SMM Aluminum Market Morning Comment (May 20)

The most-traded SHFE 2407 aluminum contract opened at 2,965 yuan/mt at last Friday’s night session, with its high and low at 21,070 yuan/mt and 20,955 yuan/mt before closing at 21,060 yuan/mt, up 65 yuan/mt or 0.31%. LME aluminum opened at $2,586/mt in the previous trading day, with its low and high at $2,582/mt and $2,623/mt respectively before closing at $2,621/mt, up $33/mt or 1.28%.

Summary: On the macro front, the US employment data was relatively weak, US CPI fell as expected. In April, the monthly retail sales rate unexpectedly fell, indicating that price pressures are easing, increasing expectations for the Fed to cut interest rates; the domestic economic data improved, and there were growing expectations for real estate. The domestic aluminum operating capacity continued to grow. Around 660,000 mt of aluminium capacity in Yunnan has been resumed, and the remaining 630,000 mt are expected to be restarted and then reach full capacity in June. In addition, the arrivals of aluminum ingots in mainstream consumption areas were relatively small, the inventory pressure of upstream aluminum plants eased, and domestic inventory of aluminum ingots and billets continued to drop. Amid bullish macro sentiment, aluminum cost went up, and domestic downstream consumption found solid support. Aluminum prices are expected to move rangebound.