SMM Aluminum Market Morning Comment (July 16)

Market: Overnight, the most-traded SHFE aluminum 2409 contract opened at 19,970 yuan/mt, reaching a high of 20,050 yuan/mt and a low of 19,955 yuan/mt, and closed at 19,955 yuan/mt, down 90 yuan/mt, a decrease of 0.45%. The previous trading day, LME aluminum opened at $2,479.5/mt, hit a high of $2,489.5/mt, a low of $2,458/mt, and closed at $2,460/mt, down $29.5/mt, a decrease of 1.18%.

Summary: On the macro front, Powell's statement last night indicated progress in the fight against inflation, boosting market expectations for a rate cut, but his speech did not change the expectation of holding interest rates unchanged in August. The upcoming 20th Third Plenary Session of the CPC Central Committee in China may bring new positive news. However, the weekend's assassination attempt on Trump increased his chances of winning, and the market expects his policies to benefit the dollar. Together with the complex situation of the Israel-Palestine conflict, this has added uncertainty to the market. On the fundamentals, domestic aluminum supply is increasing, with some capacity yet to be resumed. Downstream aluminum processing and end-user demand have entered the off-season, with some sectors experiencing demand shocks. The operating rate in the aluminum processing industry is declining, social inventory destocking is weak, and remains at a high level for the same period in nearly three years. Spot discounts may persist in the short term. The aluminum market currently lacks upward driving factors, as the off-season fundamentals continue to be bearish. SMM expects short-term aluminum prices to remain weak, with attention needed on macro changes and disruptions in the raw material sector impacting aluminum prices.