According to CCTV News, EU diplomats revealed on the 19th local time that ambassadors from the 27 EU member states to the EU have reached an agreement on the 16th round of sanctions against Russia. The new sanctions include a ban on imports of Russian primary aluminum. Following this news, LME aluminum jumped initially during the week, reaching a recent high. Additionally, market concerns over the US tariff plan potentially triggering inflation and a global trade war, coupled with US statements expressing hope for a "trade agreement" with China, have heightened market risk aversion sentiment. Gold repeatedly hit new highs, providing support to base metals as well.
Fundamentally, observing the cost side of the aluminum industry, the immediate full average cost of aluminum was approximately 16,940 yuan/mt, down 119 yuan/mt WoW as of last Thursday, with cost-side support continuing to weaken. On the demand side, influenced by the rise in aluminum prices, end-users adopted a wait-and-see approach, and shipments from downstream aluminum semis enterprises showed no significant improvement. The turnover days of raw material inventories at factories struggled to rebound, with procurement mainly based on rigid demand and consumption of finished product inventories. In terms of inventory, SMM's weekly inventory in major aluminum consumption regions recorded 845,000 mt, with an inventory buildup of 27,000 mt. The absolute inventory level continued to increase, but the growth rate slowed. On a YoY basis, current aluminum market inventory is slightly higher than the same period last year. The seasonal mismatch between supply elasticity release and demand recovery pace has not shown a significantly weaker-than-seasonal trend.
Technically, the model predicts that the SMM A00 aluminum average price will range between [20,065, 20,875] yuan/mt from this Friday to next Thursday (2025-02-27), with a price center of 20,520 yuan/mt. The extreme price range is [19,570, 21,380], the normal price range is [19,900, 21,040], and the conservative price range is [20,230, 20,710]. Next week's price trend is expected to jump initially and then pull back or fluctuate upward. The support range is [19,900, 20,230], and the resistance range is [20,710, 21,040].
In summary, most suppliers are optimistic about the aluminum market outlook and expect the inventory turning point to gradually emerge after entering March, with stronger sentiment to hold back cargoes in the spot market. Under the scenario of strong expectations but weak reality, aluminum prices, driven by macro sentiment and trading expectations, are more likely to rise than fall. The most-traded SHFE aluminum 2504 contract is expected to trade between 20,600-21,000 yuan/mt, while LME aluminum is expected to trade between $2,600-2,750/mt.
