According to aluminum inventory data released by the London Metal Exchange (LME) and the Shanghai Futures Exchange (SHFE), on March 21, LME aluminum inventory fell to 483925 tons, hitting a new low since May 2024; On the other hand, the Shanghai Futures Exchange’s (SHFE) aluminum inventory decreased by 6.95% on a weekly basis to 233240 tons, showing a differentiation pattern of “tight on the outside and loose on the inside”. This data is in sharp contrast to the strong performance of LME aluminum prices stabilizing at $2300/ton and Shanghai aluminum main contracts rising by 20800 yuan/ton on the same day, reflecting the complex game of the global aluminum industry chain under supply and demand restructuring and geopolitical competition.
The ten month low level of LME aluminum inventory is essentially the result of the resonance between the Russia-Ukraine conflict and Indonesia’s export policy. After losing its European market due to sanctions, Rusal shifted its exports to Asia. However, the bauxite export ban implemented by Indonesia in 2025 has led to a tightening of global alumina supply, indirectly driving up LME aluminum inventory costs. Data shows that in January and February 2025, Indonesia’s bauxite exports decreased by 32% year-on-year, while Australian alumina prices increased by 18% year-on-year to $3200/ton, further compressing the profit margins of overseas smelters. On the demand side, European car manufacturers have accelerated the transfer of production lines to China to avoid tariff risks, driving a 210% year-on-year increase in China’s imports of electrolytic aluminum (with imports reaching 610000 tons in January and February). This’ internalization of external demand ‘makes LME inventory a sensitive indicator reflecting international supply and demand contradictions.
The rebound of domestic Shanghai aluminum inventory is closely related to the production capacity release cycle and policy expectation adjustment. The production reduction (about 500000 tons) caused by the shortage of hydropower in Yunnan, Sichuan and other places has not been fully realized, while the newly added production capacity (600000 tons) in low-cost areas such as Inner Mongolia and Xinjiang has entered the production period. The domestic electrolytic aluminum operating capacity has climbed to 42 million tons, reaching a historical high. Although domestic aluminum consumption increased by 2.3% year-on-year in January and February, the weak real estate chain (with a 10% year-on-year decrease in completed area of commercial housing) and a decline in home appliance exports (-8% year-on-year in January and February) have led to significant inventory backlog. It is worth noting that the growth rate of domestic infrastructure investment in March exceeded expectations (+12.5% year-on-year in January and February), and the early stocking of some infrastructure projects promoted a 15% month on month increase in aluminum profile orders, which explains the resilience of the short-term rebound in Shanghai aluminum inventory.
From a cost perspective, the complete cost line for domestic electrolytic aluminum remains stable at 16500 yuan/ton, with pre baked anode prices maintaining a high of 4300 yuan/ton and alumina prices slightly falling to 2600 yuan/ton. In terms of electricity costs, Inner Mongolia’s self owned power plant enterprises have reduced electricity prices through green electricity premiums, saving over 200 yuan per ton of aluminum electricity. However, the shortage of hydropower in Yunnan has led to a 10% increase in electricity prices for local aluminum enterprises, exacerbating regional capacity differentiation due to cost differences.
In terms of financial attributes, after the Federal Reserve’s March interest rate meeting released a dovish signal, the US dollar index fell to 104.5, providing support for LME aluminum prices, but the strengthening of the Chinese yuan exchange rate (CFETS index rose to 105.3) suppressed the potential for Shanghai aluminum to follow suit.
Technically speaking, 20800 yuan/ton is an important resistance level for Shanghai Aluminum. If it can be effectively broken through, it may launch an impact on 21000 yuan/ton; On the contrary, if real estate sales fail to rebound, the downward pressure will significantly increase.
Post time: Mar-25-2025