Futures: During the night session on March 4, the most-traded SHFE aluminium 2604 contract opened at RMB 25,100 per tonne, hit an intraday high of RMB 25,380 per tonne, dipped to a low of RMB 24,915 per tonne, and finally closed at RMB 25,145 per tonne, up RMB 350 per tonne from the previous close, a gain of 1.41per cent. From a technical perspective, the MA moving averages showed a divergent pattern: MA5 (24,429) > MA30 (24,095) > MA10 (24,041) > MA20 (23,970). In terms of open interest, night-session open interest was 265,000 lots, up 1,977 lots from the daytime session. LME aluminium opened at USD 3,258 per tonne, reached a high of USD 3,418 per tonne—its highest level since April 2022—fell to a low of USD 3,255 per tonne, and closed at USD 3,335.5 per tonne, up 1.85 per cent. Trading volume was 58,279 lots, up 1,816 lots, and open interest was 668,000 lots, up 1,377 lots. On March 4, LME aluminium inventory fell by 425 tonnes, with the entire decline coming from warehouses in Port Klang.

Macro front: Lou Qinjian, spokesperson for the Fourth Session of the 14th National People’s Congress, said that this year, China will continue to take expanding domestic demand as the strategic cornerstone, vigorously boost consumption, and advance the building of a strong domestic market. (Bullish ★) The White House said it had submitted to the Senate the nomination of Kevin Warsh to serve as Fed Chairman. (Neutral) NBS data showed that in February, the manufacturing PMI was 49.0 per cent, down 0.3 percentage points from the previous month, indicating a pullback in manufacturing activity. (Neutral)

Fundamentals: On March 4, Aluminium Bahrain, due to a sudden force majeure event, said it would affect the performance of its supply contracts. It was reported that Aluminium Bahrain’s 2025 aluminium production was 1.622 million tonnes. As of March 4, 2026, the company’s aluminium production continued, but due to the blockade of the Strait of Hormuz, its aluminium ingots could not be delivered normally. As market volatility intensifies due to escalating regional conflicts, Rio Tinto has suspended negotiations with Japanese buyers on Q2 aluminium premiums.

Primary aluminium market: In early trading yesterday, SHFE aluminium 2602 fluctuated upward, with the price centre rising from the previous trading day. Affected by the US-Iran conflict, bullish sentiment was strong. In addition, with the current price spread between futures contracts performing well, some sellers held back supply and held prices firm, and willingness to sell weakened yesterday. Some downstream operations began stockpiling, and acceptance of aluminium prices rose. Yesterday, market quotes were mainly from the average price to a premium of RMB 20 per tonne, and mainstream transactions were from the average price to RMB 10 per tonne.

Yesterday, the East China market willingness-to-sell sentiment index was 2.68, down 0.27 m-o-m; the purchasing sentiment index was 3.19, down 0.03 m-o-m. Geopolitics drove shutdowns of Qatar’s aluminium production lines, and traders in central China had strong bullish sentiment. Although downstream processing enterprises were constrained by orders falling short of expectations and inventories not yet fully depleted, resulting in weaker purchasing sentiment, overall market transactions still improved compared with the previous two days. Holders’ willingness to sell on rallies was relatively evident, while holding prices firm and withholding sales. Ultimately, actual transaction prices in the central China market hovered between parity with the central China price and a discount of RMB 20 per tonne to the central China price. Yesterday, the central China market shipment sentiment index was 2.69, up 0.03 m-o-m; the purchasing sentiment index was 2.32, up 0.05 m-o-m.

Aluminium scrap: The US-Iran conflict disrupted aluminium fundamentals, triggering urgent risk-off sentiment among funds. Yesterday, spot primary aluminium rose RMB 440 per tonne from the previous trading day, and the aluminium scrap market actively followed the rally, though slight regional divergence remained. Shanghai, Zhejiang, and other areas saw larger follow-up gains, while Henan, Guizhou, and other areas adjusted prices more cautiously. After the Lantern Festival, domestic aluminium scrap yards and downstream scrap utilisation enterprises had basically fully resumed a normal production pace, but end-use demand recovered slowly, and actual restocking of raw materials fell short of expectations.

Aluminium scrap prices are expected to hover at highs this week, with the mainstream range for shredded aluminium tensile scrap (priced based on aluminium content) running around RMB 19,000-19,800 per tonne (tax excluded). Supply side, yards have basically fully resumed operations, and the release of supply is set to increase, but constraints on liquidity from recycling policies remain. Demand side, downstream enterprises accelerated their pace of resuming work, and restocking demand is expected to be released slowly. Overall, the tug-of-war between sellers and buyers will continue; market trading sentiment will gradually recover but remain sluggish. Close attention should be paid to downstream resumption progress, primary aluminium price trends, and changes in recycling policies, and vigilance is needed against price fluctuation risks.

Secondary aluminium alloy: Futures, yesterday, the most-traded aluminium alloy 2604 contract fluctuated and strengthened in the daytime session. After a slight gap-down at the open, it moved sideways; in the afternoon, bulls stepped up and continued to rise, then fluctuated at highs into the close. The intraday high was RMB 23,450 per tonne, and the low was RMB 22,765 per tonne; it closed at RMB 23,400 per tonne, up RMB 650 per tonne from the previous close, a gain of 2.86per cent, mainly driven by bears reducing positions. Trading volume increased, open interest edged down, and prices broke above the recent range. Yesterday, ADC12 prices continued to rise, with mainstream quotations raised by RMB 100-300 per tonne, driven by a rapid rise in raw material costs.

Quoting sentiment diverged slightly: some enterprises actively followed the rally on cost support, with increases of RMB 200-300 per tonne; others believed this round of gains was more macro-driven, with insufficient fundamental support, and that prices faced pullback risks, cautiously following up by RMB 100 per tonne while staying on the sidelines. Demand side, while showing a steady rebound, overall recovery remained limited; downstream players still mainly purchased as needed, and weak demand placed some pressure on upside room. Overall, ADC12 prices are expected to maintain a sideways movement in the short term. Before production resumptions are fully realised, supply release will be relatively slow; coupled with cost support, downside risk is limited. Going forward, as enterprises fully resume production, market focus will gradually shift from the supply side to the realisation of end-use consumption. If end-user orders see a phased pickup while primary aluminium continues to fluctuate upward, the ADC12 price centre still has room to move higher; if demand recovery falls short of expectations, prices may continue to maintain a fluctuating trend in a consolidation pattern.

Aluminium market summary: The escalation of the Middle East geopolitical conflict has become the key driver recently. An aluminium smelter in Qatar with an annual capacity of 650,000 tonnes is expected to suspend production, and Aluminium Bahrain announced that its contracts have encountered force majeure. Coupled with ongoing fermentation of overseas supply disruptions—an aluminium smelter in Mozambique with 580,000 tonnes of capacity is expected to face a production suspension—expectations for the overseas supply gap have widened, and LME inventory drawdowns have also provided support for LME aluminium prices. As for domestic fundamentals, seasonal pressure remains prominent.

On the supply side, new aluminium projects both domestically and overseas are steadily ramping up, and the conversion ratio of liquid aluminium remains temporarily low. On the demand side, downstream processing operating rates after the holiday have shown a steady recovery pace; however, under the impact of seasonal supply exceeding demand and some cargo piling up at railway platforms, domestic aluminium ingot inventory is expected to peak above 1.35 million tonne after the holiday, hitting a nearly five-year high, which will be an important factor suppressing a rise in prices. Overall, driven by both the widening expectations for the overseas supply gap and market risk-off sentiment, aluminium price fluctuations have further intensified, and SHFE aluminium prices are expected to fluctuate upward in the short term.

Note: This article has been issued by SMM and has been published by AL Circle with its original information without any modifications or edits to the core subject/data.