SMM Aluminum Market Morning Comment (July 17)

Market: Overnight, the most-traded SHFE aluminum 2409 contract opened at 19,800 yuan/mt, reaching a high of 19,870 yuan/mt and a low of 19,730 yuan/mt, and closed at 19,810 yuan/mt, down 85 yuan/mt, a decrease of 0.43%. The previous trading day, LME aluminum opened at $2,461/mt, reached a high of $2,462/mt and a low of $2,403/mt, and closed at $2,416/mt, down $44/mt, a decrease of 1.79%.

Summary: On the macro front, the US dollar index initially rose as retail sales data released last night exceeded expectations. However, the index later gave up all its intraday gains as the market weighed the possibility of a US Fed rate cut. The upcoming 20th Third Plenary Session in China may bring new positive news, but the weekend's assassination attempt on Trump has increased his chances of winning, and the market expects his policies to be favorable to the dollar. Together with the uncertain situation of the Israel-Palestine conflict, this has added uncertainty to the recent market. On the fundamentals, domestic aluminium production is increasing, with some capacity yet to be resumed. Downstream aluminium processing and end-user demand have entered the off-season, with demand in some sectors being hit. The operating rate in the aluminium processing industry is declining, social inventory destocking is weak, and inventory levels are at a three-year high for the same period. Spot discounts may persist in the short term. The aluminium market currently lacks upward drivers, as the fundamentals remain bearish during the off-season. SMM expects aluminium prices to remain weak in the short term, with attention needed on macro changes and disruptions in the raw material sector impacting aluminium prices.