Iranian parliament approves bill to impose tolls on the Strait of Hormuz! White House: Trump hopes to reach an agreement by April 6! International oil prices surge accordingly.

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Source: Futures Daily

Good morning! Let’s take a look at the most important updates.

Iran’s parliament approves a bill to impose tolls on the Strait of Hormuz

According to CCTV, on March 30 local time, Iran’s parliament’s National Security Committee passed a bill proposing to charge vessels transiting the Strait of Hormuz.

The plan includes implementing financial arrangements and a fee collection system in the form of Iranian rials; banning U.S. and Israeli ships from passing through the Strait of Hormuz; maintaining Iran and its armed forces’ leading position; banning ships from countries that impose unilateral sanctions on Iran from transiting; and Iran will cooperate with Oman to develop the relevant legal framework.

White House: Trump hopes to reach an agreement with Iran before April 6

According to CCTV, on March 30, the White House press secretary Levit said that President Trump hopes to reach an agreement with Iran before the April 6 deadline.

Trump previously said that at Iran’s government’s request, the suspension of strikes on Iran’s energy facilities would be extended for 10 days, resuming at 8:00 p.m. Eastern Time on April 6.

Iran’s first vice president warns the U.S.: Sending troops to Khark Island will be a one-way trip

According to CCTV, on March 30 local time, Iran’s first vice president Areif warned U.S. President Trump not to dispatch troops to attack Iran’s Khark Island.

Areif said Trump can decide whether to send troops to Khark Island, but whether they can withdraw from there will not be controlled by the U.S., because “no one can come back alive from hell.”

Khark Island is located in the northwest of the Persian Gulf, about 25 kilometers from Iran’s coast. It is roughly 6 kilometers long and 3 kilometers wide. It is Iran’s largest crude oil export base, and 90% of Iran’s crude oil is exported from here.

International oil prices jump sharply

On March 30 local time, driven by expectations that tensions in the Middle East will escalate, international oil prices rose significantly. By the close of trading that day, the May-delivery light sweet crude oil futures contract on the New York Mercantile Exchange rose by $3.24 to $102.88 per barrel, up 3.25%; the May-delivery London Brent crude oil futures contract rose by 21 cents to $112.78 per barrel, up 0.19%.

On the same day, U.S. President Trump said that if Iran fails to accept a peace agreement as soon as possible and reopen the Strait of Hormuz, the U.S. side will destroy Iran’s oil hub Khark Island and its oil wells and power facilities. Trump also revealed that the U.S. and Iran are currently conducting “serious negotiations,” but warned that if the talks break down, the U.S. will carry out military strikes against Iran-related infrastructure. The market is worried that if the situation worsens further, energy supplies will be hit even more severely.

Can aluminum prices maintain their strong momentum?

Ongoing escalation of geopolitical tensions in the Middle East is profoundly reshaping the global aluminum industry chain. In Bahrain and the United Arab Emirates, two major aluminum plants recently confirmed that they were attacked by Iran. Supported by uncertainty about production in the Middle East region and by continuously rising global energy prices, yesterday’s LME aluminum and Shanghai aluminum futures both surged higher in tandem.

Chen Xiaowei, an analyst at Foshan Zhongda Futures for non-ferrous metals, said that the attacks on aluminum plants in the Middle East have sparked expectations of tighter global supply. Both Emirates Global Aluminium (EGA) and Bahrain Aluminium (Alba) have confirmed that their facilities were damaged. Combined, the two companies’ production capacity accounts for 3.5% of global capacity. At present, the specific losses are still being assessed, and it is not yet clear whether they will shut down fully.

From the perspective of the global aluminum supply pattern, Zhang Tianyao, a macro and non-ferrous metals researcher at Hongye Futures, said that aluminum production in the Middle East accounts for 8%~9% of global total capacity. Currently, nearly 20% of capacity in that region may be affected. Among it, the electrolytic aluminum capacity that has already been confirmed to be shut down accounts for 1.4% of global total capacity. China’s aluminum capacity accounts for 57% of the global total and makes it the world’s largest aluminum producer, but due to production capacity ceiling policies, future output has basically no room to grow, making it difficult to make up for losses in overseas production. Therefore, the global aluminum supply-demand balance has indeed been affected to a certain extent.

The latest data show that in Japan’s second quarter, the aluminum price premium over the baseline was $350~$353 per ton, up 79%~81% compared with the first quarter. This significant increase also clearly reflects the reality that the global aluminum industry chain has been affected by the Middle East situation.

Fu Ying, an analyst at the CICC Futures Research Center for non-ferrous metals, said that there is a high likelihood that Emirates Global Aluminium (EGA) and Bahrain Aluminium (Alba) will cut production further. It is expected that the scale of supply disruptions will expand to 1 million~2 million tons. Except for Saudi Arabia, where the aluminum industry chain is relatively complete, the input self-sufficiency rate of electrolytic aluminum enterprises in other Middle Eastern countries is generally low. With the Middle East geopolitical conflict having continued for nearly a month, related aluminum plants may further reduce capacity due to raw material supply problems. The Middle East is a major export destination for unwrought, unworked aluminum overseas; annual exports exceed 4 million tons, accounting for 15% of global aluminum trade flows. If shipping through the Strait of Hormuz continues to be disrupted, the circulation of aluminum trade will be constrained. If the Middle East geopolitical conflict ends within 1~2 months, it is expected that the annual production impact will be 0.5 million~1.5 million tons, and the global aluminum supply-demand structure will shift from tight balance to a substantial shortage.

“This incident has a significant and long-lasting impact on the global aluminum supply pattern.” Chen Xiaowei said that Bahrain Aluminium (Alba) had already shut down three production lines in early March, accounting for 19% of its capacity. Qatar Aluminium, meanwhile, will keep its capacity stable at about 60%. In addition, rising natural gas prices may lead to further production cuts of electrolytic aluminum in the Middle East and in high-cost regions.

From the domestic situation, Zhang Tianyao said that after the Lunar New Year, domestic aluminum inventories once reached the highest levels in recent years. Starting this week, they began to decline. Spot premiums have narrowed noticeably, and the domestic aluminum supply-demand structure is gradually improving. April to May is the domestic traditional peak season; downstream demand is expected to further improve, and inventories may continue to fall. However, the cancellation of export VAT refunds for aluminum limits export profits. Combined with factors such as a year-on-year decline in domestic auto production and sales volumes, the high profit margins of the electrolytic aluminum industry impose certain constraints on aluminum price increases. Therefore, the improvement in China’s aluminum industry chain will show a gradual pattern. It is expected that Shanghai aluminum prices will have a relatively strong medium-term trend, with substantial downside support. Going forward, key items to monitor include changes in the Middle East situation—for example, the restart progress of aluminum plants on the ground and the status of energy supply—as well as how domestic aluminum inventories are being worked through.

“Driven by factors such as aluminum prices running at high levels and a sharp rise in export freight, the overall recovery in aluminum market demand this year is lower than the same period last year, and the extent of the consumption rebound is relatively limited.” Fu Ying said that since March’s restart of work and production, the pace of destocking of domestic aluminum ingot inventories has been slow. Overall, domestic demand still has resilience, but if aluminum prices continue to rise, they may to some extent weigh on demand. Going forward, it is necessary to keep monitoring downstream operating conditions, changes in spot trade, and the pace of inventory destocking. If spot trading continues to improve and inventories enter a destocking cycle, it may help support the continuation of a strong aluminum price pattern.

Against the backdrop of disrupted overseas supply and a recovery in domestic demand, Chen Xiaowei believes that for aluminum prices to sustain their strong trend, more positive signals are still needed for confirmation. Key focus for the outlook is three areas: first, progress in the Middle East situation, including the assessment results of damage to the relevant aluminum plants, and whether the geopolitical situation will spill over to other production capacity in the region; second, the switching of macro expectations—currently the market is trading around supply-side bullish factors, so risks of a recession trade arising from rising interest-rate expectations amid high inflation should be kept in mind; third, China’s destocking situation—whether aluminum social inventories can turn at a certain point is the key to verifying the true strength of demand and supporting the continuation of a strong aluminum price trend.

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责任编辑：赵思远