SMM

Overnight, the most-traded SHFE 2401 aluminum contract opened at 18720 yuan/mt, with its low and high at 18700 yuan/mt and 18800 yuan/mt before closing at 18765 yuan/mt, up 115 yuan/mt or 0.62%. LME aluminum opened at $2151/mt yesterday, with its high and low at $2220/mt and $2151/mt respectively before closing at $2210/mt, up $65/mt or 3.03%.
On the macro front, the Federal Reserve decided to keep the benchmark interest rate unchanged at the range of 5.25%-5.50% at its December meeting, in line with market expectations. The overall performance of domestic social financing data was good, and financial support for the real economy was strong. The credit structure has improved, and the macroeconomic atmosphere at home and abroad has improved, boosting market confidence. In terms of fundamentals, the supply side has entered a period of stable operation in the short term, but we still need to be alert to the risk of production capacity reduction of aluminum in the southwest region. On the demand side, the operating rates of the aluminum processing industry weakened in December. Transportation delays and active downstream replenishment have led to a sharp reduction in domestic aluminum social inventories. The short-term low inventory status has forced short sellers to leave the market. In the short term, as delivery approaches, the supply of circulating goods is tight, which will keep SHFE front-month contract at highs.