[SMM Analysis]Weak Supply-Demand Pattern; Secondary Aluminum Prices Were Expected to Come Under Pressure and Pull Back in April

Overall, cost support remained strong, supply tightened while demand stayed stable. As tender prices became clear, aluminum fluoride prices were generally raised by around 800 yuan/mt in line with the guidance. Going forward, close attention should be paid to dynamic changes in raw material costs and adjustments in downstream procurement pace.

Supply glut, cautious demand, and fading cost support drag the benchmark contract down RMB 205/mt in the week of March 30 – April

On April 2, 2026, the White House ushered US steel trade policy into "Version 2.0." This strategic shift goes beyond simple tariff hikes. It uses full-value taxation and melt-and-pour traceability to block low-end imported raw materials, while applying structural tariff reductions to finished products to ease manufacturing inflation. Ultimately, this two-pronged approach aims to forcibly bring the global supply chain back to domestic US steel production.

On April 1, 2026, the launch ceremony for the Zhongke Liquid Sunshine (Shawan) Green Hydrogen Coupled Zero‑Carbon Liquid Sunshine Methanol Circular Economy Industrial Project was held in Shawan, Tacheng Prefecture, Xinjiang. As a flagship project of China’s 15th Five-Year Plan strategic hydrogen energy layout, the project has officially entered the construction phase. Led by the research team of Academician Li Can of the Chinese Academy of Sciences (CAS) and developed by Zhongke Liquid Sunshine (Shawan) Hydrogen Energy Technology Co., Ltd . , the project will build an integrated zero‑carbon circular economy system centered on wind‑solar power, green hydrogen, and methanol. It comprises three core modules: an annual output of 3.6 million tonnes of methanol, 13.5 GW of photovoltaic hydrogen production capacity, and an annual output of approximately one million tonnes of coal. Compared with conventional coal chemical industry, this model cuts coal consumption by two-thirds while enabling efficient utilization of green electricity and green hydrogen. The project adopts domestically developed oil‑methanol co‑refining technology to produce polyester fiber, supporting high‑value resource utilization in conjunction with Xinjiang’s textile industry. Multiple enterprises have participated in the joint construction, including China National Chemical Engineering Third Construction Co., Ltd. In alignment with national policies such as the West Hydrogen East Delivery pipeline initiative, the project will help upgrade Xinjiang’s wind and solar energy resources. It is expected to create nearly 2,000 jobs, serve as a model for Xinjiang’s green energy transition, and support national energy security and low‑carbon development.

This week, stainless steel spot prices fell slightly more than production costs, further worsening the inversion between stainless steel mill prices and costs. Taking 304 cold-rolled products as an example, based on raw material prices on the day, the full cost profit margin was -1.19% this week; calculated based on raw material inventory costs, the margin was -0.55%. Nickel-series raw material costs, high-grade NPI prices remained in the doldrums this week. Although nickel ore prices are currently holding firm and NPI traders are broadly bullish, SHFE nickel futures have been weak recently, while downstream stainless steel prices have struggled to rise. Stainless steel mills themselves are under heavy cost pressure and have shown low acceptance of high-priced raw materials, resulting in sparse market transactions recently; affected by this, high-grade NPI traders have faced considerable transaction pressure, and the price center edged lower slightly. As of this Friday, high-grade NPI with a grade of 10-12% fell by 2 yuan per nickel unit to 1,081.5 yuan/nickel unit. Stainless steel scrap market, stainless steel scrap prices were stable this week, and the decline in finished stainless steel prices did not transmit to the steel scrap market, while prices of substitute furnace charge also remained stable. Tightness in tax invoices eased, the economic advantage of steel scrap became more evident, and high stainless steel mill production schedules drove higher consumption, lifting market transactions and easing inventory pressure. However, finished product prices struggled to rise, limiting upside room for steel scrap prices, which are expected to remain stable in the short term. As of this Friday, the price of 304 off-cuts in Shanghai rose by 100 yuan/mt, with the latest quote at around 10,150 yuan/mt. Chrome-series raw material costs, high-carbon ferrochrome prices dropped back slightly this week. Although some ferrochrome producers recently reported maintenance and production cuts, and stainless steel production schedules for April remained high, leaving retail spot supply in the ferrochrome market relatively tight, stainless steel mills had built relatively ample ferrochrome raw material inventories earlier. Meanwhile, high port inventories of chrome ore recently caused some loosening in chrome ore spot prices. In addition, ferrochrome capacity has already reached a high level, the rainy season in south China is approaching, and ferrochrome producers outside China are resuming production. With ferrochrome producers lacking confidence in the outlook, ferrochrome prices still faced some downward pressure. As of this Friday, high-carbon ferrochrome prices in Inner Mongolia fell 25 yuan/mt (50% metal content) WoW to 8,625 yuan/mt (50% metal content).

SMM News, April 2: This week, total inventory in the two major stainless steel markets of Wuxi and Foshan posted a slight inventory buildup, rising from 982,000 mt on March 19, 2026 to 984,100 mt on April 2, 2026, up 0.21% WoW. During the week, stainless steel futures were overall in the doldrums. Dragged down by futures moves, downstream end-users showed strong wait-and-see sentiment, and market inquiries and transactions were sluggish. Although the market was in the traditional peak consumption season, downstream just-in-time procurement was maintained, but amid disruptions from the macro environment, stainless steel prices lacked a clear direction. In the short term, transactions were heavily affected by changes in futures, and downstream end-users generally remained cautious, with little willingness to proactively stockpile, further constraining the pace of inventory digestion. Supply side, steel mills concentrated shipments to the market at month-end March, and arrivals were relatively large this week, directly driving the slight inventory buildup. Meanwhile, planned production at stainless steel mills remained generally high in April, and supply-side pressure persisted, posing a major challenge to inventory digestion. Coupled with continued macro perspective disruptions, rising market uncertainty further reinforced downstream caution, and stockpiling enthusiasm remained low throughout. Overall, this week's slight inventory buildup was mainly driven by the combined impact of concentrated steel mill shipments at month-end March, increased arrivals, weak futures, and insufficient willingness among downstream players to stockpile. At present, the high production schedule pace at steel mills has not changed significantly, and social inventory still faced substantial digestion pressure against the backdrop of high supply. Although the "Silver April" peak season provided some support to demand and just-in-time procurement kept the market basically stable, downstream caution was hard to reverse, making a sharp inventory drawdown difficult in the short term. Going forward, the key to inventory trends will still be closely tracking the release of real downstream demand, the direction of futures, and subsequent changes in the macro environment.

As production order fully resumed after the Chinese New Year, the sodium-ion battery industry chain saw a strong recovery in March. Production across the four major segments—cathode, anode, electrolyte, and battery cell—posted substantial growth both YoY and MoM, with industry prosperity rebounding markedly.

This Week, the MHP and High-Grade Nickel Matte Markets Showed a Pattern of Weak Supply and Demand on Both Sides, with the Coefficient Remaining Stable

Refined Cobalt: This week, spot refined cobalt prices trended downward under the influence of capital flows and macro sentiment. Supply side, mainstream smelters kept ex-factory prices stable; after spot prices fell, traders' sentiment to hold prices firm strengthened, and spot-futures price spread quotations were raised to above parity. Demand side, lower spot prices improved downstream purchasing sentiment and slightly lifted transactions, but affected by fluctuations in related metals, downstream buyers remained cautious and mainly made just-in-time procurement. This week, the DRC announced an extension of cobalt intermediate product export quotas for Q4 2025, increasing export uncertainty; the structurally tight raw material situation in China remained unresolved, providing bottom support for cobalt prices. Cobalt Intermediate Products: This week, cobalt intermediate product prices edged up. The DRC announced its quota extension policy, under which Q4 2025 quotas can be extended by up to one month, and Q1 2026 quotas can be extended to the end of June; it is understood that the core reason for the current slow approval process for intermediate products is the lack of local detection personnel. Supply side, some miners sold small volumes of futures cobalt intermediate products this week, with quotations above $25.9/lb. Demand side, most smelters remained on the sidelines as cobalt salt prices struggled to catch up and available-for-sale intermediate products were scarce, and actual transactions were sluggish. Overall, based on the current pace of shipments, large-volume arrivals of cobalt intermediate products at port may be delayed to June-July. After downstream orders become clear and procurement demand is released, intermediate product prices will still have upside room. Going forward, continued attention should be paid to export progress in the DRC and the pace of downstream demand recovery. Cobalt Sulphate: This week, the spot market for cobalt sulphate operated steadily, with no significant price fluctuations, and overall continued to move sideways within a narrow range. Supply side, the continued tightness in raw materials supported smelter quotations, with the mainstream quotation range stable at 95,000-98,000 yuan/mt. At the beginning of the week, a small number of enterprises made low-priced shipments at 91,000-95,000 yuan/mt due to financial reporting and funding pressure, but these enterprises have now basically completed cash realization. Demand remained mediocre, as downstream enterprises were still cautious about expectations for subsequent orders, and their own raw material inventory remained ample, resulting in low purchasing enthusiasm. They only purchased small volumes of low-priced cargoes as needed, and overall market trading activity was weak. In the short term, the market remained in an inventory digestion cycle, with buyers and sellers in a stalemate, making large price swings unlikely. In the long term, uncertainty over raw material supply from the DRC will still support the cost side. As downstream inventories are effectively depleted, cobalt sulphate prices are expected to gradually rebound and recover.