[SMM Central China Spot Aluminum Midday Review] SHFE aluminum prices experienced a slight correction. Shipment sentiment in the central China market improved further today compared to the previous two days, but downstream processing enterprises preferred to purchase at lower premiums, while suppliers showed weak willingness to hold prices firm. Market quotes declined continuously, gradually shifting from a discount of 100-110 yuan/mt against the SHFE aluminum July contract before market open to a discount of around 120-140 yuan/mt against the same contract, with the mainstream transaction range being at a discount of 120-140 yuan/mt against the SHFE aluminum July contract.

[Inventory Buildup Weighs on Domestic Aluminum Prices; Ex-China Support and Risks Coexist] The risk of supply disruptions to aluminum production outside China has not yet subsided, and the ex-China aluminum ingot supply-demand gap will continue to provide support for aluminum prices. Meanwhile, the continuation of higher-than-expected inventory buildup in China will weigh on domestic aluminum prices. At the same time, tightened invoicing restrictions have constrained aluminum ingot spot liquidity, and the weakening spot market further limits the upside room for domestic aluminum prices. Close attention should be paid to the potential emergence of a turning point in China's social inventory, which could drive a rebound and rise in aluminum prices.

[Geopolitical Negotiations Remain Unresolved; Aluminum Prices Continue LME Outperforms SHFE Pattern] Overall, the Middle East negotiation process continued to face setbacks. However, the supply gap outside China and the continued drawdown of LME inventory supported LME prices to hold up well. Meanwhile, China's aluminum ingot inventory remained at elevated levels, and attention should be paid to whether the inflection point of domestic inventory can materialize smoothly.

SMM April 20 update: SHFE aluminum 2605 fluctuated downward in early trading, but overall aluminum prices remained at high levels. End-users mainly made just-in-time procurement, and traders' buying sentiment was relatively positive, influenced by declining aluminum prices and wider premiums. Mainstream transactions in the market were concentrated around SMM A00 aluminum -10 yuan/mt to +10 yuan/mt. The shipment sentiment index in the east China market was 3.4 today, down 0.32 MoM; the procurement sentiment index was 3.06, flat MoM. SHFE aluminum prices pulled back today, but high aluminum prices still suppressed buying sentiment in the central China market. Downstream processing enterprises mostly adopted a wait-and-see approach, with slight pressure to push for lower prices in actual transactions. However, overall buying sentiment recovered compared to the previous two days. Suppliers had a strong willingness to hold prices firm, transaction prices remained stable, and the downward trend was not significant. Ultimately, actual transaction prices in the central China market ranged between a 20 yuan premium over the central China price and parity. The shipment sentiment index in the central China market was 2.85 today, flat MoM; the procurement sentiment index was 2.39, up 0.04 MoM. Inventory side, aluminum ingot inventory in major consumption areas increased by 28,000 mt MoM today, with all three regions showing inventory buildup.

[Mixed Macro News Signals, Aluminum Prices Are Expected to Mainly Fluctuate and Adjust] Overall, the situation in the Middle East remained a key concern. If aluminum smelters in the Middle East further cut production, it is expected to provide upward momentum for aluminum prices in and outside China. However, China’s social inventory continued to build up, with ample supply available, which is expected to put a ceiling on SHFE aluminum prices. In the short term, aluminum prices are expected to mainly fluctuate and adjust.

[SMM Aluminum Weekly Review: The Situation in the Middle East Remained Unclear, and Aluminum Prices Were Expected to Fluctuate and Adjust in the Short Term]

[SMM Aluminum Morning Meeting Minutes: Aluminum Bahrain Encounters Force Majeure; LME Aluminum Prices Hit a New High Since 2022] Overall, driven by both expectations of a widening overseas supply gap and risk-averse market sentiment, aluminum price fluctuations have further intensified, and SHFE aluminum prices are expected to maintain a fluctuate upward trend in the short term.

[Shanghai aluminum futures consolidated narrowly during the night session, with slow downstream resumption of work leading to volatile aluminum prices] On the fundamentals, seasonal pressure remains prominent. On the supply side, new aluminum projects in the domestic market are steadily ramping up production, while the proportion of liquid aluminum conversion remains temporarily low. On the demand side, post-holiday operating rates of downstream processing materials show a steady recovery pace. However, under the influence of seasonal supply exceeding demand and some cargo backlog at railway stations, it is expected that the peak inventory of aluminum ingots domestically after the holiday will exceed 1.35 million mt, hitting a new high in nearly five years, which will be an important factor suppressing price rises. Overall, in the short term, Shanghai aluminum futures will continue a volatile pattern.

SMM February 26 News: In the morning session, SHFE aluminum 2602 fluctuated downward, with the price center higher than the previous trading day. Influenced by the spot-futures price spread and the price spread between futures contracts, some traders entered the market to build positions, leading to a continuous rise in spot quotations since the opening. The mainstream quotations concentrated around the average to 30 yuan/mt. Today, the shipment sentiment index in the east China market was 2.81, up 0.15 MoM; the purchasing sentiment index was 2.7, up 0.08 MoM. SMM A00 aluminum closed at 235,200 yuan/mt, up 1,400 yuan/mt from the previous trading day, at a discount of 1,800 yuan/mt against the 2603 contract, an increase of 200 yuan/mt from the previous trading day. Today, SHFE aluminum prices rose, and traders holding stocks in the central China market showed a clear willingness to sell at high prices. However, during the initial period after the Chinese New Year holiday, downstream processing enterprises had not fully consumed their inventories, coupled with high aluminum prices, resulting in low restocking willingness. Overall, the market's trading situation was poor, with trading volume lower than the previous two days. Ultimately, the actual transaction price in the central China market fell from a premium of 10 yuan/mt over the central China price before the opening to a discount of 40 yuan/mt. Today, the shipment sentiment index in the central China market was 2.6, up 0.06 MoM; the purchasing sentiment index was 2.13, down 0.03 MoM. SMM central China closed at 234,100 yuan/mt, up 1,100 yuan/mt from the previous trading day, at a discount of 2,900 yuan/mt against the 2603 contract, a decrease of 100 yuan/mt from the previous trading day. The price difference between Henan and Shanghai was -1,100 yuan/mt, widening by 300 yuan/mt from the previous trading day. In terms of inventory, today, the aluminum ingot inventory in the main consumption areas increased by 26,000 mt MoM. Affected by the Chinese New Year break, all three regions showed an inventory buildup. In the short term, post-Chinese New Year, aluminum ingots continued to experience seasonal inventory buildup, and spot premiums/discounts are expected to remain under pressure.

[SMM Aluminum Morning Meeting Minutes: Expectations for US Fed Interest Rate Hike Heat Up, Aluminum Prices to Move Sideways in the Short Term] Overall, from a macro perspective, rising short-term expectations for US Fed interest rate hikes are pushing up the US dollar, while geopolitical tensions between the US and Iran and tariff policies are intensifying risk aversion. Coupled with a slowdown in US economic resilience and a weak recovery in the eurozone, the global macro environment is characterized by a fragile balance and high fluctuations. Seasonal pressure from the fundamentals is becoming more pronounced. On the supply side, new aluminum projects domestically and overseas are steadily ramping up production. Demand side, attention should be paid to the pace of downstream enterprise resumptions after the holiday. Currently, due to seasonal oversupply, the market widely expects post-holiday inventory peaks to reach 1.3 million mt, hitting a five-year high, which will be a key factor suppressing prices. Overall, aluminum prices are expected to move sideways in the short term.