Positive Factors Still Provide Support, but Upside Room for Aluminum Prices Is Limited [SMM Aluminum Price Weekly Review]

SMM May 14 News:

Macro perspective: Overall macro atmosphere was warm, with multiple positive factors resonating

Ex-China, US April CPI data showed surging energy prices pushed overall inflation to a three-year high, and expectations for US Fed interest rate hikes within the year intensified. US-Iran negotiations were volatile, with the Strait of Hormuz remaining closed; US President Trump arrived in Beijing to begin his visit to China, and market risk appetite was relatively positive. In China, the Ministry of Industry and Information Technology and seven other departments issued the "Work Plan for Stabilizing Growth in the Non-Ferrous Metals Industry (2025–2026)," which still uses energy consumption and environmental protection as the key levers for capacity, with an overall production growth guidance of 1.5%. Actual improvement in supply and demand needs to be seen before it can serve as a driver for price rises.

Fundamentals: Divergence between domestic and overseas markets, with high inventory pressure persisting in China

Ex-China, aluminum showed a rigid deficit amid Middle East conflicts, driving continuous LME inventory destocking. As of this Wednesday, LME inventory destocked approximately 11,700 mt WoW to 346,500 mt. The LME aluminum Cash-3M premiums structure continued to deepen, with Wednesday's premiums rebounding $24.02/mt WoW to $76.12/mt. In China, as of this Thursday, SMM aluminum social inventory was approximately 1.428 million mt, destocking approximately 13,000 mt compared to last Friday. The initial destocking boosted market sentiment, but inventory remained at high levels, continuing to pressure aluminum prices.

Overall,

current macro front saw concentrated release of positive factors, the global aluminum rigid supply deficit was confirmed, coupled with initial destocking of China's aluminum ingot inventory, multiple positive factors provided support for aluminum prices. However, China's inventory at high levels remained the core factor suppressing significant price rallies, and weak spot market transaction performance further limited upside room for aluminum prices. The most-traded SHFE aluminum contract is expected to trade in the range of 24,300-25,000 yuan/mt next week, with LME aluminum in the range of $3,620-3,700/mt.