SMM Aluminum Market Morning Comment (May 13)

Last Friday night, the most-traded SHFE 2407 aluminum contract opened at 20,615 yuan/mt, with the highest and lowest prices at 20,640 yuan/mt and 20,455 yuan/mt before closing at 20,490 yuan/mt, down 185 yuan/mt or 0.89%. LME aluminum opened at $2,570/mt last Friday, with its low and high at $2,517/mt and $2,589.5/mt respectively before closing at $2,520/mt, down 1.6%.

Summary: On the macro front, the expected one-year inflation rate in the US hit a recent high. The US CPI data will be released this week, providing more data support for the Fed to formulate monetary policy. Meanwhile, positive domestic central bank's new social financing and RMB loan data supported the real economy. Bolstered by real estate and consumption policies, the domestic macro atmosphere is relatively optimistic. Fundamentally, the sharp increase in LME aluminum inventories put pressure on aluminum prices. Domestic inventories of aluminum ingots and billets continued to drop after the holiday, and downstream market's acceptance of high aluminum prices increased. In the short term, the contradiction between domestic supply and demand is not prominent. The increase in aluminum cost and the resilience of consumer demand supported aluminum prices. It is expected that aluminum prices will remain volatile, but due to LME aluminum inventory, there may be adjustment risks.