SMM Aluminum Market Morning Comment (Jan 8)

At last Friday’s night session, the most-traded SHFE 2402 aluminum contract opened at 19,120 yuan/mt, with its lowest and highest at 19,080 yuan/mt and 19,255 yuan/mt before closing at 19,190 yuan/mt, down 5 yuan/mt or 0.03%. LME aluminum opened at $2,279/mt last Friday, with its high and low at $2,294.5/mt and $2,251/mt respectively before closing at $2,272/mt, a drop of $13/mt or 0.57%.

Summary: From a macro perspective, the number of non-farm payrolls in the United States in December exceeded expectations, and the unemployment rate was lower than expected. Although the ISM service industry index fell, it was still in the expansion range, highlighting the resilience of the job market, and market expectations for interest rate cuts were lowered. In terms of fundamentals, the domestic aluminum supply side has entered a period of stable operation, with no major changes in the short term. As the traditional off-season has arrived, the industry's aluminium ingot is expected to increase. The disturbance in the alumina supply caused by the fluctuations in Guinea's mines and the domestic heating season may come to an end for the time being. The trading logic of SHFE aluminum returns to the fundamentals. The short-term aluminum supply remains stable, while the consumption is still expected to weaken. The seasonal accumulation of aluminum ingots may be approaching, which will suppress SHFE aluminum. However, the current low inventory supports aluminum prices. SMM predicts that SHFE aluminum will remain volatile in the short term.