Concerns over a US economic recession are intensifying, and aluminum prices are expected to fluctuate downward in the short term. [SMM Aluminum Morning Meeting Summary]

》Click to view SMM aluminum industry chain database

》Order to view SMM metal spot historical prices

April 1 SMM Aluminum Morning Meeting Summary

Futures: Overnight, the most-traded SHFE aluminum 2505 contract opened at 20,480 yuan/mt, with a high of 20,510 yuan/mt, a low of 20,420 yuan/mt, and closed at 20,425 yuan/mt, down 110 yuan/mt, a decline of 0.54%. Yesterday, LME aluminum opened at $2,552.5/mt, with a high of $2,560.5/mt, a low of $2,525/mt, and closed at $2,538.5/mt, down $11.5/mt, a decline of 0.45%. 

Macro: (1) The March manufacturing PMI recorded 50.5, up from the previous 50.2, staying above the 50 mark for two consecutive months; the non-manufacturing PMI recorded 50.8, up from the previous 50.4. (Bullish★) (2) Goldman Sachs warned that the global trade war could escalate significantly in the coming days; it nearly doubled the probability of the US economy falling into recession in the next 12 months to 35%. (Bearish★★) (3) A survey of 14 economists by mainstream US financial media showed that the US Q1 real GDP YoY growth rate is expected to be only 0.3%, far below the 2.5% in Q4 last year, hitting a new low since 2021. (Bearish★)

Fundamentals: (1) According to SMM statistics, the domestic mainstream consumption area aluminum billet inventory on March 31 was 261,000 mt, down 23,500 mt WoW. (Bullish★); (2) On March 31, LME aluminum inventory recorded 462,500 mt, down 3,600 mt from the previous day, a decrease of 0.77%; over the past week, LME aluminum inventory decreased by 17,800 mt, a decrease of 3.71%; over the past month, LME aluminum inventory decreased by 58,800 mt, a decrease of 11.27%. (Bullish★) (3) Customs data shows that China exported 155,300 mt of aluminum alloy wheel hubs in January-February 2025, up 1% YoY. Among them, China exported 88,800 mt of aluminum alloy wheel hubs in January 2025, up 17.6% MoM from December 2024. Although industry exports showed a rebound trend at the end of 2024 and hit a recent high in January 2025, SMM emphasized that this pulse-like growth is essentially a result of tariff and trade wars forcing advanced shipments. SMM expects that aluminum wheel exports will enter a deep adjustment period in H1 2025, with overall exports likely to decline, and the YoY decline may exceed market expectations. The industry's pain period may continue until the new tariff system becomes clear. (Bearish★)

 Primary aluminum market: On Monday morning, the aluminum price center continued to move down, hovering around 20,500 yuan/mt. In the spot market, activity in east China was not high on Monday, with transactions mainly driven by downstream just-in-time procurement, and no consumption highlights were seen. In addition, the SHFE/LME price ratio recently narrowed to around -1,700 yuan/mt, with increased inflows of Russian aluminum, and low-priced sources also pressured spot premiums. The market traded SMM A00 at parity with the SHFE 2504 contract, unchanged from the previous trading day. SMM A00 aluminum ingot recorded 20,560 yuan/mt, down 60 yuan/mt from the previous trading day. In the central China market, both supply and demand were weak in the morning, with large players standing firm on quotes, leading to higher market offers. As the aluminum price center fell, hedging shipments increased, but downstream purchases fell short of expectations, and market sentiment cooled. SMM central China A00 recorded 20,490 yuan/mt against the SHFE 2504 contract, down 50 yuan/mt from the previous trading day, with the Henan-Shanghai price spread at -70 yuan/mt. Actual market transactions were at parity to a premium of 10 yuan/mt against SMM central China prices, and at -70 yuan/mt against the 2504 contract.

Secondary aluminum raw materials: On Monday, spot primary aluminum continued to fall by 60 yuan/mt from the previous trading day, with SMM A00 spot reported at 20,560 yuan/mt, and aluminum scrap prices generally followed the downward trend. On Monday, baled UBC scrap aluminum prices were lowered by 100 yuan/mt to 15,300-15,850 yuan/mt (excluding tax), and shredded aluminum tense scrap prices were lowered by 0-100 yuan/mt to 16,250-17,100 yuan/mt (excluding tax). On Monday, aluminum scrap prices slightly declined with the aluminum price, with some traders holding back on sales, and downstream demand remained sluggish. Scrap utilization enterprises mainly made just-in-time procurement, and overall market transactions were moderate. In the short term, aluminum scrap prices may follow primary aluminum in a narrow range.

Secondary aluminum alloy: On Monday, aluminum prices continued the decline from last Friday, with SMM A00 aluminum prices down 60 yuan/mt from the previous trading day to 20,560 yuan/mt. Domestic SMM ADC12 prices remained flat in the range of 20,900-21,100 yuan/mt; in the import market, overseas ADC12 quotes remained firm above $2,500/mt, with the import window remaining closed. On Monday, aluminum prices fell again, with the secondary aluminum market mostly holding steady and observing, with some prices down 100 yuan/mt, making up for last Friday's decline. Current end-use consumption momentum is insufficient, coupled with the transmission of downward pressure from aluminum prices, downstream enterprises generally maintained just-in-time procurement. Considering the balance between cost support and weak demand, it is expected that aluminum alloy prices will maintain a narrow range in the short term.

Summary: In recent weeks, macro-wise, due to Trump's escalating and uncertain tariff policies, concerns about a US economic recession have intensified. On the fundamentals side, the aluminum industry chain remains mainly bullish, with the seasonal destocking trend of "Golden March and Silver April" further clarified, and aluminum ingot inventory continuing to decline to around 800,000 mt; end-use consumption such as NEVs is steadily growing, and downstream restocking demand has also warmed up. As the peak consumption season approaches, order volumes and operating rates in most sectors have rebounded, coupled with continued destocking of social aluminum ingot inventory, providing bottom support for aluminum prices. However, the short-term market is still somewhat suppressed by external bearish factors, with the US dollar rebounding to a high level, pressuring base metals. In the short term, aluminum prices are expected to maintain a fluctuating downward trend. Continued close attention should be paid to changes in macro sentiment and the actual release of downstream demand. 

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