SMM Aluminum Market Morning Comment (Feb 2)

The most-traded SHFE 2403 aluminum contract opened at 18,900 yuan/mt overnight, with its low and high at 18,850 yuan/mt and 18,915 yuan/mt before closing at 18,895 yuan/mt, down 0.05%. LME aluminum opened at $2,274.0/mt on Thursday, with its low and high at $2,244.0/mt and $2,275.6/mt respectively before closing at $2,249.0/mt, down 1.58%.

On the macro front, the Federal Reserve maintained its first interest rate in 2024, and its statement was hawkish. Expectations for an interest rate cut in March fell back, and the US index rebounded, suppressing commodities. In China, the macroeconomic environment was positive. The implementation of real estate “white list” and relaxation of purchase restrictions in Guangzhou, Suzhou and Shanghai greatly boosted domestic market sentiment. In terms of fundamentals, the domestic aluminum operation is generally stable before CNY holidays. The market is generally concerned about the time of production resumption in Yunnan. Downstream consumption weakened before CNY holiday. Small and medium-sized enterprises took CNY holidays, coupled with a high aluminium liquid ratio in 2024 CNY holidays, it is expected that the peak of aluminum inventory after CNY holiday may be lower than levels for the same period of previous years. From a macro perspective, the Fed's interest rate cut expectations declined, but domestic expectations improved, coupled with low expectations for total inventory after CNY holiday, the aluminum market has no major negative factors and is expected to move rangebound before CNY holiday.