Since late April, aluminum billet processing fees in China's three major consumption regions staged a strong rebound, with South China taking the lead. Processing fees of φ120 aluminum billets (Guangdong) hit a Q2 low of -40 yuan/mt on April 16, then surged rapidly, approaching the 500 yuan/mt mark by month-end in May, and reaching a new yearly high of 490 yuan/mt on May 28. SMM believed there were three main reasons...

According to SMM statistics, on May 28, aluminum billet inventory in China's major consumption regions fell to 181,500 mt, a significant destocking of 24,000 mt WoW, successfully pulling back below the 200,000 mt threshold. Warehouse withdrawals during the week climbed to 58,900 mt, up 3,200 mt WoW, hitting a new periodic high.

In May, China's aluminum fabrication industry recorded an overall PMI of 50.8%, barely staying above the 50 mark but pulling back significantly by 3.1 percentage points from April. Industry sentiment slid from the edge of expansion territory toward the critical threshold, with structural divergence intensifying further.

Iron ore futures strengthened with a fluctuating trend today. The most-traded contract I2609 closed at 783.5 yuan/mt, up 0.45% from the previous trading session. Port spot prices edged up by 3-5 yuan from the previous day. Traders showed moderate enthusiasm in offering prices; steel mills purchased as needed; with the weekend approaching, the overall market trading atmosphere was sluggish. The transaction price of PB fines at Shandong ports was 754 yuan/mt. The transaction price of PB fines at Caofeidian Port was 760 yuan/mt, and the transaction price of Jimblebar fines was 723 yuan/mt. Today, SMM's 35-port inventory continued destocking, but the magnitude had narrowed significantly. The risk of inventory buildup is continuously increasing after entering June. Additionally, rising coke prices squeezed steel mill profits, continuing to weigh on iron ore prices. Meanwhile, end-use demand further weakened due to weather impacts, and market sentiment tilted toward pessimism. Under these combined influences, iron ore prices are expected to maintain a fluctuating trend within a narrow range, with the upper and lower bounds remaining unchanged.

This week, the operating rate of China's leading downstream aluminum processing enterprises was 64.1%, down 0.3 percentage points WoW.

【SMM Aluminum Brief】According to the latest SMM data, the Shandong 2# petroleum coke spot price index was recorded at RMB 4,203.64/mt, up 0.52% from last Thursday; the Shandong 3# petroleum coke spot price index stood at RMB 3,752.45/mt, up 0.87%; and the Shandong 4# petroleum coke spot price index reached RMB 2,000.6/mt, up 4.02%.

[SMM Silicone Weekly Review: DMC Seemingly Stable but Quietly Declining, Silicone Market Tug-of-War Intensifies] This week, China's silicone DMC market appeared stable on the surface but declined underneath, with the trading range shifting down to 14,300-14,800 yuan/mt, an average price of 14,550 yuan/mt, down approximately 350 yuan/mt WoW. In terms of regional quotations, mainstream quotations in Shandong and other regions all reached 14,800 yuan/mt.

DCE iron ore futures were in the doldrums today, with the most-traded contract I2609 closing at 780.5 yuan/mt, edging down 0.06% from the previous trading session. Port spot prices fell 1-5 yuan from the previous day. Traders showed moderate enthusiasm in offering prices; steel mills inquired cautiously, with transactions mainly concluded at low prices; overall trading activity was lukewarm. The transaction price of PB fines at Shandong ports was 750 yuan/mt. The transaction price of PB fines at Caofeidian port was 756 yuan/mt, and that of Jimblebar fines was 725-730 yuan/mt. According to today's industry data, total inventory of the five major steel products continued destocking, and although demand weakened somewhat, it remained resilient. Meanwhile, steel mill profits stayed stable, and hot metal production still had room to edge up. Combined with geopolitical impacts from the US-Iran conflict and the Russia-Ukraine conflict, short-term cost support persisted. Iron ore prices are expected to find bottom support in the near term and continue to move sideways.

SMM May 27: Dealers in Shandong reported that replacement demand in the e-bike lead-acid battery market remained sluggish, with poor battery sales. Current battery inventories exceeded one month. The battery wholesale market had a strong clearance atmosphere, with the main model 48V20Ah quoted at 400 yuan/set. Dealers in Shanxi reported that the off-season trend in the e-bike market intensified. Multiple brands in the battery wholesale market successively implemented sales promotions on batteries, with the main model 48V12Ah dropping to 275 yuan/set. Manufacturers in Zhejiang reported that consumption in the e-bike lead-acid battery market was weak. Dealers were cautious in purchasing, and finished product inventories stayed high. The current factory operating rate was maintained at around 80%. In addition, lead prices pulled back today, and they purchased lead ingots as needed.

DCE iron ore futures were in the doldrums today. The most-traded contract I2609 closed at 781.5 yuan/mt, edging down 0.32% from the previous trading session. Port spot prices were basically flat compared to the previous day. Traders showed moderate enthusiasm in offering quotes; steel mills made fewer inquiries with heightened wait-and-see sentiment and cautious procurement. As of now, overall spot market transactions remained limited. The transaction price of PB fines at Shandong ports was 753 yuan/mt. The transaction price of Mac fines at Caofeidian port was 763 yuan/mt. According to an SMM survey, on May 27, the blast furnace operating rate of the 242 steel mills tracked by SMM was 89.70%, up 0.15 percentage points WoW. The daily average hot metal production of the sample steel mills was 2.4281 million mt, up 2,300 mt WoW. This week, one blast furnace entered maintenance and three blast furnaces resumed production, mainly concentrated in Hebei and Henan. Recent production resumptions at blast furnaces pushed overall hot metal production on an upward trend. Growing iron ore demand provided bottom support for ore prices. However, as the end-use demand off-season deepened, demand is expected to weaken further, and iron ore prices are expected to remain in the doldrums in the short term.