Summary of SMM Aluminium Morning Meeting on July 28, 2023

The most-traded SHFE 2309 aluminium contract opened at 18,400 yuan/mt overnight, with the lowest and highest prices at 18,365 yuan/mt and 18,445 yuan/mt before closing at 18,395 yuan/mt, down 25 yuan/mt or 0.14%. LME aluminium opened at $2,215/mt on Thursday, with its high and low at $2,244.5/mt and $2,196.5/mt respectively before closing at $2,209/mt, an increase of $1/mt, or 0.05%.

On the macro level, the rate hikes in Europe and US have been implemented successively in July, in line with market expectations. 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.