SMM

[SMM Aluminum Morning Meeting Summary: Significant Macro Support with Tug-of-War Between Supply and Demand, Aluminum Prices More Likely to Rise Than Fall in September] Macro front, expectations for US Fed interest rate cuts and potential US housing stimulus policies, coupled with China's intensified policies to boost domestic demand, have collectively created a bullish atmosphere, which is expected to enhance aluminum consumption prospects. However, the transmission of domestic policy support to actual consumption still requires time. Supply side, with the commissioning of a small amount of replacement capacity, operating capacity is steadily increasing slightly, and production is growing marginally. The proportion of liquid aluminum is anticipated to rebound in September. Cost side, the weekly total cost of the aluminum industry saw minimal changes, with high industry profits remaining intact. Demand side remains the core focus for the market going forward. As the September-October peak season approaches, downstream operating rates showed stronger signs of recovery last week, with increases observed in sectors such as aluminum extrusion and aluminum plate/sheet, strip and foil. Entering early September, consumption has only shown marginal improvement, and effective inventory destocking still requires time to materialize. However, current total inventory levels are not high, and some secondary aluminum enterprises in provinces like Anhui and Jiangxi have received notices of termination for tax rebate policies, posing a risk of declining capacity utilization rates for scrap utilization enterprises, which provides some support for primary aluminum consumption. Overall, aluminum prices in the traditional peak season of September are more likely to rise than fall, but upside resistance remains. For aluminum prices to effectively break through the key resistance level of 21,000 yuan/mt, the market needs to await the realization of consumption expectations during the September-October peak season, validated by subsequent domestic aluminum ingot destocking inflection points and sustained strength in downstream operating rates.