Overnight, the most-traded SHFE 2407 aluminum contract opened at 21,350 yuan/mt, reaching a high of 21,970 yuan/mt and a low of 21,350 yuan/mt, and closed at 21,895 yuan/mt, up 590 yuan/mt, an increase of 2.77%. On the previous trading day, LME aluminum opened at $2,732/mt, reaching a high of $2,798/mt and a low of $2,724/mt, and closed at $2,794/mt, up $62/mt, an increase of 2.27%.
On the macro front, the IMF has raised its forecast for China's economic growth this year, and the State Council has issued an "Action Plan" to optimize the aluminium industry's capacity, aiming for high-quality development. Multiple favorable factors boosted aluminium prices. On the fundamentals, the operating capacity of domestic aluminium continued to rise during the week, with good progress in the production resumption in Yunnan, which may be completed in June. Supply-side pressure may gradually emerge as social inventory of aluminum ingots continues to accumulate, and high aluminium prices inhibit inventory consumption, while LME aluminium inventory slightly declined from its peak. From the demand, aluminium prices hit a new high for the year and have been highly volatile, inhibiting downstream procurement enthusiasm, leading to a decrease in orders and operating rates for aluminium processing enterprises. As the market transitions between peak and off-peak seasons, orders in multiple sectors have shown slight declines, and the overall operating rate is expected to weaken steadily. During the week, spot alumina prices continued to rise, and the cost of domestic aluminium continued to climb, with the import window remaining closed, which may provide some support for aluminium prices. SMM expects short-term aluminium prices to maintain wide fluctuations at a high level, with strong market sentiment for capital chasing in the short term. We need to pay attention to the risk of price volatility after aluminium prices hit new highs.
