Bearish Macro Outlook And Seasonal Lull To Keep Short-term Aluminium Prices In Check

Macro: In the week ending December 1, positive macroeconomic news emerged overseas. European Central Bank President, Christine Lagarde, indicated potential temporary rate hike halts to assess tightening policy impacts. Federal Reserve Governor, Christopher Waller, hinted at a possible rate cut in a few months if inflation reduction efforts progress. Domestically, the People's Bank of China issued its second-quarter monetary policy report, indicating policy direction, and along with seven departments, proposed 25 measures to support private economy development. However, China's official November manufacturing PMI was 49.4.

From a macroeconomic standpoint, the US annualized real GDP quarterly rate for Q3 has been revised up from 4.9% to 5.2%, the fastest growth in nearly two years, mainly due to inventory increases and government spending, triggering market expectations of a rate cut next year. Domestically, macroeconomic data is weak, with a persistently low manufacturing PMI index. Despite growing expectations for positive year-end policies, it may take time for these policies to impact sectors like manufacturing. Fundamentally, no significant short-term supply changes are expected, with market focus on consumption demand resilience during the off-peak season. The weak short-term macroeconomic atmosphere, coupled with off-peak consumption impact, may suppress aluminum prices. However, continuous destocking should provide some price support. The most-traded SHFE aluminum contract is expected to operate between 18,300 and 18,900 yuan/mt in the week ending December 8, and LME aluminum may fluctuate between $2,190 and 2,270/mt. Inventory and open interest changes should be closely monitored.