Soft Demand And High Stocks To Pressure Short-Term Aluminum Prices

In the week ending November 23, US initial unemployment claims and inflation data dropped more than anticipated, causing US dollar index fluctuations. In China, Shenzhen's lower down-payment ratio for second homes and other positive policies boosted the market, with more domestic demand-stimulating policies expected. Yunnan's aluminum production cuts progressed, maintaining the long-term domestic tightening supply trend. Despite the need for favorable policies to stimulate demand, the traditional off-season for real estate and infrastructure projects may be difficult to directly translate into orders in aluminum processing sectors. Yet, in the medium to long term, domestic consumption is anticipated to rebound. Weak short-term downstream consumption and high aluminum inventories have created market pessimism, pressuring aluminum prices. Yet, supply contraction and ongoing inventory reduction offer market support. The most-traded SHFE aluminum contract is expected to trade between 18,300-19,000 yuan/mt in the week ending December 1, and LME aluminum may vary between $2,190-2,280 /mt. We'll continue to monitor downstream operating rates closely.