SMM Aluminum Market Morning Comment (June 6)

Overnight, the most-traded SHFE 2407 aluminum contract opened at 21,090 yuan/mt, with a high of 21,230 yuan/mt, a low of 21,050 yuan/mt, and closed at 21,225 yuan/mt, down 20 yuan/mt, a decrease of 0.09%. The previous trading day, LME aluminum opened at $2,663/mt, with a high of $2,663/mt, a low of $2,615/mt, and closed at $2,635/mt, down $27/mt, a decrease of 1.01%.

Summary: On the macro front, the US "ADP" was lower than expected in May, and the probability of the US Fed holding rates steady in June remains high. The Bank of Canada cut interest rates by 25 basis points, from 5% to 4.75%, in line with market expectations. Canada became the first G7 country to cut rates, initiating a cycle of monetary easing, and the global rate-cutting trend is accelerating. On the fundamentals, domestic aluminium operating capacity continues to rise, with Yunnan's resumption progress being good and expected to be completed in June, which may gradually highlight supply-side pressure. Aluminum ingot social inventory has been accumulating continuously. From the demand side, recent aluminum prices hit a record high for the year and have been highly volatile, inhibiting downstream procurement enthusiasm, leading to a reduction in orders and operating rates for aluminum processing enterprises. Additionally, as the market transitions between peak and off-peak seasons, many sectors are seeing slight declines in orders, and the overall operating rate is expected to weaken steadily. SMM expects aluminum prices to maintain a wide fluctuation range at a high level.