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3.3 SMM Aluminum Morning Meeting Summary
Futures Market: Overnight, the most-traded SHFE aluminum 2504 contract opened at 20,615 yuan/mt, hit a high of 20,630 yuan/mt, a low of 20,520 yuan/mt, and closed at 20,545 yuan/mt, down 75 yuan/mt or 0.36%. On Friday, LME aluminum opened at $2,632.5/mt, reached a high of $2,641/mt, a low of $2,600/mt, and closed at $2,604/mt, down $27/mt or 1.03%.
Macro: (1) (2) (3) (Bullish★★)
Fundamentals: (1) (Bearish★) (2) (Bullish★); (3) (Bullish★)
Primary Aluminum Market: Yesterday morning, the SHFE front-month aluminum contract fluctuated at highs near 20,650 yuan/mt above the daily average line, with its center gradually moving upward. In east China, spot trades were less active during the day, mainly driven by just-in-time procurement from downstream, while the premium struggled to rise. SMM A00 aluminum recorded a discount of 30 yuan/mt against the SHFE aluminum 2503 contract, unchanged from the previous trading day, with SMM A00 aluminum ingot prices at 20,630 yuan/mt, up 30 yuan/mt from the previous trading day. In central China, some inventories were hedged, leading to low circulation rates. As outflows from warehouses improved recently, traders stood firm on quotes, but actual downstream consumption showed little improvement compared to the previous trading day. SMM central China A00 aluminum recorded 20,540 yuan/mt against the SHFE aluminum 2503 contract, up 40 yuan/mt from the previous trading day, with a Henan-Shanghai price spread of 90 yuan/mt. Actual market transactions were around a premium of 10 yuan/mt against SMM central China prices.
Secondary Aluminum Raw Materials: Yesterday, primary aluminum spot prices rose by 30 yuan/mt compared to the previous trading day, with SMM A00 spot aluminum closing at 20,630 yuan/mt. Aluminum scrap prices followed aluminum prices with slight increases. Today, baled UBC aluminum scrap was quoted at 15,050-15,850 yuan/mt (tax excluded), while shredded aluminum tense scrap prices rose by 0-50 yuan/mt to 16,350-17,950 yuan/mt (tax excluded). Currently, aluminum scrap traders are eager to sell, but demand from scrap utilization enterprises is below expectations, with bargain down purchasing prices dominating, and overall transactions remain moderate. In the short term, aluminum scrap prices are expected to continue fluctuating rangebound, following primary aluminum.
Secondary Aluminum Alloy: Yesterday, aluminum prices continued their fluctuating trend at highs, with SMM A00 aluminum prices up 30 yuan to 20,630 yuan/mt compared to the previous trading day, while secondary aluminum prices remained stable. Domestically, SMM ADC12 prices held steady within the range of 21,100-21,300 yuan/mt. In the import market, overseas ADC12 prices remained at $2,480-2,500/mt, with immediate import losses persisting at 200-300 yuan/mt, keeping the import window closed. Although aluminum prices have slightly increased, the secondary aluminum market remains stable, with no adjustments in mainstream quotations. Entering March, downstream demand recovery has fallen short of expectations, with manufacturers generally reporting sluggish order growth. Actual transactions are moderate, performing weaker than the same period last year. Weak demand continues to limit the upside room for ADC12 prices. In the short term, ADC12 prices are expected to continue fluctuating rangebound. Attention should be paid to changes in raw material market liquidity and the pace of recovery in end-use consumption.
Summary: On the macro side, last Friday night, US inflation data met expectations, and the US Fed adopted a cautious stance on interest rate cuts. The US dollar index surged, approaching a two-week high, putting pressure on base metals. Domestically, the "Government Work Report" proposed implementing accommodative macro policies to boost domestic demand, providing confidence support to the market. Fundamentals side, cost support showed signs of stabilization. Coupled with the steady recovery of downstream operating rates ahead of the traditional peak season of "Golden March and Silver April," attention should focus on the sustained realization of end-use consumption demand in March. As the traditional consumption peak season approaches, the inventory turning point is drawing closer. Combined with policy guidance, supply-side pressure is expected to ease. SMM believes that driven by macro sentiment and trading expectations, SHFE aluminum remains more likely to rise than fall. The possibility of further developments in tariff-related issues and macroeconomic stimulus exceeding expectations could bring additional demand. Aluminum prices are expected to fluctuate upward at highs.
[The information provided is for reference only. This article does not constitute direct investment research advice. Clients should make cautious decisions and not substitute this for independent judgment. Any decisions made by clients are unrelated to SMM.]
