SMM Aluminium Market Morning Comment (Mar 1)

Overnight, the most-traded SHFE 2404 aluminium contract opened at 18,945 yuan/mt, with high and low at 19,010 yuan/mt and 18,930 yuan/mt before closing at 18,980 yuan/mt, up 55 yuan/mt or 0.29%. LME aluminium opened at $2,193.5/mt on Thursday, with its high and low at $2,230.5/mt and $2,186/mt respectively before closing at $2,225/mt, up $34/mt or 1.55%.

Summary: From a macro perspective, the latest increase in the US personal consumption expenditures (PCE) price index in January was in line with expectations, making it possible to cut interest rates in June. Fundamentally, the strike in Guinea has been suspended, and an aluminum smelter in Inner Mongolia has resumed power supply and production. In addition, there has been no increase in power in Yunnan and other regions. Aluminum smelters maintained stable production, and supply disturbances in China and overseas have basically eased. On the demand, short-term consumption is still expected to pick up, and spot transactions improved. According to the latest data from SMM, domestic social inventories of aluminium ingots and aluminium billets increased by 78,000 mt from last Thursday, but down by 24.6% YoY, which was the lowest level in the same period in the past six years. Aluminium billets inventory has basically showed signs of a downward trend. Overall, aluminium prices continue to move rangebound, and we need to pay attention to aluminium supply, recovery of consumption, and when aluminium ingot stocks will begin to drop.