditions, with market rumors later emerging that Line 4 may also face production cuts or shutdowns.EGA suffered severe facility damage, with the extent still under assessment; the market expects large-scale production cuts or shutdowns.Worsening concerns over global supply shortages became the key driver of periodic aluminum price gains. Escalating Middle East conflicts and safety concerns over shipping through the Strait of Hormuz heightened uncertainty over global primary aluminum supply, injecting sustained geopolitical risk premium and supporting high price levels. Demand side: Rising stagflation fears boosted risk aversion, pressuring aluminum prices to correct and limiting upside. Downside risks in overseas demand became prominent, as downstream fabricators faced multiple constraints:(1) High aluminum prices significantly suppressed purchasing willingness and restrained demand realization;(2) Shortages of natural gas, crude oil and other energy resources forced some fabricators to cut or halt production;(3) Sharply rising freight and smelting costs squeezed downstream margins, further dampening demand indirectly.

I. Review of SHFE Aluminum Price Trends in Q1 2026 (by Stage) January: The market’s core trading logic deviated from fundamentals and centered on macro expectations for US Fed interest rate cuts Fundamentals: Chinese New Year off-season + demand vacuum + inventory buildup Aluminum prices continued to climb and hit a record high for the period, while downstream profit margins came under pressure, leading to weaker demand for primary aluminum. Repeated environmental protection-driven production restrictions in some regions constrained demand for raw materials. Aluminum social inventory continued to accumulate. As of end-January, SMM aluminum ingot social inventory rose to 782,000 mt, a high for the same period in the past three years. Macro front: In January, the US Fed was in an interest rate cut cycle, and the US dollar weakened significantly. Large amounts of capital flowed into the commodities futures market, driving broad commodity prices higher; together with favorable support from China’s consumption stimulus policies, this jointly supported aluminum prices. February: The market’s core trading logic deviated from fundamentals and centered on macro expectations for the US Fed to keep interest rates unchanged Fundamentals: Aluminum prices were generally in the doldrums. Affected by the Chinese New Year holiday, procurement demand from China’s downstream processing enterprises dropped sharply, aluminum plants showed stronger willingness to cast ingots, and aluminum social inventory continued to accumulate. After the Chinese New Year holiday, SMM aluminum ingot social inventory rose to 1.108 million mt. Elevated inventory levels struggled to provide effective upward support for aluminum prices. Macro front: Cooling expectations for US Fed interest rate cuts pushed the US dollar index higher, and profit-taking outflows triggered a pullback in aluminum prices, further reinforcing their weak and rangebound trend. March: The market’s core trading logic repeatedly switched between supply-side disruptions in the Middle East and demand-side suppression. The tug-of-war between longs and shorts intensified, dominating aluminum prices in a volatile pattern of “surge - correction - rebound.” Supply side: I. Production cut events occurred frequently on the overseas supply side, and disruptions continued to intensify. Mozal entered maintenance status. Qatar Aluminium Smelter announced its decision to stop further production cuts and maintain a 60% operating rate. Aluminium Bahrain initiated shutdowns of Production Lines 1, 2, and 3 under controlled and safe conditions, and the market later heard that Line 4 might also face production cuts or suspension. EGA’s aluminum plant facilities suffered severe damage, and the extent of the damage was still under assessment. The market expected it to undergo large-scale production cuts or suspensions. Ongoing concerns over continued tightening on the overseas supply side became the core driver pushing aluminum prices higher in stages. II. As the Middle East conflict continued to escalate, shipping security in the Strait of Hormuz drew widespread market attention, further increasing uncertainty over global aluminum supply and continuously injecting a geopolitical risk premium into aluminum prices, supporting prices fluctuating at highs. Demand Side: 1. From a macro perspective, concerns over stagflation continued to intensify, risk-off market sentiment picked up, dragging aluminum prices into a pullback and limiting upside room. 2. Hidden concerns on the demand side outside China became more prominent. Some downstream processing enterprises were constrained by multiple factors, triggering market concerns over weak demand: 1) high aluminum prices significantly suppressed downstream purchase willingness, hindering demand release; 2) shortages of energy resources such as natural gas and oil put some processing enterprises under pressure to reduce or suspend production; 3) costs such as freight rates rose sharply, and together with higher smelting costs, further squeezed the profit margins of downstream enterprises, indirectly suppressing demand release. Source: SMM

As of March 30, the closing price of the most-traded HRC futures contract was 3,307. In March, the SMM national average spot price for HRC was 3,265.93 yuan/mt, with the monthly average price up 0.72% MoM.

[SMM Daily Brief Review of Coking Coal and Coke] In terms of supply, coking costs at coke producers increased, profit per mt of coke narrowed somewhat, and coke producer inventories still needed to be drawn down, weighing on their production enthusiasm. However, downstream demand improved somewhat, and coke producers were actively making shipments. Demand side, the country's important meetings have concluded, and blast furnaces previously subject to production restrictions resumed production one after another, increasing rigid demand for coke. However, uncertainty still remained in finished steel consumption, and most steel mills remained cautious in their coke procurement. In summary, the supply-demand imbalance in the coke market eased somewhat, and cost support strengthened. In the short term, the coke market may temporarily remain stable.

[SMM Daily Brief Review of Coking Coal and Coke] In terms of supply, as the Two Sessions ended, coke producers previously subject to production restrictions gradually resumed production. With losses per mt of coke remaining within an acceptable range, production enthusiasm was moderate, and coke supply increased steadily. On the demand side, as the country's important meetings ended, steel mills previously subject to production restrictions were expected to resume production, leading to some increase in coke demand. However, as no clearly positive policies emerged from the Two Sessions, market wait-and-see sentiment remained strong, and steel mills maintained a cautious attitude toward coke, mainly purchasing as needed. In summary, the coke market may remain temporarily stable in the short term.

This week, ferrous metals rebounded from the bottom. At the start of the week, coking coal and coke led the futures higher, mainly driven by rising crude oil prices in the overseas market, which pushed the energy and chemicals sector stronger accordingly; mid-week, both the U.S. and Iran signaled a more relaxed stance toward war, easing geopolitical tensions, while coal prices fell in tandem, weakening the cost-side logic, and ferrous metals fluctuated at highs; in the latter half of the week, worsening short-term liquidity issues in BHP's iron ore port inventory triggered stronger iron ore prices in the overseas market, while the Middle East situation remained volatile, reinforcing cost support and pushing ferrous metals higher again. In the spot market, supported by futures, end-user and arbitrage purchase sentiment both improved WoW this week......

[Environmental Protection Measures in Northern China Weighed, Overall Trading Was Average This Week]: Spot premiums in Tianjin were flat WoW this week. As of this Friday, in China, standard domestic brands were quoted at discounts of around 50-100 yuan/mt against the 2604 contract, high-priced brands at discounts of around 30-60 yuan/mt against the 2604 contract, and Tianjin was quoted at a premium of around 10 yuan/mt against Shanghai.

[SMM Morning Meeting Summary: Affected by Macro Disturbances, LME Zinc Maintained Wide Swings] LME zinc opened at $3,316/mt. In early trading, LME zinc fluctuated upward and touched a high of $3,331.50/mt, after which prices fell rapidly. It then rose and recovered the losses, but during European trading hours, as bears reduced open interest, LME zinc quickly dipped to $3,284/mt. In the night session, amid a tug-of-war between longs and shorts, LME zinc gradually recouped the losses and returned to fluctuate above the average price line, finally closing down at $3,314.50/mt, down $1/mt, or 0.03%. Trading volume decreased to 82,887 lots, and open interest increased by 527 lots to 217,000 lots.

[SMM Daily Brief Review of Coking Coal and Coke] In terms of supply, coke producers' profits were weak, coupled with the relatively small room for coal mines to offer concessions, which did not fully restore coke producers' profits. As a result, their willingness to increase output was low, and they maintained normal production. On the demand side, the Two Sessions are about to conclude, and steel mills that had previously imposed voluntary production restrictions are expected to resume production, which may increase demand for coke. However, due to the slow destocking speed of finished steel products, steel mills remained cautious toward coke and adopted a purchase-as-needed strategy. In summary, with steel mills purchasing cautiously and coke producers' cost downside room limited, the coke market may remain temporarily stable in the short term.