[Guohai Energy Extraction] Aluminum Industry Weekly: Middle East Electrolytic Aluminum Facilities Hit Again, Focus on Supply Disruptions and Demand Recovery

（Source: Morning Watch Energy）

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This week’s outlook:

Macro: This week (March 30–April 3, the same applies below) the macro environment is a mix of bullish and bearish factors. Domestically, the People’s Bank of China’s Monetary Policy Committee has stated clearly that it will continue to implement a moderately accommodative monetary policy, with a favorable liquidity environment, providing positive support for aluminum prices. Overseas, uncertainty from the Middle East’s geopolitical conflict remains high. Trump said Iran previously sought a ceasefire request through a third party, which Iran categorically denied. At the same time, Trump said he is considering withdrawing from NATO. On April 2, local time, Iran’s Islamic Revolutionary Guard Corps issued a statement saying it has carried out “True Promise-4” Wave 90 strike operations, launching attacks on steel and aluminum industry facilities in the region associated with the United States. On April 3, the Iranian military issued a statement saying that if the United States dares to attack Iranian infrastructure, Iran will destroy “all assets and infrastructure” of the United States and Israel in the Middle East region.

Electrolytic Aluminum:

Supply: The overseas supply side has been directly hit by the geopolitical conflict, and Middle East electrolytic aluminum enterprises have reduced production. Recently, the UAE’s EGA and Bahrain’s Alba Aluminum have both been subjected to missile attacks in sequence, resulting in damage to production facilities. The extent of damage is still being comprehensively assessed. The market generally expects that there will be large-scale production cuts, or even shutdowns. As a result, the expected global supply gap for electrolytic aluminum will widen, and concerns about overseas supply will continue to heat up. Domestically, in March, the proportion of aluminum liquid rose significantly quarter-on-quarter by 9.3 percentage points to 73.7% as downstream fully resumed work after the holiday, exceeding early-month expectations. Entering April’s traditional peak consumption season, downstream operating rates continue to rise, and the proportion of aluminum liquid is expected to climb further. On costs and profits: as of April 3, the national average cost of electrolytic aluminum was 16,656 yuan/ton. On a weekly basis, it increased by 168.4 yuan/ton. The instant theoretical profit of electrolytic aluminum increased by 532 yuan/ton week-on-week to 7,864 yuan/ton. On inventory: under the backdrop of high aluminum prices, domestic downstream parties suppress their willingness to proactively restock. Downstream enterprises generally purchase according to orders as needed and maintain low inventory operations, with no large-scale stockpiling behavior. As of April 2, inventories of electrolytic aluminum ingots in major domestic consumption areas stood at 1.39M tons, up by 0.38 million tons week-on-week. What needs to be重点 focus on: under the high aluminum price backdrop, whether the April peak season can smoothly drive inventory transfer into a destocking cycle. Meanwhile, overseas inventories continue to be reduced. LME aluminum inventories this week maintain a downward trend, having fallen to 414k tons.

Demand: For aluminum rod inventories: as of April 2, total aluminum rod inventories in major domestic consumption areas were 322k tons, down by 195,000 tons week-on-week. Inventories were concentrated destocked over the weekend, while the destocking trend during the week slightly slowed. On shipments: from March 23–March 29, the total weekly aluminum rod shipments were 82k tons, up by 123,000 tons week-on-week. Although the market is currently in the traditional peak season of the “Golden March and Silver April,” aluminum prices have continued to run at historically high levels, while terminal consumption has not been driven by strong peak-season demand. This week, the weekly operating rate of domestic aluminum downstream processing leading enterprises rose by 1.2 percentage points week-on-week to 65.2%. Operating rates of aluminum wire and cable, aluminum extruded products, aluminum plate and strip, and aluminum foil increased to 67.6%, 60.5%, 73%, and 75%, respectively. Demand from the energy storage and new energy sectors has remained robust, becoming the core driver supporting operating rates of aluminum plate and strip, aluminum foil, and industrial aluminum extrusions. For air-conditioner foil, due to pressure on Middle East complete-unit exports, some companies have proactively reduced this business and shifted to the packaging segment. Traditional consumption areas such as building extrusions and automotive sheet products have been relatively weak. However, all segments are facing a dual dilemma of high aluminum prices suppressing them and insufficient “seasonal quality” during the peak season. Downstream purchasing sentiment remains cautious. On Middle East exports: although Cosco Shipping has resumed booking for the Middle East, the freight rate has surged fivefold, and demand has returned with caution, making the export recovery process clearly slower. Going forward, it will be重点 to monitor the actual release of terminal orders after the holiday, the trajectory of aluminum prices, and the impact of changes in export policy.

Bauxite: At present, domestic bauxite supplies are overall sufficient, and mine prices are flat versus the earlier period. For imported ore: as of March 27, the weekly total bauxite exports from Guinea’s major ports were 4.5937 million tons, up by 38k tons from the previous week, and shipments remain at a low level. Some mines stated that they are still controlling shipment volumes. The main reason is that ocean freight rates have continued to fluctuate, and mine operators are watching the market with strong caution. Currently, Guinea’s quota policy still has no detailed rules and no specific guidance. Shipment volumes are not expected to fall significantly; however, after the quota policy is finalized, shipment volumes are expected to undergo some adjustment, and the degree of domestic bauxite oversupply will weaken. For Australian ore, shipments are still relatively low. It is expected that once ocean freight rates stabilize, shipment volumes will rebound. As of March 27, the weekly total bauxite exports from Australia’s major ports were 0.1821 million tons, down by 322k tons from the previous week. It is necessary to continuously monitor the actual shipment status of each mine and port shipment operations. As of March 27, China’s bauxite arrival volume was 3.7005 million tons, down by 0.7154 million tons from the previous week. It is necessary to continuously monitor how, amid geopolitical disturbances, fluctuations in ocean freight rates transmit into future bauxite arrivals. On prices: there is a large gap between bid and ask intentions between buyers and sellers, and prices are in continuous negotiation. As of April 2, Guinea bauxite FOB quotes were 37–40 US dollars/ton, flat week-on-week. In a high-inventory environment, alumina refineries’ purchasing willingness remains weak. On inventories: as of April 2, alumina refinery bauxite inventory decreased by 19.5k tons quarter-on-quarter, but the overall inventory level remains high. Days of inventory were about 93 days, which exerts some top-end pressure on mine prices.

Alumina: Overseas: as of April 2, the FOB alumina price in Western Australia was 320 US dollars/ton, with ocean freight of 32.15 US dollars/ton. Converted, the export price at China’s main ports was about 2,827.78 yuan/ton, higher than the alumina index price by 40.04 yuan/ton. Domestic: as of April 2, the SMM alumina index was 2,787.74 yuan/ton, up by 2.97 yuan/ton from last Thursday. On the supply side: as of April 2, the total built capacity of metallurgical-grade alumina nationwide was 82k tons per year, with operating total capacity of 86.27 million tons per year. Nationwide weekly operating rate of alumina was down by 0.23 percentage points from last week to 76.2%, mainly because an alumina plant in Shandong began feeding at the end of the month. Newly built capacity is being gradually released, which drives a slight increase in overall weekly production by 12.3k tons to 61.7k tons. This week, China’s alumina market showed a slight trend of destocking. Overall inventories decreased by 0.22 million tons, reversing last week’s accumulation trend. Destocking at electrolytic aluminum plants was 41k tons, mainly because in Southern China the spot alumina market is tight. Electrolytic aluminum plants consume more inventory on-site, and meanwhile spot prices have risen compared with the earlier period, resulting in low restocking willingness, further accelerating the decline in electrolytic aluminum plant inventories. Finished product inventory at alumina plants increased slightly by 0.04 million tons to 81.3k tons. This was mainly driven by improved production enthusiasm for firms as prices rebounded; after production increased, inventories accumulated slightly. Port inventories, as well as inventories in transit and at docks, changed little this week, mainly because there are no new ships arriving, and external circulation remains stable. SHFE futures inventory increased by 110,000 tons to 423k tons. Inventories in Xinjiang remain high; overall warehouse intake speed is slower than earlier, and meanwhile futures prices in this cycle declined somewhat, reducing market willingness to deliver into futures, which has somewhat constrained the increase in futures inventories. As newly started production capacity continues to be released, the incremental supply will gradually appear.

Prebaked Anodes: Prices of prebaked anodes and petroleum coke have risen. As of April 3, the average price of prebaked anodes was 6,257.1 yuan/ton. Compared with last week, it increased by 313.8 yuan/ton, with a week-on-week increase of 5.3%. The average price of medium-sulfur petroleum coke was 4,030.0 yuan/ton, up by 65.0 yuan/ton from last week, with a week-on-week increase of 1.6%.

Investment recommendations and industry ratings: In the short term, the Middle East situation remains severe. Electrolytic aluminum facilities in the region have been hit, with ongoing production cuts, and further production cuts are still expected. After the holiday, demand is gradually recovering and is switching step by step to the peak season, but it is still necessary to wait for the inventory inflection point. For alumina, domestic alumina operating capacity overall shows a downward trend. Affected by geopolitical factors, rising oil prices lift freight rates, and cost-side increases drive alumina prices to rebound. In the long term, incremental supply in the aluminum industry is limited, while demand still has growth points. The industry may maintain high levels of optimism, so it is recommended to maintain the “Recommended” rating for the aluminum industry. It is recommended to pay attention to Hongqiao Holding, China Hongqiao, Tianshan Aluminum, Shenhuo Co., Ltd., China Aluminum, and Yunnan Aluminum.

Risk warning: (1) Risk that downstream demand is weaker than expected; (2) Risk that policy controls are stronger than expected; (3) Risk of insufficient power supply; (4) Risk that supply increases more than expected; (5) Risk of large fluctuations in aluminum prices; (6) Risk that data updates are not timely; (7) Risk of exchange rate fluctuations; (8) Geopolitical risk; (9) Risk that key companies’ performance fails to meet expectations.

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Securities Research Report “Aluminum Industry Weekly: Middle East electrolytic aluminum facilities hit again—focus on supply disruptions and demand recovery”

External release date: April 5, 2026

Issuing body: Guohai Securities Co., Ltd.

This report’s analysts:

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