Summary of SMM Aluminium Morning Meeting on July 27, 2023

The most-traded SHFE 2309 aluminium contract opened at 18,295 yuan/mt overnight, with the lowest and highest prices at 18,270 yuan/mt and 18,335 yuan/mt before closing at 18,300 yuan/mt, down 55 yuan/mt or 0.3%. LME aluminium opened at $2,238/mt on Wednesday, with its high and low at $2,240/mt and $2,206/mt respectively before closing at $2,208/mt, a decrease of $28.5/mt or 1.27%.

On the macro level, the Fed raised interest rates as expected. Domestic stimulus policies may be more frequent in H2 2023. In terms of fundamentals, the resumption of aluminium production in Yunnan is speeding up, and it is expected that some large smelters in the region will be able to produce at full capacity by the end of August, potentially fueling the total domestic operating capacity to a record high. At present, the amount of resumed production is mainly liquid aluminum, and there is no large aluminum ingot oversupply pressure. In terms of consumption, domestic downstream demand is in the off-season. So far, the domestic aluminium ingot inventory accumulation is lower than expected. The low inventory in the off-season may give support to aluminium prices. SHFE aluminium may move range bound in the short term.