The US Fed rate cut expectations surged significantly, driving aluminum prices higher overnight [SMM Aluminum Morning Comment]

Market: Last Friday night, the most-traded SHFE aluminum 2410 contract opened at 19,880 yuan/mt, with a session high of 19,970 yuan/mt and a low of 19,840 yuan/mt, closing at 19,925 yuan/mt, up 130 yuan/mt or 0.66%. Last Friday, LME aluminum opened at $2,475/mt, with a high of $2,547.5/mt and a low of $2,473.5/mt, closing at $2,533.5/mt, up $67/mt or 2.72%.

Summary: Macro-wise, Fed Chairman Powell sent the strongest signal yet last Friday indicating an approaching rate cut, with the US dollar index hitting its lowest point in nearly a year, leading to a broad rise in non-ferrous metals. Fundamentally, domestic aluminum supply has nearly peaked, with only sporadic resumption of production expected in regions like Guizhou and Sichuan. Downstream consumption improved due to the traditional peak season and domestic economic stimulus policy. Additionally, tight supply in the aluminum scrap market has driven some incremental demand for primary aluminum. Domestic aluminum social inventory may enter a destocking cycle, boosting the aluminum market. In the short term, aluminum prices are expected to continue to fluctuate upward, with continued attention needed on macro changes and the sustainability of downstream aluminum consumption.