SMM Morning Comment For Aluminium Market On August 21

SHANGHAI, Aug 21 (SMM) –

Last Friday night, the most-traded SHFE 2309 aluminium contract opened at 18,060 yuan/mt, with the lowest and highest prices at 18,030 yuan/mt and 18,075 yuan/mt before closing at 18,045 yuan/mt, down 15 yuan/mt or 0.08% from the previous trading day. LME aluminium opened at $2,144/mt last Friday with its high and low at $2,159/mt and $2,135/mt respectively before closing at $2,138/mt, a decrease of $4.5/mt or 0.21% from the previous trading day.

On the macro side, the minutes of the Federal Reserve meeting in July showed that the probability of interest rate hikes was increasing before November to fight rising inflation. Domestic stimulus policies relating to expanding demand and supporting real estate have not been implemented yet. In terms of fundamentals, the amount of domestic ingots is still relatively small. It is difficult for the market to witness a large number of concentrated arrivals of ingots in the short term. Domestic aluminum ingots social inventory declined to nearly 500,000 mt but with the resumption of production in Yunnan, more supplies will flow into the spot market. In mid-August, the downstream inventory restocking was active, which strengthened confidence over the extended destocking of aluminum products and boosted spot premiums. In the short term, low inventories will still support aluminum prices. However, the uncertain macro sentiment and the expected supply increase will put pressure on the upward trend of aluminum prices. SMM predicted that the short-term aluminum prices will remain volatile, and follow-up attention should be paid to consumption and inventory.