U.S.-Iran negotiation situation fluctuated; macro factors were mixed with both bullish and bearish signals this week

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Macro perspective: Fed nominee Warsh pledged to safeguard monetary policy independence. The US-Iran temporary ceasefire agreement was set to expire on April 22. Trump initially stated it was "extremely unlikely" to extend the ceasefire agreement with Iran, but later on Tuesday local time announced an extension of the ceasefire deadline, maintaining the naval blockade while awaiting Iran's submission of a unified negotiation proposal. The US-Iran negotiation situation remained volatile, with bullish and bearish macro factors intertwined this week.

Fundamentals:

Markets outside China continued to be affected by geopolitical disruptions. Navigation through the Strait of Hormuz had not yet fully returned to normal. Combined with ongoing production cuts at aluminium smelters in the Middle East due to the impact of regional tensions, the global aluminium supply deficit further intensified, and ex-China aluminium fundamentals exhibited a relatively significant supply-demand gap. This week, the LME aluminium Cash-3M premiums structure continued to recover, with the price spread rebounding to USD57.07per tonne. Meanwhile, LME aluminium inventory continued its destocking trend, with total inventory pulling back to a relatively low level of 378,800 mt, providing strong support for ex-China aluminium prices.

On the Chinese market side, the overall operating rate of downstream processing enterprises pulled back this week. Combined with aluminium prices currently at elevated levels, this has suppressed downstream enterprises' enthusiasm to pick up goods to some extent. Additionally, some aluminium ingots in the Wuxi area were still pending warehousing, creating visible backlogs. This week, China's aluminium ingot social inventory saw an inventory buildup of 12,000 mt w-o-w to a high level of 1.465 million mt. Whether the subsequent inventory inflexion point would materialise as expected still requires continuous tracking and verification.

Overall:

The Middle East negotiation process remained volatile, and geopolitical risks had not yet been fully cleared. However, the widening ex-China supply gap and steady LME inventory destocking jointly supported LME aluminium prices to hold up well. China's aluminium ingot social inventory remained at elevated levels, and the pace of demand recovery and inventory destocking became the core variables influencing SHFE price trends. The most-traded SHFE aluminium contract is expected to trade in the range of RMB 24,700-25,300 per tonne next week, while LME aluminium is expected to trade in the range of USD3,500-3,700per 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.