This week, the macro front leaned bullish. European Central Bank Governing Council member Stournaras stated that a 25-basis-point interest rate cut in December is almost certain. China's Ministry of Finance announced that a debt limit of 6 trillion yuan has been allocated to local governments. The National Development and Reform Commission (NDRC) indicated plans to propose further measures to enhance support and expand the scope of the "Two New" policies. Economic performance in November and December is expected to continue improving, with ample policy space and abundant policy reserves.
Fundamentals: This week, domestic aluminum enterprises remained largely stable. New capacity in regions such as Inner Mongolia and Xinjiang was successfully put into operation. In Guizhou, the capacity replacement project is proceeding, with approximately 30,000 mt of old capacity planned to be shut down, while new capacity is being put into operation at a slower pace. In other regions, most aluminum enterprises maintained stable production. Alumina costs remained high, and aluminum capacity in Guizhou, Guangxi, Chongqing, and central China showed an inverted cost structure. Continued attention is needed on the operational status of aluminum enterprises in these regions. Cost side: Domestic spot alumina prices mainly increased during the week, and the cost side of domestic aluminum remained more likely to rise than fall. As of Thursday, the immediate full average cost of domestic aluminum was approximately 21,096 yuan/mt, up 203 yuan/mt from last Thursday. During the week, the domestic spot aluminum market saw weak consolidation, and the industry remained in a loss-making state. As of Thursday, the average loss for domestic aluminum was approximately 396 yuan/mt, with industry profits down 143 yuan/mt from last Thursday. Primary aluminum imports: Customs data showed that in October 2024, China's net imports of primary aluminum were approximately 159,000 mt, up 26.5% MoM but down 26.5% YoY. From January to October, total net imports of primary aluminum were approximately 1.734 million mt, up 63.7% YoY. Demand side: This week, the operating rate of domestic downstream aluminum producers slightly increased MoM. On November 15, China announced the cancellation of aluminum semis export tax rebates starting December 1. During the week, inquiries and orders from overseas aluminum semis demand enterprises increased, leading to a rebound in orders for domestic aluminum semis export enterprises. However, the limited policy window is expected to result in only a modest increase in aluminum semis exports. Further observation is needed on the impact of domestic aluminum semis export policies on enterprise operations. During the week, domestic aluminum ingot social inventory remained in a destocking state, and the spot-futures price spread improved.
Technical side: The model predicts that the SMM A00 aluminum average price will range between [20,050, 21,150] yuan/mt from this Friday to next Thursday, with a price center of 20,620 yuan/mt. The extreme price range is [19,660, 21,490] yuan/mt, the normal price range is [19,920, 21,260] yuan/mt, and the conservative price range is [20,180, 21,040] yuan/mt. Next week's price trend is expected to jump initially and then pull back or fluctuate upward. The support range is [19,920, 20,180] yuan/mt, and the resistance range is [21,040, 21,260] yuan/mt. The model also predicts that the closing price of the most-traded aluminum contract will range between [19,610, 20,980] yuan/mt from this Friday to next Thursday, with a price center of 20,410 yuan/mt. The extreme price range is [19,150, 21,440] yuan/mt, the normal price range is [19,460, 21,130] yuan/mt, and the conservative price range is [19,760, 20,830] yuan/mt. Next week's price trend is expected to jump initially and then pull back or fluctuate upward. The support range is [19,460, 19,760] yuan/mt, and the resistance range is [20,830, 21,130] yuan/mt.
In summary, on the macro front, the US Fed remains cautious in its stance on interest rate cuts, and the US dollar index hovered at highs. The escalation of the Russia-Ukraine conflict heightened market risk aversion. Domestically, attention is focused on the upcoming State Council policy briefing by the State Council Information Office, which will introduce measures to promote stable growth in foreign trade. On the fundamentals side, high aluminum costs raised concerns about production cuts among high-cost enterprises. On the demand side, downstream demand slightly rebounded, driven by the rush to export, while aluminum social inventory returned to a destocking state. In Xinjiang, short-term concentrated arrivals remain challenging, and the domestic spot market stayed relatively tight. In the short term, the support logic of high costs and low inventory for domestic aluminum remains intact. However, the cancellation of aluminum semis export tax rebates is bearish for medium and long-term aluminum demand. As the domestic market transitions into the traditional off-season, aluminum prices are expected to weaken on the demand side. SMM forecasts that the most-traded SHFE aluminum contract will fluctuate between 20,180-21,040 yuan/mt next week, while LME 3M aluminum is expected to range between $2,550-2,730/mt. Continued attention should be paid to domestic consumption trends and changes in international macro sentiment.
Data source: SMM
![Aluminum prices pull back slightly, weak tone unchanged [SMM South China spot aluminum daily review]](https://imgqn.smm.cn/usercenter/ECUsL20251217171652.jpg)
