Futures: In the night session on March 13, the SHFE aluminium 2605 contract opened at RMB 25,130 per tonne, hit an intraday high of RMB 25,200 per tonne and a low of RMB 24,960 per tonne, and finally closed at RMB 24,965 per tonne, down RMB 105 per tonne, or 0.42 per cent, from the previous close. Technically, the MA lines remained in a bullish alignment, with SMA5 (25,121.02) > SMA10 (25,117.08) > SMA20 (24,911.32) > SMA40 (24,600.18) > SMA60 (24,389.26). The short-term moving averages (5/10-day) were still above the medium and long-term moving averages, indicating a bullish medium-term trend. However, the 5-day moving average was only marginally above the 10-day moving average and had turned downward, suggesting some weakening in short-term bullish momentum. On the 4-hour candlestick chart, MACD turned into a green histogram (DIFF: 282.97, DEA: 296.81, STICK: -27.69). 

The DIFF line crossed below the DEA line, forming a death cross, indicating fading short-term bullish momentum and correction pressure on prices. In terms of open interest, night session open interest was დაახლოებით 305,000 lots, down 640 lots from the daytime session. On March 13, LME aluminium opened at USD3,525per tonne, rose to a high of USD3,528.5per tonne, fell to a low of USD3,420.5per tonne, and closed at USD3,439per tonne, down 2.66 per cent from the previous day. Trading volume was 33,592 lots, down 8,639 lots, while open interest stood at 680,000 lots, down 5,382 lots.

Macro front: US core PCE inflation for January rose as expected on a y-o-y basis, while real GDP for Q4 last year was unexpectedly revised down sharply. Specifically, the US personal consumption expenditures (PCE) price index rose 0.3 per cent m-o-m in January, in line with expectations; the y-o-y increase came in at 2.8 per cent, while analysts had previously expected it to remain unchanged at 2.9 per cent. (Bearish ★) The central bank's February financial statistics report showed that at month-end February, broad money (M2) balance stood at RMB 349.22 trillion, up 9 per cent y-o-y; aggregate social financing increased by a cumulative RMB 9.6 trillion in the first two months, RMB 316.2 billion more than in the same period last year; and new RMB loans totaled RMB 5.61 trillion in the first two months. (Bullish ★)

Fundamentals: According to SMM statistics, the operating rate of aluminium billet in February fell sharply by 9.2 percentage points m-o-m to 41.4 per cent, and was down 7.7 percentage points y-o-y. China's aluminium billet production in March is expected to rebound sharply to around 1.5 million tonnes, with the operating rate expected to recover to about 55.7 per cent, likely returning to the peak-season level seen in the same period in previous years. According to Alba's official website on March 15, aluminium Bahrain (Alba) has safely and orderly initiated the shutdown process for Potlines 1, 2, and 3, involving 19 per cent of its total capacity of 1.623 million tonne, with the aim of optimizing the utilization of Alba's existing raw material inventory and prioritizing the stable operation of Potlines 4, 5, and 6.

Primary aluminium market: The SHFE aluminium 04 contract fluctuated at highs after opening last Friday. High aluminium prices suppressed downstream demand, and overall purchasing demand remained weak, while market premiums continued to soften. Market premiums kept declining from the opening. Last Friday, mainstream market quotations and transaction prices were concentrated between -RMB 20 per tonne and the average price. Last Friday, the East China market shipment sentiment index was 3.32, flat w-o-w; the purchasing sentiment index was 2.55, down 0.02 w-o-w. Last Friday, trading sentiment in the central China market remained sluggish. 

As it coincided with the weekend, market buying sentiment improved slightly, but constrained by high aluminium prices, downstream processing enterprises still showed low enthusiasm for picking up goods, and actual trading volume was limited, with only traders restocking when premiums were low. In the end, actual transaction prices in the central China market were around parity with the central China price, at a discount of RMB 20 per tonne against the central China price. Last Friday, the central China market shipment sentiment index was 2.67, flat w-o-w; the purchasing sentiment index was 2.34, down 0.02 w-o-w.

Secondary aluminium raw material: Continued fluctuations in geopolitical risks drove spot primary aluminium to pull back RMB140 per tonne last Friday from the previous trading day, and the aluminium scrap market fell across the board. In terms of the price difference between A00 aluminium and aluminium scrap, as of March 13, the price difference between A00 aluminium and mixed aluminium extrusion scrap free of paint in Foshan was RMB 3,560 per tonne, and the price difference between A00 aluminium and shredded aluminium tensile scrap was RMB 2,646 per tonne. Although it is currently the traditional peak season, affected by weaker-than-expected recovery in terminal orders and wild swings in prices, the production pace of China’s aluminium scrap yards and downstream scrap utilisation enterprises has remained lukewarm, and actual raw material restocking has fallen short of expectations. 

On the policy front, secondary enterprises lack clear expectations for the specific operating rules of “reverse invoicing,” and aluminium scrap circulation is set to tighten further. The aluminium scrap market is expected to maintain a high-level, firm fluctuation range next week, with the mainstream range for shredded aluminium tense scrap (priced based on aluminium content) running around RMB 20,600-21,400 per tonne (excluding tax). Primary aluminium will still be the core driver under the influence of the geopolitical situation, and the risk of price fluctuations is intensifying. On the supply side, cargo supply is being released steadily, but policy uncertainty continues to weigh on circulation efficiency. On the demand side, the recovery pace in the peak season is relatively slow, while high prices and wild swings continue to suppress purchase willingness.

 In the short term, close attention should be paid to primary aluminium price trends amid developments in geopolitical conflicts, the recovery of downstream orders, and the implementation of secondary recycling policies, while guarding against the risk of a sharp pullback from highs.

Secondary aluminium alloy: In futures, the aluminium alloy 2604 contract last Friday generally showed a pattern of opening high, retreating after a rapid rise, and accelerating downward into the close. It opened higher at RMB 23,990 per tonne in early trading and once climbed to RMB 24,060 per tonne intraday before fluctuating lower. 

In the afternoon session, bulls cut positions, and prices accelerated downward, hitting a low of RMB 23,620 per tonne. Prices rebounded slightly into the close and finally settled at RMB 23,655 per tonne, down RMB 335 per tonne from the previous trading day, a decline of 1.40 per cent. Trading volume was 5,842 lots, down 1,020 lots from the previous trading day; open interest was 5,679 lots, down 195 lots. Technically, the price fell below support from short-term moving averages, indicating emerging short-term pullback pressure. Attention should be paid to support near the previous low of RMB 21,755 per tonne below. In the spot market, quotations in the secondary aluminium alloy market were mainly stable last Friday. Before noon, fluctuations in futures narrowed, and enterprises showed a notably weaker willingness to adjust prices, with most producers choosing to hold quotes steady and wait. In the afternoon, as futures fluctuated downward, some producers began to lower quotations by RMB 100 per tonne. Demand side, downstream buyers still mainly made just-in-time procurement, but amid the pullback in aluminium prices and the approaching weekend, some enterprises showed slightly improved purchasing enthusiasm, and market transactions improved somewhat from the previous day. 

In the short term, raw material costs remain at highs, providing relatively strong support for ADC12 prices; however, if prices continue to rise, the suppressive effect of high prices on demand will become increasingly evident. At the same time, as operating rates gradually recover, the supply side is also expected to see a mild increase. ADC12 prices are expected to fluctuate at highs in the short term. Going forward, focus is recommended on the pace of downstream order release, pressure on the market from the supply recovery process, and the impact of the Middle East situation on aluminium prices.

Aluminium market summary: Overall, macro geopolitical risks have not subsided. The Middle East remains in a stalemate, threats to navigation through the Strait of Hormuz persist, and the risk premium in the global aluminium supply chain remains in place. In China, demand has gradually recovered after the holiday, with the proportion of liquid aluminium and downstream operating rates rebounding m-o-m. Demand from PV, packaging, and the power grid was strong, construction extrusion recovered slowly, and end-user support gradually strengthened. 

Against the backdrop of continued tightening LME liquidity, LME aluminium still has upward momentum, with strong support from prices outside China, and is likely to maintain a backwardation structure in the short term. China, by contrast, remains in a phase of high inventory plus weak spot fundamentals, with upward momentum clearly weaker than outside China. Amid diverging domestic and overseas drivers, the SHFE/LME price ratio is expected to continue weakening, and aluminium prices are expected to fluctuate at highs 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.