SMM

[Aluminum Morning Meeting Summary: Macro Tailwinds Dominate Aluminum Prices, Consumption Strength Awaits Peak Season Verification] On the macro front, expectations for US Fed interest rate cuts and increased policy support in China to boost domestic demand have created a bullish atmosphere, which is expected to bolster aluminum consumption prospects. Fundamentally, on the supply side, with a small amount of replacement capacity coming online, production has seen a slight increase; cost-wise, the full cost of domestic aluminum stands at 16,718 yuan/mt, down 20 yuan/mt WoW, with industry profits remaining around 3,960 yuan/mt. The demand side remains the core focus for the market going forward. When aluminum prices were hovering around 20,500 yuan/mt last week, downstream enterprises' restocking volumes increased, with some companies already starting to build up inventory in anticipation of better orders during the upcoming peak season. Domestic downstream operating rates saw a modest rebound, but as aluminum prices rebounded, terminal shipments declined again, and procurement volumes of processed materials significantly decreased. Overall, high aluminum prices are exerting some pressure on off-season consumption, but as the peak season approaches, expectations for improved orders are growing. Last week, aluminum ingot inventory pressures eased, and inventories slightly decreased to 596,000 mt. In summary, while short-term consumption shows only marginal improvement, there is a risk of inventory buildup for aluminum ingots, but the current total inventory level is not high. Moreover, some secondary aluminum enterprises in provinces like Anhui and Jiangxi have received notices of the termination of tax rebate policies, posing a risk of declining capacity utilization rates for scrap utilization enterprises, which will provide some support for primary aluminum consumption. Under the influence of macro tailwinds, aluminum prices are expected to gain more upward momentum, and it is anticipated that aluminum prices will continue to fluctuate at highs this week, with further gains contingent upon the realization of peak season consumption.