US Dollar Index Surges, LME Aluminum Under Pressure [SMM Aluminum Morning Comment]

SMM, Aug 29: Overnight, the most-traded SHFE aluminum 2410 contract opened at 19,845 yuan/mt, reaching a high of 19,925 yuan/mt and a low of 19,810 yuan/mt, and closed at 19,860 yuan/mt, down 45 yuan/mt from the previous close, a decrease of 0.23%. On Wednesday, LME aluminum opened at $2,543/mt, with a high of $2,548.5/mt and a low of $2,484/mt, closing at $2,484/mt, down $62.5/mt, a decrease of 2.45%.

Summary: On the macro front, the market is gradually digesting the expectation of a rate cut by the US Fed next month, currently awaiting inflation data, which may provide clues on the extent of the rate cut. On the fundamentals side, recent disturbances such as power rationing have not had a substantial impact on aluminum production, with supply remaining relatively stable. Currently, the aluminum market is seeing a decline in purchasing strength and ample circulation of aluminum ingots, which suppresses the narrowing of spot discounts. However, the consumption side is gradually recovering, driving up downstream operating rates, and a turning point in inventory reduction is expected. In the short term, aluminum prices are expected to maintain a fluctuating trend, with caution advised regarding the risk of price declines due to lower-than-expected rate cuts or peak season consumption performance.