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4.21 SMM Aluminum Morning Meeting Summary
Futures market: In the previous night session, the most-traded SHFE aluminum 2506 contract opened at 19,680 yuan/mt, with a high of 19,805 yuan/mt, a low of 19,625 yuan/mt, and closed at 19,785 yuan/mt, up 90 yuan/mt or 0.46% from the previous close. LME aluminum opened at $2,385/mt in the previous session, with a high of $2,396/mt, a low of $2,363/mt, and closed at $2,385/mt, down $3.5/mt or 0.15%.
Macro: (1) The State Council executive meeting emphasized the need to stabilize the stock market and promote the steady and healthy development of the real estate market. (Bullish★) (2) The US is coercing other countries to restrict economic and trade relations with China. The Ministry of Commerce responded that this is a guise of "reciprocity" to pursue hegemonic politics and unilateral bullying in the economic and trade field. (Bearish★) (3) The Office of the US Trade Representative announced final measures in the 301 investigation into China's maritime, logistics, and shipbuilding sectors. (Bearish★)
Fundamentals: (1) On April 21, SMM statistics showed that domestic aluminum social inventory was 673,000 mt, down 16,000 mt WoW. (Bullish★) (2) On April 17, Rio Tinto Group and Ammique Metal Materials Company will study the potential of developing a primary aluminum smelter with an annual capacity of up to 1 million mt and an alumina production facility with an annual capacity of 2 million mt, all powered by wind and solar energy supported by pumped storage. The first phase of the project plans to assess the feasibility of building a 500,000 mt/year primary aluminum smelter in an advantageous location in India. (Neutral) (3) AppleInsider reported that Apple's next-generation augmented reality headset may use titanium alloy to replace some aluminum structures to reduce weight. (Bearish★) (4) Data released by the National Energy Administration showed that as of the end of March, the country's cumulative installed power generation capacity reached 3.43 billion kW, up 14.6% YoY. Among them, solar power installed capacity was 950 million kW, up 43.4% YoY; wind power installed capacity was 540 million kW, up 17.2% YoY. (Neutral)
Primary aluminum market: Last Friday, SHFE aluminum moved downwards after a higher opening, with the center down to around 19,700 yuan/mt. In the spot market, due to large purchases by major players, spot circulation tightened, and spot premiums in east China rose. With the support of previous spread funds, the backwardation structure of SHFE aluminum 05-07 contracts expanded to 170 yuan/mt, also supporting the spot market. The market traded at a premium of 20 yuan/mt against the SMM A00 average price. SMM A00 was at a premium of 50 yuan/mt against the SHFE aluminum 2505 contract, up 20 yuan/mt from the previous session. SMM A00 aluminum ingot was recorded at 19,830 yuan/mt, up 30 yuan/mt from the previous session. After the rebound in aluminum prices in central China, downstream purchasing weakened, while upstream suppliers actively shipped, releasing some previous inventory. The market presented a completely different situation from east China, with spot premiums stabilizing during the day. SMM central China A00 was recorded at 19,780 yuan/mt against the SHFE aluminum 2505 contract, up 30 yuan/mt from the previous session. The Henan-Shanghai price spread was -50 yuan/mt, with actual market transactions at parity to a discount of 10 yuan/mt against the SMM central China price, and at parity against the 2505 contract.
Secondary aluminum raw materials: In the previous session, baled UBC aluminum scrap was quoted at 14,850-15,450 yuan/mt (excluding tax), and shredded aluminum tense scrap was quoted at 15,850-17,350 yuan/mt (excluding tax). In the short term, aluminum scrap prices remain high, mainly due to the generally low operating rates of downstream scrap utilization enterprises and tight domestic aluminum tense scrap circulation, supporting aluminum scrap prices. The price difference between A00 aluminum and aluminum scrap is mainly adjusted within a narrow range.
Secondary aluminum alloy: Last Friday, aluminum prices rebounded slightly, and secondary aluminum plants continued to hold steady quotations. Domestic SMM ADC12 prices remained in the range of 20,500-20,700 yuan/mt. Under the dominance of weak demand, ADC12 prices will likely remain in the doldrums in the short term. Recent focus will be on the impact of aluminum raw material price fluctuations and tariff policies on export orders.
Summary: On the macro front, the domestic bullish atmosphere remains unchanged, but the impact of the US tariff war continues, and market sentiment is cautious. Fundamentally, the destocking of domestic aluminum ingot inventory supports spot premiums and provides a strong bottom for aluminum futures. In terms of aluminum consumption, the comprehensive operating rate of the aluminum processing sector has seen a slight correction. Except for aluminum wire and cable, the operating rates of other sectors have weakened slightly, and subsequent orders are expected to decline. The momentum for a significant rise in aluminum prices is insufficient, and domestic aluminum prices are expected to fluctuate in the short term.
[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.]
