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4.10 SMM Aluminum Morning Meeting Summary
Futures: Last night, the SHFE aluminum 2505 contract opened at 19,265 yuan/mt, with a high of 19,480 yuan/mt, a low of 19,225 yuan/mt, and closed at 19,425 yuan/mt, down 20 yuan/mt, or 0.1%. Last night, LME aluminum opened at $2,366.5/mt, with a high of $2,415/mt, a low of $2,360/mt, and closed at $2,407/mt, up $50.5/mt, or 2.14%.
Macro: (1) Just 13 hours after taking effect, Trump announced a suspension of reciprocal tariff policies on most economies for 90 days to allow for negotiations. Trump also stated that he had been considering the suspension for the past few days and now felt that the reaction was a bit over the top, showing some panic and fear. He will consider exemptions for some US companies; the White House stated that a 10% global tariff will still be levied during the negotiations, and previously announced tariffs on industries such as automobiles, steel, and aluminum are not included in the suspension. (Bullish ★★) (2) China resolutely counterattacks with a "stimulus policy package". The Customs Tariff Commission of the State Council: The additional tariff rate on all imported goods originating from the US will be increased from 34% to 84%. (Bearish ★★) (3) Premier Li Qiang chaired a symposium on the economic situation with experts and entrepreneurs. Li Qiang emphasized that new incremental policies will be introduced in a timely manner based on the situation. (Bullish ★)
Fundamentals: (1) According to SMM statistics, in terms of domestic aluminum billet inventory in two regions, Guangdong aluminum billet inventory was 143,400 mt, Wuxi aluminum billet inventory was 39,700 mt, totaling 183,100 mt, a decrease of 2,900 mt WoW. (Bullish ★) (2) According to SMM statistics, on April 10, Guangdong aluminum ingot inventory was 251,000 mt; Wuxi aluminum ingot inventory was 260,000 mt; Gongyi aluminum ingot inventory was 113,000 mt, with a total social inventory of 744,000 mt, a decrease of 30,000 mt from Monday.
Primary aluminum market: Yesterday, SHFE aluminum was in the doldrums in the morning session, with more spot market sales, at a discount to SMM, and downstream stockpiling at low prices. Specifically, the east China spot market traded at a discount of 10-20 yuan/mt to SMM; in the central China market, sales were sluggish today, mainly due to the opening of spot arbitrage opportunities, with suppliers selling more, and spot trading at a discount of 10 yuan/mt to the SMM central China average price.
Secondary aluminum raw materials: Yesterday, spot primary aluminum fell by 340 yuan/mt from the previous trading day, with SMM A00 spot closing at 19,530 yuan/mt. The aluminum scrap market followed the decline in primary aluminum, with downstream demand not showing a clear peak season, maintaining purchasing as needed. Yesterday, baled UBC aluminum scrap was quoted at 14,650-15,250 yuan/mt (excluding tax), and shredded aluminum tense scrap was quoted at 15,650-17,150 yuan/mt (excluding tax). By region, aluminum scrap suppliers in Foshan and Hubei showed strong sentiment to hold back cargoes, with low willingness to adjust prices, while prices in other regions such as Shanghai, Jiangsu, Henan, and Anhui were reduced by 200-350 yuan/mt depending on the type and tightness of aluminum scrap. In the short term, domestic aluminum scrap supply is unlikely to increase, demand is weakening, downstream producers are taking a wait-and-see attitude, maintaining purchasing as needed, and the aluminum scrap market may remain in the doldrums, with the price difference between A00 aluminum and aluminum scrap further narrowing, but long-term structural support remains, and attention should be paid to marginal changes in supply and demand and macro policy direction.
Secondary aluminum alloy: Yesterday, aluminum prices continued to decline, with SMM A00 spot prices falling by 340 yuan/mt to 19,530 yuan/mt in a single day, with a cumulative decline of over 1,000 yuan for the week. The secondary aluminum market was also under pressure, with SMM ADC12 prices reduced by 200 yuan/mt to the range of 20,500-20,700 yuan/mt. Overseas ADC12 prices were reduced to $2,460-2,490/mt, and imported spot prices were reduced by 100 yuan/mt from the previous day to 19,600-19,800 yuan/mt, with both domestic and overseas markets declining, but the RMB exchange rate fell again, keeping the immediate loss of imported ADC12 at a high level. The rapid price decline has significantly weakened the purchasing willingness of downstream enterprises, and the market trading atmosphere has become quiet. Secondary aluminum alloy prices will remain in the doldrums in the short term.
Summary: The macro front is mixed, with intensified Sino-US trade disputes causing short-term disturbances. Trump's suspension of some reciprocal tariffs has eased market panic, but tariffs on the automotive, steel, and aluminum industries have not been canceled, still suppressing China's aluminum semis export demand. On the other hand, China's substantial increase in tariffs on US goods may push up the import costs of the aluminum industry chain, but at the same time, it has released incremental signals. If subsequent stimulus policies in infrastructure, new energy, and other fields are introduced, it will boost aluminum consumption (such as PV and NEV aluminum), offsetting some of the negative impacts of trade friction. With the arrival of the traditional consumption peak season of "Golden March and Silver April", the operating rate of the downstream aluminum processing industry has shown signs of mild recovery. Domestic trade order growth is relatively stable, while foreign trade orders have seen a significant decline. Especially recently, the SHFE/LME price ratio has continued to rebound, and the price spread between domestic and overseas markets has narrowed from around -3,000 yuan/mt to around -1,000 yuan/mt, which has continuously damaged the profits of foreign trade orders, and the number of new orders has decreased accordingly. Fundamental destocking and policy expectations form the core support for aluminum prices, but the risk of escalating trade friction on the macro front creates pressure. In the tug-of-war between longs and shorts, aluminum prices may fluctuate upward, and attention should be paid to fluctuations caused by policy black swan events.
【The information provided is for reference only. This article does not constitute direct advice for investment research decisions. Clients should make decisions cautiously and not use this to replace independent judgment. Any decisions made by clients are not related to SMM.】
