Domestic Macro Continues to Favor, Stable Fundamentals Support Aluminum Prices [SMM Aluminum Morning Meeting Summary]

4.23 SMM Aluminum Morning Meeting Summary

Futures: In the previous night session, the most-traded SHFE aluminum 2506 contract opened at 19,765 yuan/mt, with a high of 19,810 yuan/mt, a low of 19,730 yuan/mt, and closed at 19,755 yuan/mt, up 10 yuan/mt or 0.05% from the previous close. LME aluminum opened at $2,386.5/mt, with a high of $2,403.0/mt, a low of $2,372.0/mt, and closed at $2,390.0/mt, up $5.0/mt or 0.21%.

Macro: (1) The General Office of the Jilin Provincial People's Government released the "Implementation Plan for the Special Action to Boost Consumption in Jilin Province" on April 22. It proposed that individual consumers who scrap eligible passenger vehicles and purchase new energy or fuel passenger vehicles that meet the vehicle purchase tax reduction policy will receive subsidies of 20,000 yuan and 15,000 yuan, respectively. (Bullish★) (2) The Guangdong Provincial Government held a Q1 economic situation analysis meeting, emphasizing the need to continue efforts to stabilize the real estate market, strengthen the planning, design, and construction of "good houses," and vigorously promote urban renewal and urban village renovation. (Bullish★) (3) The Guangdong Provincial Government held a Q1 economic situation analysis meeting, emphasizing the need to introduce more incentive policies as soon as possible to actively solve difficulties for enterprises, stabilize the basic foreign trade situation, and actively promote the shift from export to domestic sales. (Bullish★)

Fundamentals: (1) According to statistics released by the National Energy Administration on April 20, 2025, the national new PV installations from January to March 2025 were 59.71 GW (59.71 million kW), up 30.5% YoY. (Bullish★) (2) According to SMM statistics, on April 22, aluminum ingot inventories in Guangdong were 239,700 mt, in Wuxi were 225,400 mt, and in Gongyi were 88,100 mt, with total inventories in the three regions at 553,200 mt, up 400 mt from the previous day. Some suppliers held back cargoes due to bullish sentiment, and outflows from warehouses declined. Coupled with a slight increase in arrivals of northern cargoes this week, daily inventories in the three regions faced resistance to decline. Be cautious of short-term pressure on futures and spot markets due to weak destocking. (Bearish★) (3) According to customs data, China's aluminum foil exports in March 2025 were 118,900 mt, up 22.3% MoM but down 4.7% YoY. Aluminum plate/sheet and strip exports in March 2025 were 268,800 mt, up 36.4% MoM but down 3.3% YoY. (Bullish★) (4) According to SMM statistics, aluminum billet inventories in Guangdong were 104,900 mt, and in Wuxi were 31,400 mt, with total inventories in the two regions at 136,300 mt, down 4,400 mt MoM. (Bullish★) (5) Cui Dongshu from the China Passenger Car Association stated that China's automobile exports from January to March were 1.54 million units, up 16% YoY, and exports in March were 570,000 units, up 16% YoY, with both YoY and MoM trends remaining strong. The main driving force this year is still the improvement in the competitiveness of Chinese products and the slight growth in the global south market. (Bullish★)

Primary Aluminum Market: SHFE aluminum fluctuated downward in the morning session yesterday, with the first trading session fluctuating above 19,800 yuan/mt. In the spot market, shipments in east and central China were slightly difficult, mainly due to increased purchases by suppliers. Specifically, spot premiums in east China significantly pulled back, with early market transactions at parity against SMM prices, later shifting to -10 and -20, mainly due to suppliers offloading cargoes and futures market pullback, with downstream purchasing as needed. SMM A00 aluminum was quoted at 19,880 yuan/mt, down 30 yuan/mt from the previous day, with a premium of 40 yuan/mt against the May contract, narrowing by 20 yuan/mt from the previous day. Transactions in central China continued to weaken, with suppliers offloading cargoes. Early transactions were mainly at -10 against SMM central China prices. SMM central China A00 was recorded at 19,810 yuan/mt against the SHFE aluminum 2505 contract, down 40 yuan/mt from the previous day, with the Henan-Shanghai price spread at -70 yuan/mt. Actual market transactions were at a discount of 10 yuan/mt against SMM central China prices and -30 yuan/mt against the 2505 contract.

Secondary Aluminum Raw Materials: Yesterday, baled UBC was quoted at 14,900-15,550 yuan/mt (excluding tax), and shredded aluminum tense scrap was quoted at 15,950-17,450 yuan/mt (excluding tax). By product, shredded aluminum tense scrap and wheel hub removed from vehicle were in tight supply, with overall prices already at high levels. In the short term, aluminum scrap prices remain high, mainly due to low operating rates at downstream scrap utilization enterprises and tight domestic aluminum tense scrap circulation, providing support for aluminum scrap prices.

Secondary Aluminum Alloy: Aluminum prices slightly pulled back yesterday, with SMM A00 aluminum down 30 yuan/mt to 19,880 yuan/mt from the previous day. Domestic SMM ADC12 prices remained stable in the range of 20,500-20,700 yuan/mt. In the import market, overseas ADC12 was quoted at $2,430-2,450/mt, with an immediate loss of around 600 yuan/mt for imported ADC12. Currently, the demand side of the secondary aluminum market lacks effective support, with downstream purchasing enthusiasm remaining sluggish, leading to slower shipments from secondary aluminum plants and accumulation of finished product inventories, increasing destocking pressure for enterprises. Short-term upward momentum is insufficient, and secondary aluminum alloy prices are expected to continue fluctuating in the doldrums.

Summary: On the macro front, the domestic bullish atmosphere remains unchanged, but the impact of the US tariff war continues, with strong market sentiment of wait-and-see. Fundamentally, domestic aluminum ingot destocking provides support for spot premiums, strongly underpinning aluminum futures, with futures fluctuating. In terms of aluminum consumption, the comprehensive operating rate of the aluminum processing sector slightly corrected, with operating rates in other sectors slightly weakening except for aluminum wire and cable, and subsequent orders are expected to decline. The momentum for a significant rise in aluminum prices is insufficient, and domestic aluminum prices are expected to fluctuate in the short term. As domestic aluminum demand transitions to the off-season, the price center may show a pullback trend. [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 as a substitute for independent judgment. Any decisions made by clients are unrelated to SMM.]

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