Overnight, the US dollar index hit a seven-month low, and domestic aluminum inventory continued to decline [SMM Aluminum Morning Comment]

Market: Overnight, the most-traded SHFE aluminum 2409 contract opened at 19,625 yuan/mt, reached a high of 19,730 yuan/mt and a low of 19,615 yuan/mt, and closed at 19,625 yuan/mt, up 185 yuan/mt, or 0.95%. Overnight, LME 3M aluminum opened at $2,367/mt, reached a high of $2,449.5/mt and a low of $2,365/mt, and closed at $2,430/mt, up $64.5/mt, or 2.73%.

Summary: The US dollar index continued its decline overnight, hitting a seven-month low, leading to a broad rise in non-ferrous metals. On the macro front, recent US retail and inflation data performed well, alleviating concerns about economic recession. Additionally, rising geopolitical tensions provided support for the non-ferrous metals market. On the fundamentals, domestic aluminum supply has peaked, with only sporadic resumption expected in regions like Guizhou and Sichuan. Downstream, thanks to improved orders for 3C and NEVs, the operating rate of leading extrusion enterprises saw a slight increase last week. Meanwhile, with the traditional peak season and domestic economic stimulus policies, downstream consumption is expected to improve. Last week, aluminum social inventory continued to decline slightly, with a potential turning point in the second half of August, further weakening the supply-demand mismatch. Considering that recent strong performance of alumina provides solid cost support for aluminum, SMM expects short-term aluminum prices to rebound. Continued attention is needed on aluminum consumption and changes in aluminum social inventory.