Since the end of March, the LME aluminum price has surged rapidly due to the supply panic caused by the Middle East conflict. Subsequently, after the negotiations between the United States and Iran, it turned into a narrow - range high - level fluctuation. At present, the price of the main contract of LME aluminum is fluctuating around 24,750 yuan/ton, and the core logic revolves around the long - short game of external strength and internal weakness.
The US-Iran conflict has led to a widening of the overseas supply gap.
The US-Iran conflict, which broke out at the end of March, has severely damaged the global aluminum market through three paths: military strikes, raw material supply cuts, and energy shortages. The Middle East accounts for about 9% of global aluminum production. Currently, more than 3 million tons of annualized capacity have been affected, which is close to half of the region's capacity. At present, EGA's Taivara smelter in the United Arab Emirates (with an annual production of 1.6 million tons) has been completely shut down, and the recovery period may last for up to one year; Bahrain Aluminum and Qatar Aluminum have also significantly reduced production.
Meanwhile, 60% of the alumina supply in the Middle East region relies on the Strait of Hormuz, and the current situation has further exacerbated the crisis of raw material supply disruption and soaring maritime costs. Due to the long production recovery cycle for damaged capacity, the supply gap will support aluminum prices in the medium to long term.
Supply rigidity is difficult to reduce.
China aluminum bar stockpiles' inflection point postponed
SMM data shows that in March, China electrolytic aluminum production was 3.8311 million tons, a year-on-year increase of 1.6% and a month-on-month increase of 10.7%. With high profits, enterprises maintain a high rate of production. As of April 9, the installed capacity was about 46.2087 million tons, the operating capacity was 45.1076 million tons, and the rate of production was 97.62%. Recently, Huo Coal Hongjun, Liaoyang Xiangyu's resumption of production and Guangxi's new investment project have been slowly increasing, which has pushed the supply of electrolytic aluminum to continue to increase.
On the inventory front, since March, the social stock of aluminum ingots has continued to accumulate. As of April 13th, the China aluminum ingot social stock of SMM was 1.434 million tons, an increase of 23,000 tons on a weekly basis and an increase of 710,000 tons year-on-year. On the supply side, the rigidity of production and the low efficiency of aluminum-water conversion have exacerbated the pressure on casting. On the demand side, in April, the traditional consumption peak season has begun, and the production rate of aluminum processing enterprises has briefly rebounded before weakening again, dropping to 64.7% last week, a decrease of 0.5 percentage points compared to the previous week, showing a weak recovery and a lackluster peak season. The support for the production rate of enterprises mainly comes from the backlog of orders during the Spring Festival, and new orders are not ideal. At the same time, since the end of March, the aluminum price has moved up, and the downstream is more afraid of high prices, reducing the amount of goods taken out of the warehouse. It is difficult to promote the reduction of inventory with only essential purchases. It is expected that the inflection point of the China aluminum inventory may be postponed to the end of April.
Overseas premium surges sharply
China's electrolytic aluminum imports or pressure
Customs data show that in the first two months of the year, China imported about 391,000 tons of raw aluminum, a year - on - year increase of 8.0%. In February alone, imports surged by 6.6% compared with the previous month and increased by 0.7% year - on - year. Since March, the premium for aluminum in the overseas market has rapidly increased. Due to the attack on aluminum smelters in the Gulf region, the premium for European aluminum has soared; Russian aluminum has already started to shift some of its goods from China to markets like Japan, where the premium is higher, and the attractiveness of China as an import destination is gradually weakening. Although China's imports of raw aluminum increased year - on - year in the first two months of the year, the space for future import growth is expected to be limited.
Since April, the cost of the electrolytic aluminum industry has declined, prices have slightly decreased, and profits have remained at a high level. As of April 13th, the average cost of electrolytic aluminum was 16,578.6 RMB/ton, a decrease of 67.43 RMB/ton compared to the beginning of the month. The main reason was the decrease in the cost of alumina by 75.55 RMB/ton. Recently, the alumina new projects were put into production one after another, and the supply and demand pattern was in surplus, which further suppressed the cost side. At the same time, the average price of electrolytic aluminum was 24,450 RMB/ton, a decrease of 150 RMB/ton compared to the beginning of the month; the industry profit was 7,961.4 RMB/ton, an increase of 7.43 RMB/ton compared to the beginning of the month, at a historical high level.
The later period of alumina price is expected to be mainly weakly fluctuating, but the space for decline is limited, the electricity price is stable, and there is upward pressure on the cost of auxiliary materials such as fluorine aluminum and pre-baked anode.
Real estate impact narrows
Automotive industry adjustment and recovery
At present, the two major aluminum consumption sectors, real estate and automobiles, are both in a period of structural adjustment. The real estate industry is still in the process of bottoming out, with the downward slope slowing down. In the first two months, the sales area of China commercial housing decreased by 13.5% year-on-year; real estate development investment decreased by 11.1% year-on-year; the newly started area decreased by 23.1%, and the completed area decreased by 27.9%. The decline at the completion end directly dragged the demand for architectural aluminum profiles. It is expected that the proportion of aluminum used in construction will decrease to about 15.8% in 2026, and the marginal drag of the real estate industry on aluminum demand will narrow.
Automobiles: In March, China car production and sales volume were 2.917 million and 2.899 million units, respectively, a month-on-month increase of 74.4% and 60.6%, and a year-on-year decrease of 3.0% and 0.6%; in the first quarter, the cumulative production and sales volume of China cars decreased by 6.9% and 5.6% year-on-year. In March, China's new energy vehicle production and sales volume were 1.231 million and 1.252 million units, respectively, with a year-on-year decrease of 3.6% in production and a year-on-year increase of 1.2% in sales, and a market penetration rate of 43.2%. Due to the adjustment of the vehicle purchase tax policy, there was a phased fluctuation in the new energy market in the first quarter. As the policy impact fades and the replacement subsidy is clarified, consumers' confidence in buying cars has recovered. In the second quarter, the "two new" policy, new products from the Beijing Auto Show, high growth in exports, and intelligent upgrading will boost consumption. It is expected that the automobile market will be low in the first half and high in the second half of the year, and the second quarter is a window period for demand recovery. The China Automobile Association predicts that in 2026, China's automobile industry will reach a total sales volume of 34.75 million units, setting a new record.
Overall, in the short term, the price of aluminum in Shanghai will operate with a strong trend, with the core driving force coming from the contraction of overseas supply caused by the geopolitical conflict, and the China demand recovery in the peak season forming a resonance with it, but the high inventory and macro pressure limit the upward space of the price. The supply side is the main support, the Middle East production capacity recovery cycle is long, the overseas spot premium is soaring, attracting some of the goods originally planned to flow to China to turn to overseas, and the China import pressure is reduced. Chinaally, the output of refined aluminum is operating at a high level, and the inventory inflection point is expected to appear in late April; the demand side shows a weak recovery trend, with the storage, new energy and other sectors providing core support, but the high aluminum price and the peak season not meeting expectations limit the upward space of the utilization rate.
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