SMM Aluminium Market Morning Comment (Jan 19)

Overnight, the most-traded SHFE 2403 aluminium contract opened at 18,745 yuan/mt, with high and low at 18,760 yuan/t and 18,665 yuan/mt before closing at 18,700 yuan/mt, down 65 yuan/mt or 0.35%. LME aluminum opened at $2,180/mt on Thursday, with high and low at $2,192.5/mt and $2,162/mt respectively before closing at $2,168/mt, a drop of $46/mt or 2.08%.

The macro front remained bearish during the week. Although some domestic economic data released were better than expected, it was insufficient to offset the rapid cooling of expectations for interest rate cuts, which put pressure on aluminum prices. In terms of fundamentals, the disturbance in the alumina supply still existed, domestic aluminium smelters maintained stable operation, the amount of aluminium ingot produced was expected to increase MoM in January, and imported aluminium ingots may increase. In addition, the aluminium market may enter a traditional inventory accumulation amid low-season, but domestic aluminium ingot inventories continued to remain low. The shipment increased thanks to pre-holiday stockpiling. The domestic aluminium ingot has been destocked for more than a week, thus the total inventory before the holiday may be difficult to exceed level in the same period of 2023. In the short term, the macroeconomic data at home and abroad perform poorly, and domestic and overseas aluminum downstream industries are entering the off-season before the end of the year. SMM predicts that aluminum prices may be under pressure in the near future, and we will pay attention to the pace of the Federal Reserve's interest rate cuts, domestic consumption and inventory changes.