[SHFE Aluminum Night Session Closed Higher, with Geopolitics and Fundamentals Jointly Supporting Aluminum Prices] Overall, the geopolitical situation in the Middle East remained the core factor affecting the global aluminum market. A series of production cuts and damage incidents at Middle Eastern aluminum plants is expected to provide strong upward momentum for aluminum prices in and outside China, together with support from expectations of the gradual release of peak-season demand in China. In the short term, aluminum prices are expected to remain in a high-level consolidation pattern.

[SMM Cast Aluminum Alloy Morning Comment: Weak Trading in the Aluminum Alloy Night Session, ADC12 to Move Sideways in the Short Term] The aluminum alloy 2605 contract showed a pattern of opening higher and then fluctuating lower in the night session. It opened at 23,985 yuan/mt, hit an intraday high of 23,985 yuan/mt, dipped to a low of 23,705 yuan/mt, and finally closed at 23,745 yuan/mt, up 50 yuan/mt from the previous trading day, or 0.21%. Trading volume was 2,253 lots, down 5,248 lots from the previous trading day, while open interest stood at 6,784 lots, down 174 lots. Both trading volume and open interest pulled back, indicating weak trading sentiment in the night session.

The global aluminum market is currently characterized by a distinct divergence between overseas and domestic markets. Overseas markets have performed strongly amid supply-side disruptions, while the domestic market has also strengthened due to similar supply disturbances but remained relatively weak compared with the LME. Details on supply, demand, trade and market structure are as follows: I. Overseas Aluminum Market: Prominent Supply Tightness and Sustained Pressure on Inventories The core contradiction in overseas aluminum markets lies in supply contraction and low inventory levels, exacerbated by geopolitical conflicts, further intensifying supply tightness. In terms of LME inventory data, current inventories remain on a continuous downward trend, greatly weakening their supportive role in the market. Historically and recently, LME cancelled warrants peaked at 178,000 tonnes earlier, accounting for 39% of total inventory. As a result, the effectively available LME inventory has dropped to its lowest level since May 2025, further highlighting tight overseas supply. Supply contraction has widened the market deficit, with production cuts at two key projects—EGA and Alba—having a particularly significant impact.On March 28, EGA’s Al Taweelah smelter in the UAE and Alba’s plant in Bahrain were attacked, causing equipment damage and sharply raising risks of capacity disruptions. This came on top of earlier disruptions: March 15: Alba reduced output at three production lines due to shipping disruptions in the Strait of Hormuz; March 12: Qatar’s Qatalum smelter suspended 40% of capacity due to natural gas supply cuts. Overseas primary aluminum supply deficits are expected to continue widening. Meanwhile, high energy costs in Europe have also reduced local semi-fabricated aluminum output, further tightening supply. Supply tightness has directly driven a sharp rise in overseas spot premiums. Amid supply concerns from escalating Middle East geopolitical conflicts, the Q2 MJP premium rose by approximately USD 156.5/t to USD 351.5/t. Specifically, major regional premiums rose markedly at end-March: CIF South Korea: from USD 168/t (early March) to USD 292/t; CIF Thailand: from USD 183/t to USD 317/t; European Duty Unpaid: from USD 345/t to USD 400/t; US Midwest DDP: from 103.75 cents/lb to 105.5 cents/lb. This fully reflects that expectations of tight primary aluminum supply have enabled sellers to push up quotations. Downstream demand and purchasing patterns vary significantly across regions: South Korea: Phase-wise restocking completed; weak downstream restocking sentiment, limited demand support. Southeast Asia: Dominated by term contract execution with limited spot restocking; insufficient incremental buying momentum. Europe: Rising supply shortage concerns amid production cuts in Qatar and Bahrain; downstream restocking underway, relatively strong demand. United States: Low inventories entering a restocking cycle, providing moderate market support. II. Domestic Aluminum Market: High Inventory Pressure, Weak and Constrained Demand In contrast to strong overseas markets, the domestic aluminum market has strengthened amid supply disruptions but underperformed relative to the LME, characterized by high inventories and constrained demand. High domestic aluminum prices have continued to suppress downstream purchasing. Current buying is mainly order-based rigid demand, with low willingness for active restocking, providing limited upward support. Domestic inventory pressure has not eased effectively: primary aluminum inventories remain elevated, and inventory destocking has progressed slower than expected, likely prolonging the digestion period.High inventories and high prices form dual constraints. Although the domestic market has upward momentum, it is weaker than overseas. Domestic spot premiums are expected to remain under pressure and further widen in the short term.

SMM News, March 31， In Q1 2026, amid macro tailwinds, expectations of a supply gap, and successive geopolitical conflicts in the Middle East, aluminum prices repeatedly hit new highs. The quarterly average SMM A00 aluminum price reached 24,028 yuan/mt, up 17.5% YoY; the quarterly average closing price of the LME aluminum 3M contract at 15:00 Beijing time reached $3,196/mt, up 21.8% YoY. High prices suppressed downstream consumption: At the end of 2025, SMM expected China’s primary aluminum consumption growth in 2026 to be 2.0%; as of February, that growth rate had fallen to 1.1%. As a result, the proportion of liquid aluminum in the aluminum industry declined significantly, and aluminum social inventory hit a nearly three-year high. As of March 31, the inflection point in China’s aluminum social inventory was still unclear, while the absolute inventory level had already entered the upper range of SMM’s previous forecast of 1.35-1.4 million mt. However, affected by geopolitical conflicts in the Middle East, aluminum supply and demand were both weak, fundamental risks increased, and prices saw wild swings. Under the impact of high prices, aluminum ingot inventory may continue to build further. According to SMM, as of the end of March, some aluminum ingots in certain regions were still backlogged at rail platforms and outside warehouses. High prices also accelerated supply growth: As of the end of Q1, average profits in China’s aluminum industry exceeded 8,000 yuan/mt. Stimulated by high profits, China’s aluminum supply growth is expected to exceed expectations. At the end of 2025, SMM expected China’s aluminum supply growth in 2026 to reach 1.7%; as of the end of Q1 2026, SMM expected that growth rate had risen to 1.9%. Outside China, supply growth was also boosted by high prices: 1) A smelter in Spain had originally planned to resume full production by 2026, and according to foreign media reports in March, it had already resumed to 90% of operating load; 2) In October 2025, an Icelandic smelter cut production on one line due to equipment failure. It had originally planned to resume production in September-October 2026, but has now moved the plan forward to start by the end of April; 3) At the end of 2025, expectations were that Indonesia’s operating aluminum capacity would reach 2 million mt by the end of 2026; that expectation has now been raised to 2.2-2.5 million mt. Q2 Outlook: At present, one of the decisive factors for global aluminum fundamentals and price trends is the geopolitical situation in the Middle East. SMM analysis showed that outside China, aluminum capacity that had already cut production or faced substantial production reduction risk exceeded 3 million mt. If subsequent production cuts from this portion of capacity are confirmed, outside China aluminum supply is expected to maintain negative YoY growth for an extended period, and global aluminum fundamentals are expected to face a large gap, with the gap outside China far exceeding that in China. In this case, aluminum prices in and outside China are expected to rise sharply again, with overseas prices expected to outperform domestic prices. China’s net aluminum imports are expected to decline, while exports from downstream aluminum plants are expected to increase. However, if actual production cuts come in below expectations, while consumption sees a marked reduction due to factors such as energy and inflation, the upward move in aluminum prices may face insufficient momentum. At present, geopolitical conflicts in the Middle East are disrupting the global aluminum supply-demand pattern, and SMM will continue to follow related developments.

SMM Steel News, March 31: According to SMM statistics, estimated total shipments of resources to mainstream markets this week were 168,200 mt, down 21.69% WoW from the previous week's shipment level. By market: Table 1: Comparison of Arrivals in Mainstream Markets Source: SMM Steel Shanghai market: HRC shipments to the Shanghai market fell notably WoW this week. Specifically, shipments from the Northeast and east China markets were basically stable, resources from North China declined slightly, while shipments from mainstream steel mills in South China dropped more markedly, mainly because mainstream steel mills recently prioritized deliveries of specialty steel products. In the short term, the Shanghai market has recently had limited advantages, and steel mill shipments are expected to remain basically stable. Shipments to the Shanghai market next week are expected to rebound rangebound WoW from this week. Chart-1: Arrivals in the Shanghai Market Source: SMM Steel Lecong market: Shipments to Lecong fluctuated rangebound WoW this week. Specifically, arrivals of local mainstream resources and North China resources both saw no significant WoW changes. Looking ahead, it is understood that local mainstream steel mill WG has recently seen another increase in export orders, while orders for specialty steel have also performed well. In the short term, domestic trade shipment levels are unlikely to increase substantially, so arrivals are expected to remain at a relatively low level in the near term. Chart-2: Arrivals in the Lecong Market Source: SMM Steel SMM publishes weekly HRC shipment data by destination in mainstream markets every Tuesday. To subscribe to or follow more data, please scan the QR code below.

Recently, Chengxin Lithium Group Co., Ltd. (002240.SZ) disclosed on the investor interaction platform that pre-construction preparations for the Murong Lithium Mine, located in Yajiang County, Sichuan Province, had been largely completed, and large-scale construction is expected to begin soon. This progress marked the entry of this lithium industry giant into the substantive development stage of “the largest hard-rock single lithium deposit proven in Asia to date.” The value of the Murong Lithium Mine was first reflected in its remarkable resource endowment. According to data from the Sichuan Mineral Resources and Reserves Review Center, the mine had identified cumulative ore resources of about 61.095 million mt, with lithium oxide (Li₂O) resources as high as 989,600 mt and an average grade of 1.62%. This resource scale made it indisputably the largest hard-rock single lithium mine in Asia, and its grade also ranked among the highest in Sichuan. The mine is located in the well-known Jiajika lithium-beryllium ore district, which forms part of the Songpan-Ganzi-West Kunlun giant lithium metallogenic belt spanning Sichuan, Qinghai, and other provinces and regions, and is known as the “Asian Lithium Belt.” The entire Jiajika ore field had identified total lithium oxide resources exceeding 2 million mt, making it one of the most concentrated regions for hard-rock lithium resources in China and even globally. The Murong Lithium Mine was designed for a production scale of 3 million mt/year, and its mining license is valid until September 5, 2048, providing assurance for long-term and stable mining operations. According to the company’s latest disclosure, the Murong Lithium Mine project had obtained project approval from the Sichuan Provincial National Development and Reform Commission (NDRC), as well as key approvals from departments including natural resources, ecology and environment, and emergency management covering land-use pre-examination, environmental impact assessment, and safety facilities design. Various pre-construction preparations had been largely completed. This means the project is expected to enter the stage of large-scale mine infrastructure and beneficiation plant construction soon. After the project is completed and put into operation, its annual raw ore processing capacity of 3 million mt will translate into considerable production of lithium concentrates, providing stable and high-quality raw material support for the company’s downstream lithium chemicals production sites in Deyang and Suining, Sichuan, as well as Indonesia.

On March 25, the Guoneng Yuci Energy Storage Primary Frequency Regulation Construction Project, undertaken by the Energy Construction Branch, successfully completed all procedures for grid connection and commissioning, was successfully connected to the power grid system, and was officially put into operation. This milestone event marked the company’s breakthrough from zero in the niche field of flywheel energy storage, a new-type energy storage segment. As Huadian Engineering’s first flywheel energy storage demonstration project, it carried the dual mission of technological exploration and market expansion. The core construction content of the project was an 8 MW/800 kWh magnetic levitation flywheel energy storage unit.

Since the beginning of 2026, the lithium battery materials industry has seen a new wave of structural positioning led by chemical giants. In March, Dazhong Mining announced that it planned to sign a tripartite agreement with the Meishan High-tech Zone Administrative Committee and Wanhua Chemical (Sichuan) Battery Materials Technology Co., Ltd. to jointly invest in and build a “200,000 mt/year lithium chemicals project,” with Phase I expected to be planned at 30,000 mt.

After the Lantern Festival, the operating rate of copper cathode rod was the first to rebound continuously, driving a gradual recovery in downstream consumption and pushing social inventory to officially enter a destocking channel from mid-March. However, as copper prices have recently rebounded and risen, downstream procurement sentiment has become more cautious, the pace of destocking has slowed somewhat, and the growth in the operating rate of copper cathode rod has also narrowed accordingly. Operating Rates Rose First, and the Inventory Inflection Point Emerged as Expected After the Chinese New Year, copper prices pulled back in phases, effectively boosting downstream restocking willingness. According to SMM, the operating rate of copper cathode rod enterprises was the first to respond, showing a WoW upward trend for several consecutive weeks. As of the latest data, the operating rate of copper cathode rod enterprises further climbed to 83.17, reflecting the continued release of end-use demand. Driven by the continued rise in operating rates, downstream procurement gradually increased in volume, and rigid-demand orders were steadily placed. As a result, copper inventories in major regions nationwide ended their sustained inventory buildup on March 12, officially marking an inflection point in inventories. Thereafter, the degree of destocking increased week by week, and as of March 26, inventories had declined for three consecutive weeks. With inventories being digested rapidly, the increase in total inventories compared to the same period last year also gradually narrowed from the post-holiday high to 92,900 mt. By region, this round of destocking showed broad-based characteristics. Consumption in Guangdong recovered most notably, coupled with localized tightening on the supply side, and the pace of inventory decline was relatively fast, making it the first to establish a destocking trend; driven by downstream consumption, warehouse withdrawals in Shanghai continued to exceed warehouse inflows, and against the backdrop of normal arrivals of imported and domestic cargoes, inventory steadily pulled back; Jiangsu likewise benefited from the recovery in consumption, jointly driving the rapid drawdown of overall inventory. Copper Price Rebound Curbed Willingness to Chase Gains, Destocking Momentum Weakened Significantly Entering late March, market sentiment shifted. As copper prices rose, downstream enterprises became more cautious, and the previously more active procurement pace slowed down. As of March 30, copper inventories in major regions nationwide fell 13.81% WoW. Although the destocking trend continued, the single-week decline had narrowed from 14.54% in the previous week. Regional performance also diverged. In Shanghai, arrivals of imported and domestic cargoes were normal, downstream consumption continued to recover, and inventory steadily destocked; in Guangdong, consumption remained highly robust, and coupled with tight supply, the inventory decline was still considerable; however, in Jiangsu, affected by another rise in copper prices, downstream procurement turned more wait-and-see, the pace of destocking slowed markedly, reflecting that the restraining effect of rebounding prices on demand had begun to emerge. Meanwhile, the upward momentum in the operating rate of copper cathode rod cooled somewhat. SMM expected the operating rate of copper cathode rod to rise to 83.76% this week, up only 0.59 percentage points WoW, in contrast to the pattern of consecutive sharp increases in previous weeks, indicating insufficient willingness among downstream buyers to chase higher prices, with more shifting to just-in-time procurement and adopting a wait-and-see stance toward subsequent copper prices. Market Outlook: Short-Term Destocking Continues as Momentum Gradually Weakens Overall, supply side, imported cargoes continued to arrive, while arrivals of domestic cargoes were relatively limited due to maintenance and other factors, and the overall pattern of tight supply persisted; demand side was more heavily affected by fluctuations in copper prices, with downstream players holding a wait-and-see attitude toward subsequent price trends, making it difficult in the short term to replicate the intensity of the previous concentrated restocking. Social inventory is expected to continue destocking in the short term, but as copper prices remain at a relatively high level, downstream procurement is turning more rational, and destocking momentum is expected to weaken further. As for subsequent market direction, attention still needs to be paid to copper price trends and the actual fulfillment of end-user orders.

[SMM Brass Bar Flash News] Recently, the brass bar industry has been facing the dual challenge of persistently high raw material costs and diverging market demand. According to SMM, although the industry's overall operating rate has rebounded slightly amid the continued rise in prices of recycled brass raw materials, enterprises' willingness to stockpile has declined markedly, and wait-and-see sentiment in the market remains strong.