SMM

[SMM Aluminum Morning Meeting Summary: US Import Tariffs on Steel and Aluminum Escalate, SHFE Aluminum Likely to Maintain Mildly Strong Trend] Although the increase in US tariffs on steel and aluminum to 50% is negative, China's direct aluminum semis exports to the US have been restricted by high tariffs for years, so the actual incremental impact is limited. It will more significantly affect overall market sentiment, suppressing global aluminum trade liquidity, particularly impacting countries highly dependent on exports to the US, and exacerbating regional supply surplus pressure in the short term. On the fundamental side, domestic aluminum smelters' operating capacity remains stable. Notably, the proportion of liquid aluminum alloying has increased in some aluminum smelters in north China, reducing casting ingot volumes and affecting the arrival of goods in major consumption regions. Demand side, overall, some downstream sectors are expected to enter the off-season. Demand for PV aluminum has decreased, and automotive aluminum demand is anticipated to weaken in mid-to-late June. Construction aluminum demand remains tepid. However, currently, due to demand from State Grid orders, the operating rate of aluminum wire and cable remains high. Inventory-wise, as the Dragon Boat Festival holiday approaches, some aluminum processing enterprises are slightly stockpiling based on orders on hand. Overall, short-term market sentiment may be suppressed by tariff impacts, potentially weighing on aluminum prices. Meanwhile, domestic aluminum ingot inventory drawdowns exceeding expectations are providing support for aluminum prices and spot premiums. Currently, some industries are already showing expectations of weakening during the off-season, but the overall decline is better than anticipated, with demand resilience remaining. It is expected that SHFE aluminum will maintain a fluctuating trend in the short term, with solid support below. If macro pressures do not significantly escalate, prices are likely to maintain a mildly strong trend.