Futures: SHFE aluminium closed at RMB 24,705 per tonne in the night session, up 0.32 per cent. The price stood above all moving averages (MA5=24,653, MA10=24,691, MA40=24,366, MA60=24,365), with the moving average system in a bullish oscillating alignment. The MACD indicator DIF (93.1) and DEA (72.82) formed a golden cross upward, with both lines rising in tandem, red bars continuing to expand, and bullish momentum steadily strengthening. 

The suggested key trading range for SHFE aluminium is 24,550-25,100. LME aluminium closed at USD 3,515 per tonne, up 5.50 per cent. The price stood above all moving averages: MA5 (3,483.7), MA10 (3,457.7), MA40 (3,299.47), and MA60 (3,244.38), with the moving average system in a bullish alignment, confirming a short-term strong rebound pattern. The MACD indicator DIF (65.12) and DEA (55.14) formed a golden cross, with both lines rising in tandem. The suggested key trading range for LME aluminium is 3,400-3,550.

Macro front: Iranian Foreign Minister Araghchi posted on social media on the 13th, stating that the Iran-US negotiations recently held in Islamabad, the capital of Pakistan, were only "one step away" from reaching an agreement. The US side demanded too much, with constantly changing requirements, and threatened to impose a blockade. In the short term, the impact of Middle East conflicts on Iran persists, and vigilance is needed against changes in the war situation. 

The US core PCE price index rose 3 per cent Y-o-Y in February, narrowing slightly from the previous reading of 3.1 per cent, in line with market expectations. Services inflation slowed down significantly, with real spending up only 0.1 per cent M-o-M. US initial jobless claims increased by 16,000 to 219,000 last week, higher than market expectations.

Fundamentals: The supply side, excluding China, is directly impacted by geopolitical conflicts; Middle Eastern aluminium enterprises cut production. Recently, UAE's EGA and Bahrain's Alba were successively hit by missile strikes, with production facilities damaged. The extent of damage is still under comprehensive assessment.

The market widely expects large-scale production cuts or even shutdowns, with the global aluminium supply gap expected to widen and ex-China supply concerns continuing to escalate. LME inventory maintained a downward trend, with the latest data showing destocking to 399,200 tonnes. The share of available Russian aluminium inventory in LME warehouses surged from 60 per cent in February to 92 per cent in March. In China, the proportion of liquid aluminium rebounded in March as downstream enterprises fully resumed work after the holiday, up significantly by 9.3 percentage points M-o-M to 73.7 per cent, higher than early-month expectations.

Entering the traditional peak consumption season in April, downstream operating rates continued to rise, and the proportion of liquid aluminium is expected to climb further. On the inventory side, high aluminium prices in China suppressed downstream willingness to actively restock. Downstream enterprises generally purchased as needed based on orders, maintaining low inventory operations, with no large-scale stockpiling behaviour for the time being. On Monday this week, social inventory of aluminium ingots in China saw an inventory buildup of 11,000 tonnes w-o-w, with short-term inventory remaining at a relatively ample level.

Primary aluminium market: In early trading, SHFE aluminium 2604 fluctuated upward, with the trading centre rising from the previous day. Affected by rising aluminium prices, buyers showed low acceptance of high-priced aluminium ingots, pushing sellers to lower their offers, and transaction premiums continued to widen. 

Market transactions are mainly centred around the SMM A00 aluminium average discount price. Last Friday, the shipment sentiment index in east China was 3.25, flat w-o-w; the procurement sentiment index was 3.01, down 0.24 w-o-w. Last Friday, futures prices of aluminium rebounded somewhat, and the overall market trading atmosphere remained sluggish. However, as it was the weekend, downstream processing enterprises showed a slight recovery in stockpiling sentiment. 

Additionally, some state-owned enterprises unwound earlier arbitrage positions with large shipments, loosening available cargoes in the market, and actual trading volume increased from the previous day. Ultimately, the actual transaction price range in central China hovered between a premium of RMB 40  and a discount of RMB 10  to the central China price. Last Friday, the shipment sentiment index in central China was 2.76, up 0.02 w-o-w; the procurement sentiment index was 2.44, up 0.04 w-o-w.

Aluminium scrap: Last Friday, spot primary aluminium rebounded RMB 140 per tonne from the previous trading day, and the aluminium scrap market generally followed the uptrend. Last Friday, the tightening regulatory stance on the "reverse invoicing" policy remained unchanged, with compliance costs in the aluminium scrap recycling process staying elevated, and actually available invoiced cargoes remaining tight. Demand side, the divergence in shipments between aluminium tensile scrap and wrought aluminium alloy scrap intensified. For aluminium tense scrap-based materials such as shredded aluminium tense scrap and ADC12 aluminium shavings, downstream scrap utilisation enterprises, including secondary alloy producers, mostly maintained purchasing as needed with low inventory operations. For wrought aluminium alloy scrap-based materials such as baled UBC and 5-series/3-series plate and off-cuts, downstream secondary aluminium plate/sheet and strip enterprises were in peak production season with relatively high stockpiling enthusiasm. However, overall, high prices combined with wild swings in aluminium prices continued to suppress the purchasing enthusiasm of scrap utilisation enterprises. 

Price spread side, the price difference between A00 aluminium and mixed aluminium extrusion scrap free of paint in Foshan was recorded at RMB 2,960 per tonne, and the price difference between A00 aluminium and shredded aluminium tensile scrap was RMB 1,670 per tonne. The aluminium scrap market is expected to hover at highs this week, with the mainstream price range for shredded aluminium tensile scrap (priced based on aluminium content) around RMB 20,800-21,300 per tonne (tax-exclusive). Supply side, policy constraints are unlikely to ease in the short term, and tight compliant cargoes combined with yards holding back cargoes will continue to underpin prices. Demand side, the divergence between aluminium tensile scrap and wrought aluminium alloy scrap will persist. Primary aluminium remains volatile due to factors such as Middle East geopolitical conflicts, and coupled with a lacklustre recovery in downstream peak season demand, the overall tug-of-war between sellers and buyers will continue. Caution is warranted against market risks arising from high aluminium price fluctuations and constrained cargo circulation.

Secondary aluminium alloy: Spot cargo side, last Friday ADC12 market quotes were generally raised by RMB 100 per tonne, mainly driven by the rebound in primary aluminium prices and rising costs. After a period of continuous decline, industry profit margins narrowed significantly, and enterprises had certain demands for price recovery. From the transaction side, downstream demand had not yet improved notably, with procurement maintaining a rigid-demand pace and relatively limited acceptance of price increases, as the market overall remained dominated by passive follow-on buying. In the short term, against the backdrop of no significant demand recovery, upward momentum may be relatively constrained.

Aluminium Market Summary: Macro front, supply side, the substantive damage caused earlier was irreversible. Aluminium capacity in the Middle East suffered direct military strikes, with UAE's EGA and Bahrain's Alba successively attacked and production facilities damaged. The global aluminium supply gap expectations expanded significantly, and ex-China supply concerns continued to escalate. Meanwhile, China entered the traditional peak consumption season, with the proportion of liquid aluminium rebounding sharply to 73.7 per cent, downstream operating rates rising steadily, and demand-side support remaining solid. Overall, macro perspective risks of strait passage restrictions and conflict escalation, combined with fundamental supply hard damage and low global inventory, created resonance, jointly providing strong bottom support for aluminium prices. However, weak interest rate cut expectations, higher-than-expected aluminium ingot inventory buildup in China, and adverse expectations on consumption and inflation from recent high fluctuations in oil prices all notably weighed on the upside room for aluminium prices, with aluminium prices fluctuating 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.