Ore price pullback drives cost centre downward; Alumina and SHFE aluminium prices under pressure

Today, the most-traded SHFE aluminium 2505 contract opened at RMB 20,650 per tonne, with a high of RMB 20,770 per tonne, a low of RMB 20,570 per tonne, and closed at RMB 20,705 per tonne, up 0.27 per cent. Trading volume was 10,600 lots, and open interest was 240,000 lots.

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SMM comments: From a macro perspective, overseas trade protection and slowing growth created a bearish resonance: US trade policies focused on differentiated tariffs and export controls, while Fitch downgraded its 2025 US economic growth forecast to 1.7 per cent and warned that tariffs could push up inflation, potentially delaying the US Fed's interest rate cut to Q4 2025. Domestically, the trade-in policy continued to gain momentum, with three departments promoting the scrappage and renewal of high-emission trucks.

Coupled with a 1.3 per cent YoY increase in total electricity consumption nationwide from January to February, the divergence between domestic and international markets persisted. Fundamentals side, the aluminium industry chain showed significant bullish signals: China's aluminium ore imports in February rose 28.3per cent YoY, aluminium ingot inventories in Guangdong, Wuxi, and Gongyi decreased slightly by 1,500 tonnes to 719,400 tonnes, and LME On aluminium inventories also fell by 0.82per cent.

The traditional peak season effect of "Golden March and Silver April" continued to manifest, and the supply-demand structure kept improving. Aluminium prices are expected to be more likely to rise than fall in the near term, fluctuating downward. In the short term, close attention should be paid to changes in US tariff policies and the actual release of downstream demand.

Today, the most-traded alumina 2505 contract opened at RMB 3,057 per tonne, with a high of RMB 3,062 per tonne, a low of RMB 3,002 per tonne, and closed at RMB 3,015 per tonne, down 1.47 per cent. The trading volume was 112,000 lots, and open interest was 225,000 lots.

SMM comments: Recently, the tug-of-war between alumina buyers and sellers continued, with sporadic spot transactions in the alumina spot market and transaction prices showing further slight declines. The domestic alumina export window has closed, and the total registered warrant volume in alumina futures delivery warehouses exceeded 280,000 tonnes.

Subsequent alumina exports and transfers to delivery warehouses may struggle to provide sustained demand. Fundamentals side, in the short term, alumina operating capacity is expected to increase and decrease simultaneously, with no significant decline in total operating capacity anticipated. The alumina fundamentals are expected to maintain a slight surplus pattern, and spot alumina prices are likely to fluctuate downward in the short term.

Note: This article has been issued by SMM and has been published by AL Circle in its original form without any modifications or edits to the information.