SMM

[SMM Aluminum Morning Meeting Summary: Macro Disruptions Combined with Weak Demand in Off-Season Intensify Aluminum Price Game amid Cost and Inventory Support] On the macro front, Trump once again pressured the US Fed to cut interest rates, fueling expectations for market easing policies. Sino-US economic and trade communications remained neutral, but Trump's tariff hike on 14 countries (effective August 1) postponed the negotiation window, with uncertainties in trade frictions still suppressing global aluminum trade liquidity and exacerbating supply chain risk-aversion sentiment. On the cost side of the aluminum industry, costs declined during the week. As of Thursday this week, the domestic instant and full average cost of electrolytic aluminum stood at approximately 16,550 yuan/mt, up around 80 yuan/mt from last Thursday, mainly due to a slight increase in alumina spot prices, driving a minor rebound in costs. As a result, aluminum smelter profits decreased by around 120 yuan/mt from last week. On the demand side, overall, the off-season atmosphere was strong in most downstream sectors. Aluminum prices rose during the off-season, exerting a more pronounced inhibitory effect on demand. The operating rate in the aluminum processing sector remained sluggish. Production schedules for PV modules were expected to be largely stable MoM in July, but due to frame manufacturers operating at a loss, some enterprises voluntarily reduced orders, leading to a pullback in operating rates. On the inventory front, aluminum ingot inventory declined again yesterday, largely due to shipping rhythms, with fewer arrivals. The inventory buildup trend once again shifted to destocking, providing good support for aluminum futures and spot prices, but its sustainability remains to be verified. Overall, the domestic favorable atmosphere on the macro front remains unchanged, while the impact of overseas tariffs requires vigilance. On the fundamental front, the fluctuating state of domestic aluminum ingot inventory provides support for aluminum prices, but the weakening of downstream demand during the off-season is evident. Spot premiums/discounts continue to widen, and subsequent focus should be on changes in inventory and demand.