Positive Factors Still Provide Support, but Upside Room for Aluminum Prices Is Limited [SMM Aluminum Price Weekly Review]

SMM May 14 News:

Macro Perspective: Overall macro atmosphere leaned warm, with multiple positive factors resonating

Ex-China, US April CPI data showed surging energy prices drove headline inflation to a three-year high, fueling expectations for US Fed interest rate hikes within the year. US-Iran negotiations remained volatile, with the Strait of Hormuz continuing in a closed state; US President Trump arrived in Beijing to begin his visit to China, and market risk appetite was relatively positive.

Fundamentals: Domestic-overseas divergence pattern, with high inventory pressure persisting in China

Ex-China, amid the Middle East conflict, overseas aluminum exhibited a rigid supply gap, which drove continued LME destocking. As of this Wednesday, LME inventory decreased by approximately 11,700 mt WoW to 346,500 mt. The LME aluminum Cash-3M premiums structure continued to deepen, with Wednesday's premiums rebounding by $24.02/mt WoW to $76.12/mt. In China, as of this Thursday, SMM aluminum social inventory was approximately 1.428 million mt, destocking by approximately 13,000 mt compared to last Friday. The initial destocking boosted market sentiment, but inventory remained at high levels, continuing to weigh on aluminum prices.

Overall,

current macro front saw concentrated release of positive factors, the global aluminum rigid supply gap was confirmed, and coupled with initial destocking of domestic aluminum ingot inventory, multiple positive factors provided support for aluminum prices. However, inventory at high levels in China remained the core factor suppressing significant price rallies, and weak spot market transaction performance further limited upside room for aluminum prices. SHFE aluminum's most-traded contract is expected to trade in the range of 24,300-25,000 yuan/mt next week, while LME aluminum is expected to trade in the range of $3,620-3,700/mt.

[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.]