Macro perspective: Macro news was mixed between bullish and bearish factors during the week.

China side, on March 25, the central bank conducted a RMB 500 billion MLF operation with a one-year term, ensuring ample liquidity in China; the National Energy Administration released national power statistics for January and February 2026, showing cumulative installed power generation capacity at 2.95 billion kW, up 15.9 per cent YoY, indicating solid demand performance in the power sector.

Outside China, geopolitical risks in the Middle East had yet to subside. According to public news reports, Iran rejected the shutdown proposal put forward by the US and proposed five conditions regarding a halt, stating that a ceasefire must be premised on acceptance of all conditions, and that no negotiations would take place before then, while the end of the war would be decided by Iran.

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The geopolitical situation in the Middle East remained unclear. In addition, the US Fed announced the decision of its March rate meeting last week, keeping the benchmark interest rate unchanged at 3.5-3.75 per cent. Affected by inflation and employment data, market expectations for US Fed interest rate cuts were pushed back significantly, even reigniting market discussion about US Fed rate hikes.

Fundamentals: Supply side, the market heard that the aluminium smelter in Bahrain in the Middle East further cut production, involving 320,000 tonnes of capacity, while no other changes had occurred for the time being. Demand side, downstream operating rate further rebounded, but the proportion of liquid aluminium was relatively stable this week. Entering April, as the peak season deepens, the proportion of liquid aluminium is expected to rebound further.

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Inventory side, the centre of aluminium prices pulled back from the previous period during the week, but wait-and-see sentiment in the market remained strong, and downstream players mainly made just-in-time procurement on dips. Social inventory of aluminium ingot failed to enter the destocking stage, and as of this Thursday, total social inventory of aluminium ingot was still in an inventory buildup of 10kt from last Thursday; finished product inventories of aluminium ingot at aluminium smelters declined further. Approaching late March to early April, attention should be paid to whether aluminium ingot inventory can smoothly enter a destocking cycle under high aluminium prices.

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Overall, the situation in the Middle East remained a key concern. If aluminium smelters in the Middle East further cut production, it is expected to provide upward momentum to aluminium prices in and outside China, but China’s social inventory continued to build up, and supply was ample, which is expected to bring top-side pressure to SHFE aluminium prices. In the short term, aluminium prices are expected to fluctuate with adjustments. The most-traded SHFE aluminium contract is expected to trade at RMB 23,500-24,500 per tonne next week, while LME aluminium is expected to trade at USD 3,150-3,350 per tonne.

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.