Futures: During the night session on March 17, the SHFE aluminium 2605 contract opened at RMB 25,060 per tonne, hit a high of RMB 25,110 per tonne and a low of RMB 24,745 per tonne, and finally closed at RMB 24,915 per tonne, down RMB 75 per tonne from the previous close, or 0.30per cent. Technical analysis showed that the MA lines remained in a medium-term bullish alignment, with SMA5 (24,989.65) < SMA10 (25,042.92) > SMA20 (24,942.38) > SMA40 (24,675.55) > SMA60 (24,467.79). Medium and long-term moving averages were still diverging upward, and the medium-term trend remained bullish, but the 5-day moving average had fallen below the 10-day moving average, indicating some weakening in short-term bullish momentum. On the 4-hour candlestick chart, MACD showed a green bar (DIFF: 191.09, DEA: 253.35, STICK: -124.52).

The DIFF line crossed below the DEA line to form a death cross, suggesting fading short-term bullish momentum and correction pressure on prices. In terms of open interest, night-session open interest was about 311,000 lots, up 209 lots from the previous reading, showing characteristics of bears adding positions. On March 17, LME aluminium opened at USD 3,394.5 per tonne, hit a high of USD 3,430.0 per tonne, a low of USD 3,359.0 per tonne, and closed at USD 3,364.5 per tonne, down 0.81per cent from the previous day. Trading volume was 27,670 lots, down 4,677 lots, and open interest was 684,000 lots, up 1,790 lots.

Macro front: Kevin Hassett, Director of the White House National Economic Council, said on March 17 local time that oil tankers "had already begun to pass through the Strait of Hormuz sporadically." He also reiterated that the Trump administration believed military action against Iran would last for weeks rather than months. (Bearish ★) Senior Iranian officials said that Iran's new supreme leader, Mojtaba Khamenei, vetoed a proposal at a foreign affairs meeting to "de-escalate tensions or achieve peace" with the US, rejecting a proposal relayed to Iran's Foreign Ministry by intermediaries from both countries. Senior Iranian officials said Mojtaba stated at the foreign affairs meeting that "now is not the time for peace," adding that the US and Israel must be defeated and pay compensation. (Bullish ★) According to CME FedWatch, the probability of the US Fed cutting interest rates by 25 basis points by this week was 0per cent, the probability of keeping rates unchanged was 98.9per cent, and the probability of a 25-basis-point hike was 1.1per cent. By April, the probability of a cumulative 25-basis-point rate cut was 3.1per cent, the probability of keeping rates unchanged was 95.9per cent, and the probability of a 25-basis-point hike was 1.1per cent. By June, the probability of a cumulative 25-basis-point rate cut was 78.1per cent. (Bearish ★)

Fundamentals: Inventory side, on March 17, aluminium ingot inventory in mainstream consumption regions increased by 4,000 tonnes m-o-m, with the inventory buildup mainly coming from Guangdong and Gongyi. In the short term, aluminium ingot inventory continued its seasonal buildup after the Chinese New Year. Affected by bullish market sentiment, premiums are expected to remain on a narrowing trend. LME aluminium inventory stood at 440,300 tonne, down 2,500 tonne from the previous day, a decrease of 0.56per cent; over the past week, LME aluminium inventory fell cumulatively by 12,100 tonne, or 2.66per cent; over the past month, LME aluminium inventory fell cumulatively by 41,200 tonne, or 8.56per cent.

Primary aluminium market: The SHFE aluminium 04 contract opened higher and extended gains yesterday, with strong bullish sentiment in the market. Sellers held prices firm, buyers showed greater acceptance of prices, and purchasing enthusiasm also increased. Yesterday’s mainstream quotations and transaction prices were concentrated at -RMB 10 per tonne to +RMB 10 per tonne. Yesterday, the East China market shipment sentiment index was 3.12, down 0.05 m-o-m; the purchasing sentiment index was 2.7, up 0.04 m-o-m. Yesterday, futures prices moved up after opening lower. Before the opening, quotations in the central China market were relatively high, mainly at a discount of RMB 320-330 per tonne against the SHFE aluminium 04 contract, and then prices gradually declined. Traders remained strongly bullish and highly enthusiastic about purchases, with overall trading volume relatively large.

When suppliers had basically finished shipments, circulating cargo became tight, and market quotations continued to rise, but the transaction scale was relatively small. In the end, the actual transaction price range in the central China market was between a discount of RMB 10  against the central China price and a premium of RMB 40  against the central China price. Yesterday, the central China market shipment sentiment index was 2.6, down 0.02 m-o-m; the purchasing sentiment index was 2.38, up 0.02 m-o-m.

Secondary aluminium raw material: Yesterday, spot primary aluminium rose RMB 110 per tonne from the previous trading day, while the aluminium scrap market was mainly stable with slight follow-up gains. As for the price difference between A00 aluminium and aluminium scrap, as of March 17, the price difference between A00 aluminium and mixed aluminium extrusion scrap free of paint in Foshan was RMB 3,625 per tonne, and the price difference between A00 aluminium and shredded aluminium tensile scrap was RMB 2,711 per tonne.

Although it is currently the traditional peak season, affected by end-user order recovery falling short of expectations and wild swings in prices, the production pace of China’s aluminium scrap yards and downstream scrap utilisation enterprises remained lukewarm, and actual raw material restocking was below expectations. On the policy side, secondary aluminium enterprises lacked clear expectations for the detailed implementation rules of “reverse invoicing,” and the circulation of aluminium scrap will tighten further. The waste aluminium market is expected to hold up well at high levels this week, with the mainstream price range of shredded aluminium tensile scrap (priced based on aluminium content) around RMB 20,400-21,000 per tonne (ex tax excluded). Primary aluminium will still be the core driver under the influence of geopolitical tensions, and the risk of price fluctuations is intensifying.

On the supply side, cargo supply is being released steadily, but policy uncertainty continues to suppress circulation efficiency. On the demand side, peak-season recovery has been relatively slow, while high prices and wild swings continue to curb purchase willingness. In the short term, close attention should be paid to primary aluminium trends amid developments in geopolitical conflicts, the recovery of downstream orders, and the implementation of secondary recycling policies, while remaining alert to the risk of a sharp pullback from high levels.

Secondary aluminium alloy: Futures, the most-traded aluminium alloy 2604 contract opened at RMB 23,710 per tonne in the morning session yesterday and then rose rapidly, briefly touching an intraday high of RMB 23,945 per tonne. Bulls then lost momentum, and prices pulled back step by step. In the afternoon, prices fluctuated rangebound, and late in the session they fell further to an intraday low of RMB 23,575 per tonne, finally closing at RMB 23,725 per tonne, up slightly 0.17per cent from the previous trading day.

In the spot market, the ADC12 market was largely stable overall yesterday, with a few enterprises raising quotes slightly. Supported by a modest strengthening in aluminium scrap prices, cost support for some enterprises improved somewhat, but due to limited fluctuations in aluminium prices and mediocre downstream demand, the market as a whole still lacked momentum for price adjustments. Overall, ADC12 prices are expected to continue fluctuating at highs in the short term. Going forward, close attention should be paid to the release pace of downstream orders, potential pressure brought by the supply recovery process, and the impact of changes in the Middle East situation on aluminium price trends.

Aluminium market summary: At present, macro geopolitical risks in the global aluminium market have not yet faded. The Middle East remains in a stalemate, threats to navigation through the Strait of Hormuz remain unresolved, and aluminium enterprises in the region face disruptions to both raw material imports and product exports.

The stability of the global aluminium supply chain is under pressure, and the risk premium remains in place. As geopolitical conflict in the Middle East has pushed up energy prices and lifted the inflation centre, market expectations for interest rate cuts have been pushed back significantly. The window for the first rate cut this year will likely be delayed to late Q3 to Q4, and the pace of policy easing is becoming more cautious. Fundamentally, operating aluminium capacity outside China declined somewhat. In Europe, the Middle East, and other regions, energy, logistics, and geopolitical disruptions have pushed some capacity into production cut or shutdown cycles, further strengthening expectations for global supply contraction; in China, aluminium operating rates remained stable, and supply as a whole stayed steady.

After the holiday, demand in China entered a gradual recovery track, the share of direct supply of liquid aluminium increased, and the operating rate of downstream processing enterprises rebounded m-o-m, with the industry gradually returning to a normal production pace. Among them, demand from PV, packaging, and power grid sectors was strong, forming the core support; construction extrusion recovered slowly as work resumptions progressed, the recovery pace in traditional sectors remained mild, and overall end-user support gradually strengthened. Against the backdrop of continued tightening LME liquidity, LME aluminium still had upward momentum, with strong support from prices outside China, and is expected to maintain a Back structure in the short term. In China, however, the market remained 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 continue 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.