5.14 SMM Morning Meeting Minutes
Futures:The most-traded SHFE aluminum 2606 contract closed at 24,885 yuan/mt, up 1.32%. The price was above MA5 (24,559.00), MA10 (24,603.50), MA30 (24,786.00), and MA60 (24,542.33), with short-term moving averages forming support and the price currently testing upward for a breakout. The MACD indicator DIF (-24.4164) was below DEA (7.8856), with the histogram negative (-64.6038), indicating weakening bearish momentum. The suggested core trading range for SHFE aluminum is 24,500-25,500. LME aluminum 3M closed at $3,660/mt, up 0.25%, with the price edging up. The price was above MA5 (3,593.80), MA10 (3,555.50), MA30 (3,546.73), and also above MA60 (3,406.65), with short-, medium-, and long-term moving averages all forming support, indicating an overall bullish trend. The MACD indicator DIF (40.3546) was above DEA (36.9479), with the histogram positive (6.8135), indicating strengthening upward momentum. The suggested core trading range for LME aluminum is $3,550-3,700/mt.
Macro front:US President Trump arrived in Beijing by special aircraft on the evening of May 13, beginning a 3-day state visit to China. Nvidia CEO Jensen Huang, head of the AI chip giant, was invited at the last minute to join the delegation visiting China. Foreign Ministry spokesperson Guo Jiakun stated that China is willing to work with the US, upholding the spirit of equality, respect, and mutual benefit, to expand cooperation, manage differences, and inject more stability and certainty into a rapidly changing world. US April PPI rose 6% YoY, the highest since December 2022, with core PPI up 5.2% YoY, both far exceeding market expectations. Energy and transportation costs both climbed, with services inflation hitting a four-year high. The unexpected PPI inflation surge fueled expectations for US Fed interest rate hikes, with the market now pricing in approximately a 50% probability of a 25-basis-point rate hike within the year.
Fundamentals:Supply side, driven by high prices, aluminum smelter utilization rates in China increased; downstream, the sector is gradually entering the off-season, with downstream demand appearing slightly soft. However, supported by macro tailwinds combined with China's export orders remaining positive, a turning point in China's social inventory is expected to emerge. Markets outside China were disrupted by geopolitical conflicts, with aluminum supply under pressure and spot premiums staying high; LME aluminum inventory continued destocking, hitting a multi-year historical low. Inventory side, today's regional social inventory of aluminum ingots was 1.428 million mt, a destocking of 12,000 mt compared to this Monday.
Primary Aluminum Market:Yesterday in the morning session, the SHFE aluminum 2606 contract fluctuated upward, with the overall price center moving higher compared to the previous trading day. Yesterday, some sellers held prices firm, and end-users mainly made just-in-time procurement, while traders' buying sentiment improved somewhat. The mainstream spot quotations ranged from SMM A00 aluminum average price to SMM A00 minus 10 yuan/mt. Yesterday, the shipment sentiment index in the east China market was 2.96, up 0.1 WoW; the procurement sentiment index was 2.86, up 0.06 WoW. Yesterday, the overall trading atmosphere in the central China market remained sluggish. Aluminum prices rebounded slightly, and buying sentiment was basically flat compared with Tuesday. Insufficient invoice quotas and limited orders continued to suppress buying sentiment of downstream processing enterprises. Ultimately, the actual transaction price range in the central China market hovered between parity and a discount of 10 yuan to the central China price, remaining relatively stable. Yesterday, the shipment sentiment index in the central China market was 2.82, flat WoW; the procurement sentiment index was 2.28, flat WoW.
Aluminum scrap:Yesterday, A00 aluminum price was raised by 180 yuan/mt from the previous trading day, and aluminum scrap market prices generally followed the uptrend. Aluminum tense scrap prices in some regions chose to hold steady in a wait-and-see mode. The mainstream price range of shredded aluminum tense scrap (priced based on aluminum content) hovered around 20,500-21,000 yuan/mt (tax exclusive). The weekly price range of imported zorba (Ningbo Port) was raised by 200 yuan/mt to 21,870-22,070 yuan/mt (tax inclusive). In terms of the price difference between A00 aluminum and aluminum scrap, on May 13, the price difference between A00 aluminum and mixed aluminum extrusion scrap free of paint in Foshan was recorded at 2,745 yuan/mt, and the price difference between A00 aluminum and shredded aluminum tense scrap was 2,208 yuan/mt. Supply side, the tightening trend of compliant invoice sources intensified, raw material prices swung wildly, and aluminum scrap yards generally held back from selling and held prices firm. High LME prices led import traders to adopt a cautious strategy, and subsequent imports are expected to pull back. Demand side, the traditional off-season combined with prominent compliant invoice issues led some regional enterprises to reduce or halt production. Wrought aluminum alloy scrap was supported by secondary aluminum plate/sheet and strip operating rates, but the support was limited. Downstream purchases were mainly just-in-time procurement with strong wait-and-see sentiment. This week, the aluminum scrap market is expected to continue to be in the doldrums, with the mainstream price range of shredded aluminum tense scrap (priced based on aluminum content) maintained at 20,500-21,300 yuan/mt (tax exclusive). Supply side, policy constraints are unlikely to ease in the short term, and tight compliant sources combined with expected pullback in imports provide certain price support. Demand side, the off-season effect continued, downstream secondary aluminum enterprises remained cautiously on the sidelines, purchases were mainly small just-in-time procurement for restocking, the divergence pattern between aluminum tense scrap and wrought aluminum alloy scrap remained unchanged, order increments were limited, and vigilance is still needed against market risks arising from aluminum price fluctuations and tight supply.
Secondary aluminum alloy:Spot cargo side, yesterday ADC12 market quotations were slightly raised overall, with mainstream increases concentrated at 100 yuan/mt. Some enterprises expanded the increase to 200 yuan/mt, supported by cost and invoice factors. Currently, raw material costs fluctuate at highs, reverse invoicing policies are tightening, and sources with invoices are tight, providing price support. Meanwhile, market sentiment improved somewhat, and enterprises' willingness to hold prices firm strengthened. However, demand side, downstream procurement pace remained dominated by rigid demand, with limited transaction volume growth. Sustained price rises still require further demand support, and prices are expected to move sideways in the short term.
Aluminum market summary:Ex-China aluminum supply disruption risks have not yet subsided, and the ex-China aluminum ingot supply-demand gap will continue to provide support for aluminum prices. Meanwhile, tightened invoicing has restricted aluminum ingot spot liquidity, and a weakening spot market will limit upside room for domestic aluminum prices. However, since April, China's export orders have remained positive, coupled with recent macro tailwinds, a turning point in China's social inventory is expected to emerge, providing upward momentum for aluminum prices.
[The information provided is for reference only. This article does not constitute direct advice for investment research decisions. Clients should make prudent decisions and not replace independent judgment with this information. Any decisions made by clients are not related to SMM.]
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