SHANGHAI, December 1(SMM) – Overnight, the most-traded SHFE 2401 aluminum contract opened at 18545 yuan/mt, with low and high at 18500 yuan/mt and 18625 yuan/mt before closing at 18530 yuan/mt, down 50 yuan/mt or 0.27%. LME aluminum opened at $2218.5/mt in the previous trading day, with its low and high at $2187/mt and $2219/mt respectively before closing at $2194/mt, down 0.95%.
On the macro level, despite data showing that U.S. inflation and the labor market continue to slow, the U.S. dollar index continues to rise and stands firmly above the 103 mark. Although expectations for further interest rate hikes by the Federal Reserve have cooled, there are still occasional hawkish voices that affect market trading sentiment. In terms of fundamentals, aluminum ingot inventory fell more than expected, and have dropped below 600,000 mt. Due to aluminum production cuts in Yunnan, domestic operating production capacity has dropped to around 41.8 million mt, easing supply-side pressure. Due to recent exchange rate fluctuations, the import window has shown signs of opening. The inflow of imported goods will add to domestic supply. The performance of downstream operating rates is weak in the off-season. The PMI for domestic aluminum processing sectors was below 50%, indicating contraction territory, with production and order index both weak. SMM believes that in the off-season of consumption, the market's upward driving force is insufficient, and short-term aluminum prices may struggle to find support.
On the macro level, despite data showing that U.S. inflation and the labor market continue to slow, the U.S. dollar index continues to rise and stands firmly above the 103 mark. Although expectations for further interest rate hikes by the Federal Reserve have cooled, there are still occasional hawkish voices that affect market trading sentiment. In terms of fundamentals, aluminum ingot inventory fell more than expected, and have dropped below 600,000 mt. Due to aluminum production cuts in Yunnan, domestic operating production capacity has dropped to around 41.8 million mt, easing supply-side pressure. Due to recent exchange rate fluctuations, the import window has shown signs of opening. The inflow of imported goods will add to domestic supply. The performance of downstream operating rates is weak in the off-season. The PMI for domestic aluminum processing sectors was below 50%, indicating contraction territory, with production and order index both weak. SMM believes that in the off-season of consumption, the market's upward driving force is insufficient, and short-term aluminum prices may struggle to find support.
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