SMM

[SMM Aluminum Morning Meeting Summary: Reduced Probability of Short-Term Conflict Escalation in the Middle East, Inventory Inflection Point Becomes Key to Aluminum Market Trends] On the macro front, the ceasefire between Israel and Iran has alleviated geopolitical risks, reducing the demand for capital flight, which is short-term bearish for aluminum prices. US Fed Chair Powell's neutral stance, coupled with potential expectations for US Fed interest rate cuts and pressure from Trump, may boost the economy, providing support for aluminum prices. The People's Bank of China (PBOC) and five other departments jointly issued a document to stimulate consumption, which is bullish for end-user aluminum demand. On the fundamental front, the operating capacity of domestic 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 the traditional off-season, with significant production cuts feedback from downstream industries in central China. Local spot transactions have weakened, and the market transaction price has shown a continuous large discount. The weakening off-season demand in the PV and home appliance sectors cannot be ignored, with a significant pullback in the operating rates of related sectors. The wire and cable sector has experienced a decline in operating rates due to the completion of the previous delivery period and high aluminum prices. On the inventory front, the pace of destocking has slowed, and low inventory still provides support to the futures market. Inventory buildup occurred on Monday this week, and it is necessary to observe whether the destocking inflection point has officially formed. However, spot premiums/discounts have gradually pulled back. Overall, short-term aluminum prices are suppressed by inventory accumulation and geopolitical easing, but medium-term macro policies (such as domestic consumption stimulus and expectations for US Fed interest rate cuts) may boost demand. It is expected that short-term aluminum prices will be in the doldrums, and subsequent focus should be on changes in inventory and demand.