Expectations for US Fed Interest Rate Cuts Strengthen, Downstream Aluminum Demand Continues to Decline [SMM Aluminum Morning Meeting Minutes Dec 12]

Overnight, the most-traded SHFE aluminum 2501 contract opened at 20,300 yuan/mt, reached a high of 20,410 yuan/mt and a low of 20,345 yuan/mt, and closed at 20,395 yuan/mt, up 10 yuan/mt or 0.05% from the previous day. On Wednesday, LME aluminum opened at $2,616/mt, reached a high of $2,625/mt and a low of $2,576/mt, and closed at $2,606/mt, down $9/mt or 0.34%.

Summary: On the macro front, expectations for US Fed interest rate cuts have strengthened again, while the hot war situation, which was expected to ease, has once again fluctuated. On the fundamentals side, high aluminum production costs have raised concerns about production cuts. On the demand side, it is currently the off-season for consumption, and the operating rate of aluminum processing enterprises is declining steadily. However, social inventory of aluminum ingot remains at a relatively low level below 600,000 mt. In the short term, aluminum prices are expected to fluctuate. Changes in the macro situation and the trend of aluminum production costs remain the biggest variables at present.