SMM

[SMM Aluminum Morning Meeting Summary: Reduced Probability of Short-Term Conflict Escalation in the Middle East, Inventory Turning Point Becomes Key Factor in Aluminum Market Trends] On the macro front, the situation in the Middle East has shown marginal easing, coupled with alleviated concerns over shipping capacity in the Strait of Hormuz. The energy crisis is expected to ease, thereby weakening the cost support for electrolytic aluminum. The intensification of trade frictions between Europe and the US may suppress global demand for industrial products, dampening expectations for aluminum semis exports. On the fundamental side, domestic operating capacity for electrolytic aluminum remains stable, with the proportion of liquid aluminum maintaining a high level, and the market supply of casting ingots remains tight. Demand side, overall, most downstream sectors are in a traditional off-season state. Feedback on production cuts in the downstream sector in central China is evident, with weakened spot cargo transactions in the local market and a continuous large discount in market transaction prices. The weakening off-season demand in the PV and home appliance sectors cannot be overlooked, with a significant pullback in the operating rates of related sectors. The wire and cable sector has seen a decline in operating rates due to the completion of the previous delivery period and high aluminum prices. In terms of inventory, no further replenishment of supplies was observed in the inventory on Thursday this week, and continuous observation is needed to determine whether the destocking turning point has officially formed. Overall, the latest social inventory of aluminum ingots has not shown further inventory buildup and remains at a low level, still providing support to the futures market. Medium-term macro policies (such as domestic consumption stimulus and expectations for US Fed interest rate cuts) may boost demand. It is expected that aluminum prices will mainly fluctuate at highs in the short term, with subsequent focus on changes in inventory and demand.