SMM Aluminum Market Morning Comment (May 17)

Overnight, the most-traded SHFE 2407 aluminum contract opened at 20,670 yuan/mt, with the highest and lowest prices at 20,780 yuan/mt and 20,650 yuan/mt before closing at 20,780 yuan/mt, up 45 yuan/mt or 0.22%. LME aluminum opened at $2,596/mt in the previous trading day, with its low and high at $2,563/mt and $2,627/mt respectively before closing at $2,588/mt, down 0.46%.

Summary: On the macro front, the US employment data was relatively weak, US CPI fell as expected in April, and the monthly retail sales rate unexpectedly fell in April, indicating that price pressures are easing and increased expectations for the Fed to cut interest rates; the domestic Ministry of Finance issued super-long special treasury bonds, coupled with new policy directions for real estate and new energy vehicles, is expected to drive the real economy. The domestic aluminum operating capacity continued to grow. Around 660,000 mt of aluminium capacity in Yunnan has been resumed, and the remaining 630,000 mt are expected to be restarted and then reach full capacity in June. In addition, the arrivals of aluminum ingots in mainstream consumption areas were relatively small, the inventory pressure of upstream aluminum plants has eased, and the domestic inventory of aluminum ingots and billets continued to drop. Amid bullish macro sentiment, aluminum cost went up, and domestic downstream consumption found solid support. Aluminum prices are expected to swing on a strong note.