Futures: In the night session on March 18, the SHFE aluminium 2605 contract opened at RMB 24,800 per tonne, hit an intraday high of RMB 24,880 per tonne and a low of RMB 24,575 per tonne, and finally closed at RMB 24,835 per tonne, up RMB 35 per tonne from the previous close, or 0.14 per cent. Technically, the MA lines showed short-term weakening but a medium-term bullish pattern. The short-term moving averages, SMA5 (24,882.28) < SMA10 (24,962.47), had turned downward, and the price fell below the 5-day and 10-day moving averages, indicating fading short-term bullish momentum. The medium and long-term moving averages, SMA20 (24,918.83) > SMA40 (24,689.45) > SMA60 (24,490.96), were still diverging upward, and the medium-term bullish trend remained unchanged.

On the 4-hour K-line chart, MACD showed a green bar (DIFF: 134.06, DEA: 214.32, STICK: -160.53). The DIFF line crossed below the DEA line to form a death cross, indicating fading short-term bullish momentum and pullback pressure on prices. In terms of open interest, night session open interest was about 304,000 lots, down 3,316 lots from the previous session. On March 18, LME aluminium opened at USD 3,370.0 per tonne, hit a high of USD 3,419.5 per tonne and a low of USD 3,336.0 per tonne, and closed at USD 3,419.5 per tonne, up 1.63 per cent from the previous day. Trading volume was 35,563 lots, an increase of 7,893 lots, while open interest was 676,000 lots, down 8,608 lots.

Macro front: The US Federal Reserve concluded its two-day monetary policy meeting on the 18th and announced that it would keep the target range for the federal funds rate unchanged at 3.5 per cent to 3.75 per cent. Fed Chairman Powell said that from September to December last year, the US Fed cut its policy rate by 0.75 percentage points, bringing it back into a reasonable range within the estimated neutral rate band. (Bearish ★) Powell's term as Fed Chairman will end in May this year. Powell said that if his successor has not been confirmed by the end of his term as Fed Chairman, he will continue to serve as "acting chairman" until the successor is formally confirmed. Since taking office in January 2025, US President Trump has repeatedly pressured the US Fed to cut interest rates, criticising Fed Chairman Powell's actions as always "too late and wrong," while Powell has repeatedly said he remains firmly committed to preserving the US Fed's independence from political influence. (Neutral)

Fundamentals: Inventory side, on March 18, aluminium ingot inventory in major consumption regions increased by 8,500 tonne m-o-m, with the inventory buildup mainly coming from Guangdong; LME aluminium inventory stood at 436,600 tonne, down 3,700 tonne from the previous day, or 0.84 per cent; over the past week, LME aluminium inventory fell by a cumulative 13,500 tonne, or 3.00 per cent; over the past month, LME aluminium inventory fell by a cumulative 42,900 tonne, or 8.95 per cent. SMM learned that South32's revised Q2 2026 offer for Japan MJP CIF premiums was USD 353 per tonne.

Primary aluminium market: The SHFE aluminium 04 contract fell yesterday. Affected by the decline in aluminium prices, overall purchasing sentiment increased yesterday. Sellers held prices firm, with mainstream quotations and transaction prices in the market concentrated around the average price to +RMB 10 per tonne yesterday. Yesterday, the shipment sentiment index in east China was 3.17, up 0.05 m-o-m; the purchasing sentiment index was 3.03, up 0.33 m-o-m. As SHFE aluminium futures prices pulled back yesterday, buying sentiment in the central China market surged, with strong bullish sentiment and a pronounced willingness to buy the dip.

Meanwhile, suppliers tended to hold back from selling and instead turned to purchasing at low prices to profit from the price spread. Only some trading firms engaging in both spot and futures markets shipped for profit-taking on premiums, and the overall reluctance to sell was evident. Market quotations ranged from parity with the central China price to a premium of RMB 60 per tonne over the central China price, but actual transactions were ultimately concentrated at premiums of RMB 30-40 per tonne over the central China price. Yesterday, the shipment sentiment index in the central China market was 2.59, down 0.01 m-o-m; the purchasing sentiment index was 2.42, up 0.04 m-o-m.

Secondary aluminium raw material: Yesterday, spot primary aluminium fell RMB 390 per tonne from the previous trading day, and the overall aluminium scrap market followed lower. In terms of the price difference between A00 aluminium and aluminium scrap, as of March 18, the price difference between A00 aluminium and mixed aluminium extrusion scrap free of paint in Foshan was RMB 3,450 per tonne, and the price difference between A00 aluminium and shredded aluminium tensile scrap was RMB 2,429 per tonne. Although it is currently the traditional peak season, affected by a slower-than-expected recovery in end-user orders and wild swings in prices, the production pace at domestic aluminium scrap yards and downstream scrap utilisation enterprises remained lukewarm, and actual raw material restocking fell short of expectations.

On the policy front, secondary aluminium enterprises lacked clear expectations for the specific implementation rules of "reverse invoicing," and aluminium scrap liquidity will tighten further. Aluminium scrap prices are expected to remain high and hold up well this week, with mainstream quotations for shredded aluminium tensile scrap (priced based on aluminium content) running around RMB 20,400-21,000 per tonne (excluding tax).

Primary aluminium will still be the key driver under the influence of geopolitical developments, while the risk of price fluctuations is intensifying. Supply side, cargo supply is being released steadily, but policy uncertainty continues to suppress circulation efficiency. Demand side, the recovery pace in the peak season is relatively slow, and high prices and wild swings continue to dampen purchase willingness. In the short term, close attention is needed on primary aluminium trends amid geopolitical conflict developments, the recovery in downstream orders, and the implementation of secondary recycling policies, while guarding against the risk of a sharp pullback from high levels.

Secondary aluminium alloy: In futures, the most-traded aluminium alloy 2604 contract opened at RMB 23,580 per tonne in early trading yesterday. After briefly rising to RMB 23,670 per tonne, prices moved lower in waves amid long position reductions, hitting an intraday low of RMB 23,380 per tonne. As of the midday close, the latest price stood at RMB 23,425 per tonne, down RMB 325 per tonne from the previous trading day's settlement price, a decline of 1.37per cent, and it remained under pressure in the short term. Spot market, the ADC12 market overall trended downward yesterday, with mainstream producers generally cutting quotes by RMB 100 per tonne. This round of price adjustments was mainly driven by the pullback in aluminium prices, which weakened cost support. Enterprises accordingly adjusted quotes to align with market changes, though the overall adjustment range remained relatively restrained, indicating a cautious market sentiment. Demand side, downstream enterprises have recently been relatively sensitive to price fluctuations.

Although there has been some willingness to restock during the price decline, overall procurement has still mainly been based on immediate needs, with no evident concentrated volume release, and market demand was generally mediocre. In the short term, amid weak aluminium prices, mediocre demand performance, and cost support, ADC12 prices are expected to continue to fluctuate in a narrow range, with both upside and downside room relatively limited.

Aluminium market summary: At present, macro and geopolitical risks in the global aluminium market have yet to subside. The Middle East situation remained in a stalemate, threats to navigation through the Strait of Hormuz were unresolved, and aluminium enterprises in the region faced two-way disruption to raw material imports and product exports. The stability of the global aluminium supply chain was under pressure, and risk premiums continued to persist, though earlier in the week, some of the risk premiums pulled back as sentiment eased and bulls took profits. Influenced by stronger-than-expected US employment and inflation data, market expectations for interest rate cuts were pushed back significantly, with the first rate-cut window this year likely postponed to late Q3 to Q4. A stronger US dollar, coupled with expectations of tighter liquidity, continued to weigh on commodity valuations. Fundamentally, expectations for aluminium production cuts outside China still remained, with Europe, the Middle East, and other regions disrupted by energy and logistics factors, and some capacity entering maintenance cycles, so the logic of global supply contraction remained intact.

In China, aluminium operating rates remained stable, supply-side increases were limited, and overall supply stayed steady. After the holiday, demand in China entered a gradual recovery track, the proportion 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 the power grid was strong, providing core support; construction extrusion recovered slowly as work resumed, the recovery pace in traditional sectors remained relatively mild, and overall end-user support gradually strengthened.

Continued destocking in LME inventory provided bottom support for LME aluminium, but amid tighter fund liquidity and profit-taking by bulls, upward momentum was insufficient, and the Back structure somewhat weakened. China’s social inventory rose to a high for the same period in nearly five years, the inventory buildup cycle had not ended, and high inventory together with weak spot fundamentals jointly suppressed upward momentum. The divergence between domestic and overseas drivers continued, the SHFE/LME price ratio kept weakening, and SHFE aluminium fell below the key threshold of RMB 25,000 per tonne, with short-term trading mainly under pressure at high levels.

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.