As of April 24, the mainstream price in the south China market — SMM A00 aluminum (Foshan) was at a discount of 345 yuan/mt against the 2605 contract, while the mainstream price in the east China market — SMM A00 aluminum was at a discount of 130 yuan/mt against the 2605 contract. The price spread between the two regions had exceeded 200 yuan/mt, covering sea freight, short-haul transfer, and logistics costs, officially opening up the transshipment window between Guangdong and Shanghai...

According to SMM data, as of April 24, social inventory of aluminum ingots in China's major consumption regions stood at 1.465 million mt, up 42,000 mt WoW, maintaining an inventory buildup trend for multiple consecutive weeks, with the pace of buildup widening again WoW. Weekly warehouse withdrawals rebounded slightly by 14,200 mt WoW to 115,200 mt, but the improvement in withdrawals fell short of the recent increase in arrivals, indicating clearly insufficient momentum for inventory drawdown..

[Inventory Trends Diverge Significantly in and outside China; Aluminum Prices Continue LME-Outperforms-SHFE Pattern] Negotiations in the Middle East experienced repeated twists and turns, and geopolitical risks had not yet fully been cleared. However, the widening supply gap outside China and the steady drawdown of LME inventory jointly supported LME aluminum prices in holding up well. In China, social inventory of aluminum ingots remained at elevated levels, with the strength of demand recovery and the pace of inventory drawdown becoming the core variables influencing SHFE price trends.

[Strait Blockade Remains in Stalemate, LME Outperforms SHFE for Aluminum] Overall, the strait blockade continued. The supply gap outside China and the ongoing drawdown of LME inventory supported LME prices to hold up well, while China's aluminum ingot inventory remained at elevated levels. Attention should be paid to whether a turning point in domestic inventory can materialize smoothly.

[Geopolitical Negotiations Remain Unresolved; Aluminum Prices Continue LME Outperforms SHFE Pattern] Overall, the Middle East negotiation process continued to face setbacks. However, the supply gap outside China and the continued drawdown of LME inventory supported LME prices to hold up well. Meanwhile, China's aluminum ingot inventory remained at elevated levels, and attention should be paid to whether the inflection point of domestic inventory can materialize smoothly.

Industrial metal prices on the London Metal Exchange (LME) surged to a record high, driven by rising aluminum prices after the Middle East war disrupted supply, as well as a recent recovery in copper prices. The LME Index, which tracks six major metals, rose nearly 12% over the past four weeks and hit an all-time high at Thursday's close , gaining 3.6% this week. Aluminum prices have risen about 15% since the outbreak of the Iran war, with approximately 9% of global aluminum production coming from the Middle East. Aluminum carries the largest weighting in the index, and together with copper, the two metals account for nearly three-quarters of the index's weighting. JPMorgan warned that the aluminum industry is heading toward a "black hole," and even if flows through the Strait of Hormuz resume, "the global aluminum market will face severe and prolonged supply disruptions." This week, the bank told clients that the market has now entered a void, and aluminum prices could break through $4,000 per mt, as the industry is set to face the largest supply deficit in 25 years. Aluminum hit a record high of $4,073.50 per mt in 2022, when the Ukraine conflict triggered a similarly severe supply shock. Aluminum supply losses escalated sharply after Iran directly attacked two major smelters in Abu Dhabi and Bahrain at the end of last month, and a severe and lasting supply deficit is hitting the market. The dual blockade of the Strait of Hormuz by the US and Iran has also hindered transportation of goods. However, despite the waterway remaining closed, hopes that the US-Iran ceasefire will be extended, along with signs that both sides may be moving toward a peace deal, have provided support for other metals. These metals had previously been hit by surging energy costs and concerns that the war would slow down global growth, but rebounded recently on signs that the conflict may be nearing an end. Trump claimed on Thursday, without any evidence, that Iran had agreed to terms it had long resisted, including abandoning its nuclear weapons ambitions. Tehran has not confirmed that it has made concessions. Mercuria Energy Group and BMO Capital Markets predicted this week that copper prices will surpass the record high set in January. They noted that Chinese buyers are returning to the market, and the White House's upcoming tariff decision is also encouraging more exports to the US. Copper prices have risen 11% over the past four weeks, just about 3% below their record closing price. (Jin10 Data)

[Short-Term Supply-Demand Resonance, Bullish Trend in Aluminum Prices Continues] Overall, the Middle East negotiation process experienced repeated setbacks, but the supply gap outside China and continued LME inventory drawdown supported LME prices to hold up well. China's aluminum ingot inventory remained at elevated levels, and attention should be paid to whether a turning point in domestic inventory can materialize smoothly.

[SHFE and LME Aluminum Indicators Strengthen Across the Board, Geopolitical Risks Dominate Short-Term Market] Overall, from a macro perspective, risks of strait transit restrictions and conflict escalation resonated with fundamental supply-side hard damage and low global inventory, jointly providing strong bottom support for aluminum prices. However, weak interest rate cut expectations, China's aluminum ingot inventory buildup exceeding expectations, and adverse expectations on consumption and inflation from recent high fluctuations in oil prices all notably dragged on the upside room for aluminum prices. In the short term, aluminum prices fluctuated at highs.

[Solid Geopolitical Support, Aluminum Prices Fluctuate at Highs] Overall, from a macro perspective, restricted strait transit and risks of conflict escalation resonated with fundamental supply-side hard damage and low global inventory, jointly providing strong bottom support for aluminum prices. However, weak interest rate cut expectations, above-expectation aluminum ingot inventory buildup in China, and adverse expectations on consumption and inflation driven by recent high fluctuations in oil prices all notably weighed on the upside room for aluminum prices. In the short term, aluminum prices are expected to fluctuate at highs.

[Ceasefire Unlikely to Resolve Supply Weakness; Aluminum Prices Retain Strong Support at High Levels] Overall, the two-week ceasefire news was unable to reverse the firm pattern underpinned by substantive supply damage and low inventory. Expectations of tangible supply contraction triggered by attacks on Middle Eastern aluminum smelters, combined with low global inventory and the recovery of peak-season demand in China, will provide strong upward momentum for aluminum prices. In the near term, aluminum prices are expected to hold up well.