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.

Entering the second half of March, regional divergence in China’s aluminum market became increasingly pronounced, with the divergence between inventory trends and spot price spreads in east China and south China intensifying. On the one hand, the nationwide post-holiday inventory buildup in aluminum gradually approached its end, inventory overhang pressure in east China continued to ease, circulation efficiency steadily improved, the inventory buildup momentum slowed down significantly, and.....

Rusal's financial report showed that, affected by its capacity optimization plan, full-year 2025 primary aluminum production fell 1.9% YoY to 3.918 million mt (2024: 3.992 million mt). Alumina production, meanwhile, rose 6.7% YoY to 6.858 million mt. In addition, benefiting from the Guinea expansion project and increased equity interests in refineries in China and India, bauxite production increased 16.2% YoY to 18.453 million mt.

[SMM Aluminum Express News] Russian Ambassador Sergei Tolchenov proposed cooperation with West Kalimantan on a nuclear power plant, aluminum processing facility, and educational programs. Accompanied by Russian investors from bauxite, aluminum, and nuclear sectors, he asked the province to identify strategic partners. Rosatom (Anna Belokoneva) presented reactor technologies from 100 MW to 1,200 MW with high safety standards. Rusal (Aleksey Mirskiy) offered to invest in an aluminum processing plant and invited Governor Ria Norsan to visit Rusal facilities in Russia. Governor Ria Norsan welcomed the offers, confirming a prepared site for a nuclear power plant on Semesak Island, Bengkayang District, and openness to Russian investment.

Due to disruptions from US aluminum tariffs, imports have been hindered and domestic supply is tight, prompting the company to shift from long-term contracts to spot purchasing. Arconic, a major US aluminum producer specializing in aluminum semis for aerospace, automotive, and construction sectors, has a procurement volume of approximately 40,800 mt of aluminum ingots (90 million pounds), which is scheduled for delivery in Q2.

As voices from aluminium associations across US trade-allied nations grow louder, one consensus is becoming clear that the United States’ decision to increase tariffs on aluminium imports to 50 per cent is unlikely to benefit its global partners.

[SMM Aluminum Morning Meeting Summary: Escalating International Trade Frictions May Limit Domestic Price Declines Due to Resilient Consumption] Macro side, escalating China-US trade tensions and EU's concerns over US aluminum tariff hikes (to 50%) intensified market uncertainties. However, China's May manufacturing PMI rebound and improved export indicators provided demand support, with economic resilience potentially limiting declines. Aluminum prices faced short-term pressure, likely remaining in the doldrums. Fundamentals side, domestic aluminum operating capacity remained stable. Notably, increased liquid aluminum alloying ratios at some north China smelters reduced ingot casting volumes, affecting arrivals at major consumption hubs. Cost side, aluminum production costs rose WoW, with the average immediate complete cost reaching approximately 17,200 yuan/mt as of last Thursday, up 258 yuan/mt WoW. This 1.5% WoW increase primarily stemmed from ore supply disruptions driving alumina prices higher, squeezing smelter margins. Demand side, seasonal weakness emerged in some downstream sectors, with PV-related aluminum demand declining and automotive material demand expected to soften mid-to-late June. Construction aluminum demand remained lackluster, though aluminum wire and cable operating rates stayed elevated thanks to State Grid orders. Overall, while domestic macro sentiment remained positive, overseas uncertainties persisted. Fundamentals-wise, faster-than-expected aluminum ingot inventory drawdowns supported prices and spot premiums. Though seasonal weakness appeared in certain industries, the overall demand decline proved milder than anticipated, maintaining resilience. Subsequent focus should center on inventory and demand dynamics, with domestic aluminum prices likely to fluctuate rangebound amid mixed factors.

Recently, news has been circulating widely in the market that an energy giant has established aluminum positions exceeding 1 million mt on the London Metal Exchange (LME). The scale of this position is staggering — as of May 15, LME aluminum inventory stood at only 397,300 mt (with Rusal accounting for approximately 90% of it), and the giant's position is 2.5 times larger than the existing inventory. Affected by this, the near-month contracts of LME aluminum have shifted from a futures contango structure of $28 to a slight spot backwardation structure, intensifying market concerns about the rise in the price of near-month contracts of LME aluminum. Many investors have begun to wonder whether LME aluminum will replicate the previous strong backwardation trend of LME copper, which was triggered by tariff policy risks that led to changes in global trade flows.

Recently, news has been circulating widely in the market that an energy giant has established aluminum positions exceeding 1 million mt on the London Metal Exchange (LME). The scale of this position is staggering — as of May 15, LME aluminum inventory stood at only 397,300 mt (with Rusal accounting for approximately 90% of it), and the giant's position is 2.5 times larger than the existing inventory. Affected by this, the near-month contracts of LME aluminum have shifted from a contango structure with futures premiums of $28 to a slight backwardation structure with spot premiums, intensifying market concerns about the rise in near-month contract prices of LME aluminum. Many investors are beginning to wonder if LME aluminum will replicate the previous strong backwardation trend of LME copper, which was triggered by changes in global trade flows due to tariff policy risks.

Recently, news has been circulating widely in the market that an energy giant has established aluminum positions exceeding 1 million mt on the London Metal Exchange (LME). The scale of this position is staggering—as of May 15, LME aluminum inventory stood at only 397,300 mt (with Rusal accounting for approximately 90% of it), and the giant's position is 2.5 times larger than the existing inventory. Affected by this, the near-month LME aluminum contract has shifted from a futures contango structure of $28 to a slight spot premium (back) structure, intensifying market concerns about a rise in the near-month LME aluminum contract price. Many investors are beginning to wonder if LME aluminum will replicate the previous strong back rally in LME copper, which was triggered by tariff policy risks that led to changes in global trade flows.​ SMM believes that despite the uncertainty surrounding the 232 aluminum tariffs, which has introduced volatility into the global aluminum trading landscape and, coupled with the continuous drawdown of inventory, has led to repeated shifts in short-term trading expectations, from the perspective of overseas aluminum fundamentals, the LME back structure does not have the conditions to be sustained for an extended period.​ In terms of spot market performance, spot premiums for aluminum ingots globally are mostly on a downward trend, particularly in Asia. Influenced by expectations of the off-season, there is no shortage of aluminum ingots in the market, which poses an obstacle to the continuation of the back structure.​ From the perspective of open interest logic, market participants holding large spot positions typically maintain a certain amount of short hedging positions in the futures market. It can thus be inferred that the primary purpose of the operation on the LME this time may be for futures/futures market arbitrage, rather than a simple bet on a unilateral rise in aluminum prices.​ Regarding tariff policies, even if there is a breakthrough in negotiations between China and the US on the 232 steel and aluminum tariff issues, leading to changes in global aluminum trade flows, it will still be difficult to support a strong back structure. The reason is that the US currently still has a portion of hidden aluminum ingot inventory and has not yet faced a situation of supply depletion.​ On the international front, the end of the Russia-Ukraine war does not mean the end of Western sanctions on Russian metals. There is a high degree of uncertainty regarding the lifting of sanctions on Russia, which brings higher capital cost pressures and risks.​ Currently, trade frictions triggered by global tariffs still exist, and the low inventory situation has further strengthened the resilience of aluminum prices. However, the subsequent off-season pressure on the demand side limits its upside potential. If China and the US make substantive progress in the 232 steel and aluminum tariff negotiations, global aluminum trade flows will be reshaped, supply pressures in markets outside the US are expected to be alleviated, and market sentiment will also be boosted. However, fundamentally, this will still be difficult to bring about a substantive reversal in overseas aluminum fundamentals. Market participants need to closely monitor relevant developments and cautiously respond to the complex changes in the LME aluminum market. [The information provided is for reference only. This article does not constitute direct advice for investment research and decision-making. Clients should make decisions cautiously and should not replace their own independent judgment with this information. Any decisions made by clients are not related to SMM.] 》Subscribe to view historical spot prices of SMM metals