Aluminum prices rose 4.86% in March

Aluminum prices continued to demonstrate strong performance in March. According to the SunSirs Commodity Market Analysis System, as of March 30, 2026, the average market price for domestic aluminum ingots in the East China region stood at 24,543.33 RMB/ton—an increase of 4.86% compared to the average market price of 22,473.33 RMB/ton recorded on March 1. This figure also represents a decline of 2.86% from the month's peak average market price of 25,273.33 RMB/ton, reached on March 12.

In January 2026, aluminum prices extended the strong momentum observed throughout 2025—a year characterized by a generally upward, albeit volatile, trend—before experiencing a pullback in February. From the second half of 2025 through early 2026, a number of domestic aluminum smelters implemented temporary production cuts due to factors such as environmental restrictions, dual controls on energy consumption, and equipment maintenance. This reduction in domestic output, coupled with tighter overseas bauxite export policies and rising shipping costs, led to a temporary contraction in global aluminum supply. This supply-side squeeze provided strong support for aluminum prices, driving them steadily higher and culminating in a concentrated surge during January 2026. Earlier, the market had held strong expectations regarding a recovery in downstream sectors—such as new energy vehicles, photovoltaics, and infrastructure—prompting speculative capital to enter the market early and bid up prices. However, in February 2026, the peak consumption season in downstream sectors failed to meet expectations, and actual demand proved sluggish. This weakness—compounded by production stoppages associated with the Lunar New Year holiday—heightened companies' urgency to destock, resulting in a rapid price correction. The loose monetary policies of 2025 had boosted valuations across the commodities complex, with aluminum—as a key industrial metal—benefiting significantly. However, in early 2026, market expectations regarding a potential interest rate hike by the U.S. Federal Reserve intensified; the resulting strengthening of the U.S. dollar weighed on commodity prices, while simultaneous profit-taking by speculative investors further exacerbated the magnitude of the price decline in February. The loose monetary policies of 2025 had boosted valuations across the commodities complex, with aluminum—as a key industrial metal—benefiting significantly. During this upward price cycle, social inventories of aluminum underwent continuous depletion, thereby reinforcing bullish market sentiment. Yet, in February 2026, inventory levels reversed course—shifting from depletion to accumulation. This inventory buildup, combined with the brewing of pessimistic market expectations, triggered a negative feedback loop characterized by "inventory accumulation leading to price declines, which in turn leads to deteriorating market sentiment."

In March, driven by a recovery in demand, aggregate social inventories once again entered a destocking phase. These inventory figures validated the underlying premise of "warming demand." Broadly speaking, the rationale behind the rise in aluminum prices consists of two main components: traditional supply-and-demand dynamics, and a geopolitical risk premium. The specifics are outlined below:

1. Demand Side: Resumption of Work During Peak Season + Inventory Replenishment Synergy

In March, the traditional peak season for downstream sectors—including domestic infrastructure, automotive, and home appliances—commenced. Coupled with the sustained high prosperity in the new energy sector (specifically photovoltaics, energy storage, and new energy vehicles), downstream enterprises engaged in concentrated inventory replenishment following the holiday period, resulting in a short-term surge in demand for aluminum ingots.

2. Supply Side: Capacity Constraint + Cost Support

Domestic electrolytic aluminum capacity growth remains limited due to the dual control of energy consumption and environmental production restrictions. Meanwhile, tightening export policies in major bauxite-producing nations (Guinea and Indonesia) are keeping smelting raw material costs at elevated levels, thereby providing strong support to aluminum prices at the lower end.

3. Macro Outlook: Interest Rate Cut Expectations + Pro-Growth Policies

Expectations of a Federal Reserve interest rate cut are intensifying; a weakening U.S. dollar is bullish for commodities. Meanwhile, domestic growth-stabilization policies continue to gain momentum, boosting risk appetite for industrial metals, while speculative capital inflows are driving up aluminum prices.

4. The Transmission of Risk Premiums from the US–Israel–Iran Geopolitical Conflict

Soaring energy prices are driving up smelting costs. As a major exporter of oil and natural gas, Iran’s escalating geopolitical conflicts have triggered a sharp surge in international crude oil and natural gas prices. Electrolytic aluminum is a highly energy-intensive industry, with energy costs accounting for over 30% of total expenses; consequently, rising oil prices directly inflate global electrolytic aluminum smelting costs, thereby creating room for aluminum prices to rise.

Disruptions to shipping and supply chains have driven up logistics costs. As the Persian Gulf serves as a vital global shipping lane, heightened tensions in the region have triggered a sharp surge in tanker insurance premiums and maritime freight rates. Consequently, cross-border logistics costs for bauxite, alumina, and finished aluminum ingots have risen significantly, further driving up spot aluminum prices.

Expectations of supply disruptions have amplified market panic. Should the conflict persist, it could disrupt energy exports from Iran and the surrounding region, as well as aluminum-related production capacity (such as domestic electrolytic aluminum output in Iran). Concerned that a temporary global aluminum supply deficit may emerge, speculative capital has preemptively entered the market to take long positions, thereby further amplifying price gains.

Safe-haven capital is flowing into commodities. When geopolitical conflicts escalate, capital tends to flow into safe-haven assets such as gold and industrial metals; as a key industrial metal, aluminum becomes a preferred allocation choice, thereby commanding an additional price premium.

Future Price Forecast

In April 2026, aluminum prices are expected to fluctuate at elevated levels with a downward bias, finding it difficult to sustain the upward momentum observed in March. Domestically, the peak season for downstream sectors is gradually drawing to a close; demand from areas such as infrastructure and home appliances is showing signs of marginal weakening, and downstream inventory replenishment has largely concluded, with purchasing strategies shifting toward strictly "on-demand" procurement. On the supply side, production capacity previously idled for maintenance is gradually coming back online, leading to a recovery in electrolytic aluminum supply; consequently, there is a high probability that social inventories will shift from a destocking phase to an accumulation phase, thereby exerting downward pressure on prices.

Assuming the geopolitical conflict involving Iran does not escalate significantly, energy prices are expected to retreat after an initial surge, and the geopolitical risk premium embedded in aluminum prices will gradually dissipate. On the macro front, expectations regarding a Federal Reserve interest rate cut have largely been priced into the market, offering only limited upside support to prices. Overall, aluminum prices in April are expected to lack upward momentum; the price center of gravity may drift slightly lower, resulting in a generally volatile and bearish market pattern. Key factors to monitor include geopolitical developments and the actual realization of market demand.

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