Futures: In the night session on March 16, the SHFE aluminium 2605 contract opened at RMB 24,975 per tonne, hit an intraday high of RMB 25,080 per tonne and a low of RMB 24,865 per tonne, and finally closed at RMB 24,970 per tonne, down RMB 200 per tonne from the previous close, or 0.79per cent. Technical analysis showed the MA lines remained in a medium-term bullish alignment, with SMA5 (25,072.37) < SMA10 (25,096.13) > SMA20 (24,940.47) > SMA40 (24,645.71) > SMA60 (24,433.41). The medium and long-term moving averages were still diverging upward, indicating a bullish medium-term trend, but the 5-day moving average had fallen below the 10-day moving average, suggesting some weakening in short-term bullish momentum. On the 4-hour candlestick chart, MACD showed a green bar (DIFF: 241.81, DEA: 281.61, STICK: -79.61), with the DIFF line crossing 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 312,000 lots, an increase of 1,876 lots from the previous session, showing characteristics of increased short positions by bears. On March 16, LME aluminium opened at USD3,456.0 per tonne, reached a high of USD3,494.5 per tonne, a low of USD3,372.0 per tonne, and closed at USD3,392.0 per tonne, down 1.37per cent from the previous day. Trading volume was 32,347 lots, down 1,245 lots, while open interest was 683,000 lots, up 2,861 lots.

Macro front: From March 15 to 16 local time, China and the US held economic and trade consultations in Paris, France. Li Chenggang said the topics discussed included bilateral tariff levels under the new situation, as well as a possible further extension of arrangements related to bilateral tariffs and relevant non-tariff measures. The US side briefed on adjustments to its latest tariff measures and its next-step considerations, while the Chinese side expressed concern over the resulting uncertainty. Both sides agreed to work jointly to maintain the stability of bilateral economic and trade relations and discussed a plan to establish a working mechanism to promote bilateral trade and investment cooperation. (Bullish ★) According to CME FedWatch, the probability of the US Fed cutting interest rates by 25 basis points by this week was 0.9per cent, while the probability of keeping rates unchanged was 99.1per cent. By April, the probability of a cumulative 25-basis-point interest rate cut was 3per cent, the probability of keeping rates unchanged was 97per cent, and the probability of a cumulative 50-basis-point cut was 0per cent. By June, the probability of a cumulative 25-basis-point cut was 21.9per cent. (Bearish ★)

Fundamentals: Inventory side, on Monday, aluminium ingot inventory in major consumption regions increased by 18,500 tonnes m-o-m, with all three regions posting inventory buildup. In the short term, aluminium ingot continued its post-Chinese New Year seasonal inventory buildup. Affected by bullish sentiment, premiums are expected to remain on a narrowing trend. According to South32's official website, on March 16, it confirmed that Mozal Aluminium (Mozal) entered maintenance status on March 15. Mozal's annual capacity is about 580,000 tonnes. South32's CEO said that over the past six years, extensive discussions had been held with the Mozambican government, Eskom, and other stakeholders, but they failed to secure a sufficient and affordable power supply for Mozal beyond March.

Primary aluminium market: The SHFE aluminium 04 contract opened higher yesterday and rallied initially, while market trading was relatively sluggish. Futures prices later fell, while buying sentiment improved and price acceptance rose, pushing transaction prices higher. Yesterday's mainstream quotations and transaction prices were mostly concentrated between a discount of RMB 10 per tonne and the average price. Yesterday, the East China market's shipping sentiment index was 3.07, down 0.26 w-o-w; the purchasing sentiment index was 2.66, up 0.11 w-o-w. Yesterday, aluminium prices continued to edge lower from last Friday, and with inventory remaining high, traders in the central China market showed limited bullish sentiment. Overall purchase volumes recovered somewhat from the previous two trading days. As futures prices moved lower, market premiums showed a continued upward trend. In the end, actual transaction prices in the central China market were mostly concentrated between a discount of RMB 10 per tonne to the central China price and a premium of RMB 20 per tonne to the central China price, and moved higher throughout the session. Yesterday, the central China market's shipping sentiment index was 2.58, down 0.09 w-o-w; the purchasing sentiment index was 2.36, up 0.01 w-o-w.

Secondary aluminium raw material: Ongoing fluctuations in geopolitical risks drove spot primary aluminium down RMB 330 per tonne yesterday from the previous trading day, and the aluminium scrap market fell across the board in tandem. In terms of the price difference between A00 aluminium and aluminium scrap, as of March 16, the price difference between A00 aluminium and mixed aluminium extrusion scrap free of paint in Foshan was RMB 3,475 per tonne, and the price difference between A00 aluminium and shredded aluminium tensile scrap was RMB 2,561 per tonne. Although it is now the traditional peak season, domestic aluminium scrap yards and downstream scrap utilisation enterprises maintained a lukewarm production pace, as the recovery in end-user orders fell short of expectations and prices saw wild swings, with actual raw material restocking also weaker than expected. On the policy front, secondary aluminium enterprises lacked clear expectations for the specific implementation rules of "reverse invoicing," and the circulation of aluminium scrap will tighten further.

The aluminium scrap market is expected to maintain high-level, strong fluctuations this week, with the mainstream price range for shredded aluminium tense scrap (priced based on aluminium content) hovering around RMB 20,400-21,000 per tonne (ex-tax). Primary aluminium will still be the core driver under the influence of the geopolitical situation, and the risk of price fluctuations is intensifying. Supply side, cargo availability is being released steadily, but policy uncertainty continues to suppress circulation efficiency. Demand side, the recovery pace in the peak season remains relatively slow, and high prices and wild swings continue to restrain 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 guarding against the risk of a sharp pullback from high levels.

Secondary aluminium alloy: On the futures side, yesterday the most-traded aluminium alloy 2604 contract opened at RMB 23,655 per tonne, then quickly moved lower and touched an intraday low of RMB 23,550 per tonne. Prices then gradually stabilised and rebounded, repeatedly fluctuating and consolidating around the average price line, with a relatively intense tug-of-war between longs and shorts. Before midday, prices held up well, gradually recouping the morning losses and rising to an intraday high of RMB 23,910 per tonne, close to moving into positive territory. As of the midday close, the latest price was RMB 23,790, up RMB 135  from the previous trading day's settlement, or 0.57 per cent.

Spot side, quoted prices in the secondary aluminium alloy market overall fell by RMB 100 per tonne yesterday. Affected by the pullback in futures, most enterprises lowered their quotes accordingly to align more closely with actual market transactions. However, as aluminium scrap raw material prices remained at a relatively high level, the cost side provided some support to ADC12 prices, and enterprises were generally restrained in the extent of their price adjustments. Demand side, downstream procurement is still mainly focused on rigid demand, and no concentrated restocking driven by the price pullback has emerged so far. Wait-and-see sentiment in the market has picked up somewhat, while overall trading performance remained relatively stable. In the short term, raw material costs remain high, providing strong support to ADC12 prices. But if prices continue to rise, the restraining effect of high prices on end-use demand will also gradually become apparent. Meanwhile, as the operating rate of secondary aluminium enterprises gradually recovers, supply is expected to increase mildly. Overall, ADC12 prices are expected to continue to fluctuate at highs in the short term. Going forward, close attention should be paid to the pace of downstream order release, the 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: Overall, macro geopolitical risks in the global aluminium market have yet to subside. The situation in the Middle East remains in stalemate, threats to navigation through the Strait of Hormuz have not been lifted, and aluminium enterprises in the region face disruption in both raw material imports and product exports. The stability of the global aluminium supply chain remains under pressure, and the risk premium continues to persist. Fundamentally, operating aluminium capacity outside China has declined somewhat. Affected by energy, logistics, and geopolitical factors in Europe, the Middle East, and other regions, some capacity has entered cycles of production cuts or shutdowns, reinforcing expectations of a contraction on the global supply side. In China, aluminium has maintained stable operations, and overall supply remains steady. After the holiday, demand in China has entered a gradual recovery phase, with the share of direct supply of liquid aluminium and the operating rate of downstream processing enterprises steadily rebounding m-o-m.

The demand structure shows divergence between stronger and weaker segments: demand from PV, packaging, power grid, and other sectors has remained strong and become the core support; construction extrusion has recovered slowly as work resumptions progress, and the recovery pace in traditional sectors has been relatively mild, with overall terminal support gradually strengthening. Against the backdrop of continued tightening LME liquidity, LME aluminium still has m-o-mentum to strengthen, with firm support from prices outside China, and is likely to maintain a BACK structure in the short term. In China, however, the market remains in a phase of high inventory plus weak spot fundamentals, and upward momentum is 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.