On the macro front, US President Trump told reporters on board Air Force One on the 25th local time that the US would not remove tariffs on Chinese goods unless China made substantive concessions. Over the past week, the US has sent mixed and even contradictory signals on the issue of tariffs on Chinese goods. The spokesperson of the Chinese Embassy in the US emphasized on the evening of the 25th that China and the US had not held consultations or negotiations on the tariff issue, let alone reached an agreement. The latest Financial Stability Report released by the US Fed on Friday showed that rising global trade risks, overall policy uncertainty, and the sustainability of US debt topped the list of potential risks to the US financial system. The Political Bureau of the CPC Central Committee held a meeting on April 25 to analyze and study the current economic situation and economic work. The meeting pointed out that it is necessary to continuously consolidate the stable trend of the real estate market and maintain a stable and active capital market. It is essential to accelerate the implementation of more proactive and effective macro policies, including timely RRR cuts and interest rate cuts. For enterprises significantly affected by tariffs, the proportion of unemployment insurance fund reimbursement for job stability will be increased. Zhao Chenxin, Deputy Director of the National Development and Reform Commission (NDRC), stated that China will introduce and implement a series of measures to stabilize employment, stabilize the economy, and promote high-quality development.
On the cost side, the cost performance of the aluminum industry remained stable, with the immediate full average cost of aluminum at approximately 16,584 yuan/mt, up 2.5 yuan/mt from last Thursday.
On the demand side, there were signs of structural improvement. Benefiting from the continuous influx of new orders in May, the overall operating rate of the extrusion industry increased by 1 percentage point WoW to 59.5% this week, driving the pre-holiday stocking demand for raw materials such as aluminum ingots and aluminum billets. By sector, although the volume of new orders for PV extrusion has declined compared to the peak season levels in March-April, the overall decline is manageable, and the actual production pace needs further verification after the Labour Day holiday. The automotive extrusion sector continued to operate in the doldrums, but some enterprises have already received new orders for popular car models, which will drive an increase in subsequent operating rates. For construction extrusion, driven by the sustained release of demand for curtain wall projects, the operating rates of relevant enterprises in the industry chain have rebounded.
In terms of inventory, according to SMM statistics, as of April 30, the inventory of aluminum ingots in major domestic consumption areas stood at 614,000 mt, a decrease of 29,000 mt from Monday.
SMM expects that the destocking trend in late April will remain unchanged, with domestic aluminum ingot inventory expected to fall to 600,000-650,000 mt by the end of April. However, attention should be paid to the risk of temporary inventory buildup during the Labour Day holiday due to concentrated arrivals.
Overall, on the macro front, the positive domestic macroeconomic atmosphere remains unchanged. Trump's softened stance on China regarding his signature tariff policy yesterday has improved market sentiment, stimulating a rebound in the futures market. On the cost side, the aluminum industry's cost performance remains stable, and on the demand side, there are signs of structural improvement. Benefiting from the continuous influx of new orders in May, the pre-holiday stocking demand for raw materials such as aluminum ingots and aluminum billets has been driven. The reduction in domestic aluminum ingot inventory provides support for aluminum prices, but suppliers are actively selling at higher prices, causing spot premiums to pull back. SMM believes that whether substantive easing in Sino-US trade can be achieved requires time for observation. In the short term, the imbalance between bullish and bearish factors remains significant. As the transition between the off-season and peak season approaches and the PV installation rush nears its end, there is an expectation of a decline in subsequent orders for aluminum downstream industries. The momentum for another significant rally in aluminum prices is insufficient, and it is expected that domestic aluminum prices will oscillate mainly before the holiday.
SMM expects that the most-traded SHFE aluminum 2506 contract will trade within the range of 19,300-20,200 yuan/mt next week, while LME aluminum will trade within the range of 2,320-2,470 US dollars/mt.
![[SMM Analysis] Aluminum Processing Rates Rebound 1.1% MoM, But Lag Behind Previous Years' Peak-Season Levels](https://imgqn.smm.cn/usercenter/ppauU20251217171651.jpg)
