U.S. Tariff Threat Materializes, SHFE Aluminum Fluctuates [SMM Aluminum Futures Brief Review]

》Check SMM Aluminum Product Quotes, Data, and Market Analysis

SMM, March 4:

Today, the most-traded SHFE aluminum 2504 contract opened at 20,710 yuan/mt, with a high of 20,715 yuan/mt and a low of 20,595 yuan/mt, closing at 20,630 yuan/mt, down 0.43%. Trading volume was 79,000 lots, and open interest was 190,000 lots.

SMM Comments: On the macro side, US economic data showed mixed results. Additionally, the 25% tariffs imposed by Trump on Canada and Mexico took effect on March 4 without room for negotiation, with further tariffs targeting countries using currency devaluation as a means of sanction, triggering market risk aversion sentiment. The Atlanta Fed's GDPNow model forecasts Q1 2025 US GDP growth at -2.8%, down from the previous estimate of -1.5%. In February, the Caixin China Manufacturing PMI recorded 50.8, up 0.7 percentage points from January, reaching a three-month high. The domestic Caixin Manufacturing PMI returned to expansion territory, coupled with the upcoming Two Sessions, raising market expectations for more accommodative policies to support domestic demand. Fundamentals side, cost support showed signs of stabilization. Combined with the steady recovery in downstream operating rates ahead of the traditional peak season of "Golden March and Silver April," attention should focus on the sustainability of end-use consumption demand in March. On the inventory side, as of Monday, domestic aluminum ingot + aluminum billet inventory increased by only 6,500 mt, with signs of a slowdown in inventory buildup. The inventory turning point is approaching, and supply-side pressure is expected to gradually ease. SMM believes that driven by macro sentiment and trading expectations, SHFE aluminum remains more likely to rise than fall. The potential escalation of tariff issues and macroeconomic stimulus could lead to unexpected demand, coupled with a slowdown in inventory accumulation, suggesting aluminum prices are expected to fluctuate upward at high levels.

Today, the most-traded alumina 2505 contract opened at 3,369 yuan/mt, with a high of 3,371 yuan/mt and a low of 3,305 yuan/mt, closing at 3,334 yuan/mt, down 1.07%. Trading volume was 88,000 lots, and open interest was 175,000 lots.

SMM Comments: Recently, domestic spot alumina prices have stabilized, mainly due to increased alumina export demand and transfer to delivery warehouse demand, which have supported alumina prices. In the short term, spot alumina prices in some regions have rebounded slightly. However, overseas alumina prices have declined, effectively closing the export window. Alumina transfer to delivery warehouse cannot provide sustained demand, and the market expects some new alumina capacity to be gradually commissioned, reinforcing the expectation of a loose alumina supply and demand balance. In the medium and long-term, spot alumina prices remain under pressure. In the short term, spot alumina prices may enter a phase of fluctuating adjustments. Continuous attention should be paid to alumina export profitability and changes in bauxite prices.

[The information provided is for reference only. This article does not constitute direct investment research advice. Clients should make cautious decisions and not substitute this for independent judgment. Any decisions made by clients are unrelated to SMM.]