Power Shortage Reemerged in Sichuan, Aluminum Plants Yet to Cut Production, Aluminum Prices Rebounded, Breaking Continuous Inventory Decline [SMM Aluminum Morning Comment]

Market: The most-traded SHFE aluminum 2410 contract opened at 19,930 yuan/mt overnight, reaching a high of 19,980 yuan/mt and a low of 19,860 yuan/mt, and closed at 19,890 yuan/mt, down 35 yuan/mt, a decrease of 0.18%. On Monday, LME aluminum was closed for a day due to the summer bank holiday.

Summary: On the macro front, the expectation of a US Fed rate cut has intensified, creating a warm macro atmosphere. On the fundamental side, several industries in Sichuan have been required to stagger production due to persistent high temperatures, but aluminum production has not yet seen substantial cuts. Additionally, an aluminum plant in Inner Mongolia that partially halted production due to an accident over the weekend resumed normal operations on Monday afternoon, resulting in limited overall supply disruptions. The rapid rebound in aluminum prices has led to a decline in outflows from warehouses, suppressing the narrowing of spot discounts. However, with the traditional peak season and domestic economic stimulus policy, downstream consumption is gradually recovering, and the inventory reduction turning point is expected. In the short term, aluminum prices are expected to continue to fluctuate upward, with continued attention needed on macro changes and the sustainability of downstream aluminum consumption.