SMM Aluminum Market Morning Comment (Jul 19)

The most-traded SHFE 2409 aluminum contract opened at 19,630 yuan/mt overnight, reaching a high of 19,680 yuan/mt and a low of 19,555 yuan/mt, and closed at 19,575 yuan/mt, down 130 yuan/mt, a decrease of 0.66%. The previous trading day, LME aluminum opened at $2,405.5/mt, reached a high of $2,430/mt, a low of $2,380/mt, and closed at $2,385.5/mt, down $20/mt, a decrease of 0.83%.

Summary: On the macro front, the US dollar index saw its largest single-day gain since June 20, as the Philadelphia Fed Manufacturing Index for July exceeded expectations, indicating signs of a resilient US economy. Domestically, the 20th Third Plenary Session of the CPC Central Committee may bring new positive news. However, the assassination attempt on Trump over the weekend has increased his chances of winning, and the market expects his policies to be favorable to the dollar. Together with the uncertain situation of the Israel-Palestine conflict, this has added uncertainty to the market. Fundamentally, domestic aluminum production is increasing, with some capacity yet to be resumed. Downstream aluminum processing and end-user demand have entered the off-season, with demand in some areas being impacted. The operating rate in the aluminum processing industry is declining, social inventory destocking is weak, and inventory levels are at a three-year high for the same period. Spot discounts may persist in the short term. The aluminum market currently lacks upward drivers, as the fundamentals during the off-season remain bearish. SMM expects short-term aluminum prices to remain weak, with attention needed on macro changes and material-related events that may impact aluminum prices.