[SMM Morning Comment on Cast Aluminum Alloy: Alloy Prices Continued to Hover at Highs, While Market Demand Was Significantly Suppressed] This week, secondary aluminum alloy prices continued to rise, but the pace of demand follow-up was relatively slow. In the short term, raw material costs remained at high levels, providing strong support for ADC12 prices; however, if prices continue to rise, the suppressive effect of high prices on demand will become increasingly evident. Meanwhile, as operating rates gradually recover, there are also expectations of a mild increase on the supply side. ADC12 prices are expected to fluctuate at highs in the short term. Going forward, it is recommended to focus on the pace of downstream order release, the pressure on the market from the supply recovery process, and the impact of the Middle East situation on aluminum prices.

SMM Morning Meeting Summary: Overnight, LME copper opened at $13,044/mt. It touched a high of $13,063.5/mt in early trading, then the center moved lower to a low of $12,929/mt, and finally closed at $12,948.5/mt, down 0.77%. Trading volume came in at 17,000 lots, down 235 lots from the previous trading day; open interest stood at 304,000 lots, up 279 lots from the previous trading day, mainly reflecting an increase in bears' positions overall. Overnight, the most-traded SHFE copper 2604 contract opened at 101,240 yuan/mt. It touched a high of 101,240 yuan/mt at the open, then the center moved lower to a low of 100,560 yuan/mt, and finally closed at 100,860 yuan/mt, down 0.15%. Trading volume came in at 26,000 lots, down 62,000 lots from the previous trading day; open interest stood at 189,000 lots, down 3,320 lots from the previous trading day, mainly reflecting a reduction in bulls' positions overall.

[[Weekly Review of Aluminum Scrap and Secondary Aluminum]]Aluminum Prices Strengthened This Week, Rising Costs Drove Up ADC12 Prices

According to the latest data from the General Administration of China Customs (GACC), China's total iron ore imports for January and February 2023 reached 211 million tonnes, with a cumulative value of approximately US$9.89 billion. The average import price across these two months was US$101.3 per tonne , a month-on-month increase of 0.3%. An analysis by month shows January imports totalled 110.35 million tonnes, representing a 7.77% decrease from the previous month but a 13.59% increase year-on-year. February imports were 99.67 million tonnes , down 9.68% month-on-month, yet showing a 5.80% increase year-on-year. The decline in import volumes is primarily attributed to frequent weather-related disruptions in key supplying nations like Australia and Brazil, which adversely affected mine-to-port rail networks and port loading operations, causing a temporary downturn in overseas shipments. Concurrently, operational activity at major domestic ports slowed during the Chinese New Year holiday, impacting the efficiency of vessel unloading, cargo warehousing, and customs clearance procedures. These combined factors contributed to the reduction in import scale during the first two months of 2023. Looking ahead to March, iron ore imports are forecast to experience a month-on-month rebound. This is anticipated due to shipping disruptions in the Middle East, caused by a partial blockade in the Strait of Hormuz , which may lead some vessels to be rerouted to China , thereby boosting import figures. Furthermore, weather-related logistical constraints are expected to ease, allowing shipments from producing countries to normalise. Finally, as March marks the end of the first quarter , some mining companies may increase their shipment volumes to meet quarterly targets, which would further support a recovery in import levels.

[SMM Aluminum Morning Meeting Summary: The SHFE/LME Price Ratio Continued to Weaken, and Aluminum Prices Were Expected to Fluctuate at Highs in the Short Term] Against the backdrop of continued tightening LME liquidity, LME aluminum still had upward momentum, with strong support from overseas prices, and the backwardation structure was expected to persist in the short term. China was in a phase of high inventory + weak fundamentals, and its upward momentum was clearly weaker than that outside China. Amid diverging domestic and external drivers, the SHFE/LME price ratio was expected to continue weakening, and aluminum prices were expected to continue fluctuating at highs in the short term.

[SMM Rare Earth Weekly Review: Rare Earth Prices Fell First, Then Rose; Pr-Nd, Dysprosium, and Terbium Saw Wide Swings] Due to the combined impact of market news and falling futures prices, suppliers in the Pr-Nd oxide market lacked confidence in the future market and proactively cut prices for shipments. However, upstream separation plants believed that the tight supply pattern of Pr-Nd oxide had not changed. Therefore, Pr-Nd oxide prices pulled back to 760,000-780,000 yuan/mt before rebounding to 790,000-800,000 yuan/mt.

SMM News, March 5: Data Brief: As of Thursday, March 12, SMM copper inventories in major regions nationwide fell 0.57% WoW from last Thursday, ending the inventory buildup seen over the previous three consecutive weeks; total inventories increased 218,400 mt YoY from the same period last year, while regional performance remained differentiated. By region, copper cathode inventory in Shanghai continued to build up. Although consumption recovered somewhat, inventories still trended upward due to the impact of concentrated arrivals of imported cargoes and delivery factors; in Jiangsu, inventories declined slightly, supported by recovering downstream consumption; in Guangdong, consumption rebounded significantly and warehouse withdrawals increased, with inventories already reaching an inflection point and expected to continue declining going forward. Looking ahead, on the supply side, imported cargoes continued to arrive at port and domestic arrivals remained steady; on the demand side, downstream enterprises fully resumed production, and consumption recovered markedly. Based on the overall supply-demand pattern, supply is expected to remain normal next week while consumption steadily rebounds, and weekly copper cathode inventories are expected to destock somewhat.

[SMM Cast Aluminum Alloy Morning Comment: Futures Rebound Lifted Sentiment, Spot Quotes Rose Across the Board] Spot market, boosted by the rebound in futures prices, ADC12 quotes rose across the board today, with the SMM average price of ADC12 raised by 300 yuan/mt. Driven by the cost side, producers actively recouped earlier losses, generally raising prices by 200-400 yuan/mt. However, affected by wild swings in prices during the week, downstream purchase sentiment remained cautious, with most buyers staying on the sidelines and only restocking to meet immediate needs, while the overall pace of market transactions was stable. In the short term, against the backdrop of cost support and a mild release of supply, ADC12 prices were expected to hold up well.

China’s silver prices fluctuated and consolidated this week. The price spread between the Gold Exchange TD price and the SHFE March contract kept narrowing, while a large volume of imported silver ingots entered the market to meet downstream demand, driving down spot premiums for physical silver ingots rapidly. Although many suppliers were reluctant to sell and mostly held firm on offers, downstream buyers actively negotiated for lower prices, and spot premiums in China had already fallen sharply by the end of the week. As of Thursday, in the Shanghai market, the tradable quote for domestic standard silver ingots against TD premiums had been lowered to 600-700 yuan/kg. A few suppliers held firm and were reluctant to sell at premiums of 700-800 yuan/kg against TD, but actual transactions were thin. In Shenzhen, imported large ingots were processed into small ingots before entering the market for trading. Some suppliers, concerned that spot premiums would continue to fall, sold at premiums of 400-500 yuan/kg against TD. Downstream buyers actively negotiated, but remained cautious and mostly stayed on the sidelines due to concerns over further declines in both absolute prices and spot premiums. Actual procurement transactions weakened, and some downstream purchasing demand was delayed until next week. Inventory side, silver social inventory across different regions rose and fell this week. Imported large ingots or silver ingots processed from imported crude silver raw materials entered social warehouses. As downstream demand remained strong, the increase in supply only led to a slight overall buildup in silver ingot social inventory this week.

[SMM Aluminum Morning Briefing: Middle East Situation Remains Deadlocked, Aluminum Prices Hold Up Well] Overall, macro geopolitical risks are providing support at the bottom of prices, while the continued buildup in China’s social inventory is weighing on aluminum prices. However, the geopolitical situation in the Middle East remains unclear. If the conflict persists, expectations for tighter global aluminum supply will remain strong, and aluminum prices will still have solid upward momentum. In the short term, aluminum prices are still expected to hold up well.