Strait of Hormuz disruptions and Iran tensions are driving up aluminum prices and premiums. Aluminium Bahrain and Qatalum have cut output, while feedstock is tight. Rerouting via Port of Sohar or Saudi ports raises costs and delays. Buyers are turning to China, India, Russia, Canada, and scrap to offset risk. Prolonged disruption could reduce Middle East market share and reprice it as higher-risk supply.

[SMM Weekly Review of Aluminum Prices: Strong Support and Pressure Points Coexist, SHFE Aluminum to Maintain Volatile Consolidation in the Short Term]

[SMM Analysis: Module Factory Purchase Demand Declines, PV Frame Profile Operating Rate Under Pressure] This week, the operating rates of sampled PV frame enterprises continued to diverge. The operating rates of some leading enterprises in east China declined slightly WoW, mainly due to the sluggish purchase sentiment of downstream module factories and the enterprises' relatively pessimistic expectations for module scheduled production in June. However, according to SMM, some manufacturers in Anhui are steadily ramping up their newly invested capacity, which is expected to reach full production in H2. Meanwhile, according to SMM survey, some small and medium-sized enterprises in Anhui and Henan reported that their PV production lines are gradually exiting the market, retaining only orders from some long-established customers. Their PV frame operating rates remain at a low level of 30%.

》Check SMM aluminum product quotes, data, and market analysis SMM News on June 4: Today, the most-traded SHFE aluminum 2507 contract opened at 20,005 yuan/mt, with a high of 20,110 yuan/mt, a low of 19,975 yuan/mt, and closed at 20,075 yuan/mt, up 0.43%. Trading volume was 97,500 lots, and open interest was 190,000 lots. SMM Commentary: Although the increase in US steel and aluminum tariffs to 50% is bearish, China's direct aluminum semis exports to the US have been restricted by high tariffs for years, so the actual incremental impact is limited. It mainly affects overall market sentiment, suppressing global aluminum trade liquidity, particularly impacting countries highly dependent on US exports, and exacerbating regional supply surplus pressure in the short term. On the fundamental side, domestic aluminum smelters' operating capacity remains stable. Notably, some aluminum smelters in north China have increased the proportion of liquid aluminum used in alloying, reducing casting ingot volumes and affecting the arrival of goods in major consumption areas. On the demand side, some downstream sectors are showing expectations of an off-season slowdown. Demand for PV aluminum is decreasing, and automotive aluminum demand is expected to weaken in mid-to-late June. Construction aluminum demand remains lukewarm, but currently benefits from orders from State Grid, keeping the operating rate of aluminum wire and cable high. Overall, short-term market sentiment may suppress aluminum prices due to tariff impacts. Meanwhile, domestic aluminum ingot inventory has declined more than expected, supporting aluminum prices and spot premiums. Although some sectors are showing expectations of a weakening off-season, the overall decline is better than expected, and demand resilience remains. It is expected that the most-traded SHFE aluminum contract will maintain a fluctuating trend in the short term, with solid support below. If macro pressures do not escalate significantly, prices may show mild strength. Today, the most-traded alumina 2509 contract opened at 3,036 yuan/mt, with a high of 3,086 yuan/mt, a low of 3,010 yuan/mt, and closed at 3,063 yuan/mt, up 0.89%. Trading volume was 316,000 lots, and open interest was 300,000 lots. SMM Commentary: According to SMM statistics, alumina's weekly operating capacity continued to rebound, reaching 86.67 million mt/year as of last Thursday, up MoM, further alleviating spot supply pressure and slowing the rise in spot prices. Recent overseas alumina transactions have been sluggish, with relatively small price fluctuations. As domestic prices continue to rise, alumina imports have shifted from losses to profits, and the domestic alumina import window is gradually opening. In the short term, with the gradual resumption of production from some alumina maintenance and production cuts, alumina supply pressure is expected to gradually ease. The average profit of the alumina industry has entered a profitable state, and the market has strong expectations for alumina production resumptions. Alumina futures prices have taken the lead in pulling back, which may drive spot prices weaker. Subsequent attention should be paid to changes in the capacity of domestic alumina enterprises and the supply of imported alumina. [The information provided is for reference only. This article does not constitute direct advice for investment research and decision-making. Customers should make decisions cautiously and should not replace their own independent judgment with this information. Any decisions made by customers are not related to SMM.]

Overnight, LME copper opened at $9,566.5/mt, dipping to a low of $9,557.5/mt shortly after the opening bell.

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

Check SMM's aluminum product quotes, data, and market analysis SMM, May 16: Today, the most-traded SHFE aluminum 2507 contract opened at 20,220 yuan/mt, with a high of 20,220 yuan/mt, a low of 20,090 yuan/mt, and closed at 20,130 yuan/mt, down 0.45%. Trading volume was 83,100 lots, and open interest was 204,000 lots. SMM Commentary: Favourable macro front provides bottom support for aluminum prices, while low inventory further strengthens price resilience. As of May 16, inventories in Guangdong, Wuxi, and Gongyi were 238,000 mt, 168,000 mt, and 53,000 mt respectively, totaling 459,000 mt, down 3,000 mt from the previous day. However, the off-season pressure on the demand side limits upside room. If a breakthrough is achieved in the US-China negotiations on the Section 232 steel and aluminum tariffs, the global aluminum trade flow will be reshaped, and supply pressure in markets outside the US is expected to ease, further boosting market sentiment and supporting aluminum prices. Today, the most-traded alumina 2509 contract opened at 2,995 yuan/mt, with a high of 2,996 yuan/mt, a low of 2,872 yuan/mt, and closed at 2,890 yuan/mt, down 3.51%. Trading volume was 951,000 lots, and open interest was 343,000 lots. SMM Commentary: Maintenance and production cuts at alumina enterprises in south China were concentrated this week, with operating capacity decreasing by 2.9 million mt/year on a MoM basis, further tightening spot supply. In addition, alumina enterprises have been facing losses in recent months, with a strong intention to refuse to budge on prices. Coupled with maintenance and production cuts, spot supply has tightened, leading to a significant rebound in spot prices. In the futures market, alumina futures have rebounded strongly, driven by the alumina fundamentals turning to a deficit, as well as news on domestic alumina enterprises' production dynamics, the revocation of mining rights of several miners in Guinea, and favourable macro news. In the short term, due to the concentrated maintenance and production cuts, alumina spot supply is expected to remain tight, and prices are expected to hold up well. As alumina maintenance ends and new capacity is released, combined with the alumina profit recorded at 153 yuan/mt according to SMM's daily cost-profit model, the market has certain expectations for alumina production resumptions. Subsequent attention should be paid to the maintenance, production cuts, and production resumptions of alumina enterprises. [The information provided is for reference only. This article does not constitute direct investment research and decision-making advice. Clients should make decisions cautiously and not rely on this as a substitute for independent judgment. Any decisions made by clients are not related to SMM.]

Overnight, LME copper opened at $9,527.5/mt. Prices fluctuated at the beginning of the session, dipping to a low of $9,511.0/mt during the session, before fluctuating upward.

[SMM Aluminum Morning Meeting Summary: Bullish Macro Atmosphere and Destocking in Fundamentals Support Aluminum Prices] Favorable macro factors provide bottom support for aluminum prices, and low inventory further strengthens price resilience. However, off-season pressure on the demand side limits upside room. If China and the US achieve a breakthrough in the 232 steel and aluminum tariff negotiations, the global aluminum trade flow will be reshaped, and the supply pressure in markets outside the US is expected to ease, further boosting market sentiment and supporting aluminum prices.