SMM Aluminum Morning Comment

The most-traded SHFE 2311 aluminum contract opened at 19150 yuan/mt in last night trading session, with the lowest and highest at 19085 yuan/mt and 19190 yuan/mt before closing at 19125 yuan/mt, down 125 yuan/mt, or 0.65%. Three-month LME aluminum opened at $2237/mt last evening and closed at $2247/mt, a rise of $7.5/mt or 0.33%.Taken together, there are signs of improvement in external macro news after the holidays, interest rate hike expectations have dropped, and the U.S. dollar index has fallen slightly, which has boosted market confidence. The weak futures market after the holiday is expected to improve.

The domestic manufacturing PMI data in September returned to the expansion range, further confirming the logic of improved consumption. Subsequent policy-driven and endogenous repairs are expected to promote further economic recovery. In terms of fundamentals, the domestic aluminum supply side is approaching its peak, and there is unlikely to be a significant increase in the short term. Under various factors, although domestic aluminum social inventories will accumulate in stages and increase significantly after the holidays, the total inventory is still expected to remain stable at low levels. Downstream orders may be expected to improve after the holidays. Aluminum social inventory may re-enter the state of destocking driven by concentrated downstream replenishment after the holidays, and aluminum supply and demand are still tightly balanced. In the short term, accumulation of inventory may suppress SHFE aluminium and spot premiums. But in the medium and long term, with the growth rate of the supply side narrowing significantly, aluminum supply and demand are still in a tight balance, giving support to SHFE aluminum.