SMM Aluminum Market Morning Comment (Apr 12)

Overnight, the most-traded SHFE 2406 aluminum contract opened at 20,425 yuan/mt, with the highest and lowest prices at 20,510 yuan/mt and 20,380 yuan/mt before closing at 20,460 yuan/mt, flat from the previous trading day. LME aluminum opened at $2,463/mt in the previous trading day, with its high and low at $2,482/mt and $2,443/mt respectively before closing at $2,457/mt, down $14/mt or 0.57%.

Summary: On the macro level, the recent strong employment data and high inflation data further delayed the Fed's interest rate cut expectations, and favourable policies such as "trade in" in China have been introduced. Fundamentally, the domestic aluminum operating capacity was recovering slowly. On the demand, high aluminum price suppressed downstream purchasing enthusiasm and operating rate. The spot discounts sustained, but driven by the destocking of aluminum ingots, the discounts may narrow. Overall, the aluminum prices stayed at highs due to growing expectations of US economic recovery and positive fundamentals, and may swing on a strong note. We need to pay attention to impact of high prices on downstream procurement and changes in domestic inventory.