Sino-Global Information: Geopolitical escalation and Federal Reserve statements create a chain reaction; aluminum prices come under pressure and decline

Recently, spot aluminum prices have been trading volatilely under pressure and have fallen, with the pullback expanding as the weekend approaches. According to monitoring by Fubao Information, as of March 19, the average daily price of A00 aluminum was 24,500 yuan/ton, down 3% from last Thursday. The main reasons are: the situation in the Middle East has escalated again, with geopolitical risks spilling materially over into the energy supply chain; the escalation of geopolitical tensions has heightened inflation risks, which in turn has further triggered demand to collapse and investment to contract, driving an increase in the market’s sentiment of falling trading activity. Meanwhile, the Federal Reserve’s unexpectedly hawkish comments in the early hours of Thursday intensified market concerns; liquidity expectations tightened abruptly, putting downward pressure on precious metals and base metals. On the fundamentals, the aluminum-water ratio on the supply side has improved but remains below last year’s level. Social inventories have continued to accumulate to around 1.3 million tons. Downstream processing plants show a low willingness to restock, and they tend to buy flexibly on dips, so the pace of demand recovery remains relatively slow. The market may continue to trade amid uncertainty around the Federal Reserve’s hawkish stance and the escalation of geopolitical tensions. It is expected that in the short term, aluminum prices may remain under pressure and fluctuate in the range of 23,500–24,500 yuan/ton. (Zhuochuang Information)