SMM October 22:
Macro front:
The macro picture is mixed. Geopolitically, Israel-Iran conflict risks have escalated again: Israel had planned a large-scale offensive against Iran, which was not carried out due to US opposition, but Iran has issued intensive warnings of military escalation, claiming that a war would trigger a severe global energy crisis. The uncertainty in the Middle East has kept risk premiums on crude oil and energy shipping elevated. Fed Chairman Warsh declined to signal interest rates ahead of schedule, and traders maintained expectations of no move in October, with the valuation pressure from the US dollar and interest rates on nonferrous metals marginally easing. Overall, macro sentiment remains cautious in the near term.
Fundamentals:
On the supply side, with project replacement, a small amount of idle capacity was released, and China's weekly aluminum production edged up this week. Overseas, on October 21, an aluminum plant in the UAE saw its operating rate recover to 50%; meanwhile, there were reports that a production line at an Iranian aluminum plant malfunctioned, with possible impact on production, though the plant's scale is limited. Combined with continued production ramp-up at the Indonesia project, overseas supply is steadily recovering overall. On the demand side, after aluminum prices fell from earlier levels, aluminum billet processing fees recovered, production at aluminum billet plants in South China improved, and the proportion of liquid aluminum rose 0.06 percentage points MoM. Overall, consumption remained resilient in October.
In summary, macro sentiment is relatively cautious; fundamentally, inventory continues to draw down, providing near-term support for aluminum prices. SHFE aluminum front-month contract is expected to trade at 22,900–23,600 yuan/mt next week; LME aluminum is expected to trade at $2,950–3,050/mt. Going forward, close attention should be paid to China's aluminum semis export performance.
[The information provided is for reference only. This article does not constitute direct investment research or decision-making advice. Clients should make decisions prudently and not use this as a substitute for independent judgment. Any decisions made by clients are not related to SMM.]
