The potential easing of Sino-US tariffs may stimulate a rebound in the futures market, but with expectations of a weakening fundamental outlook, the upward momentum for aluminum prices is limited. [SMM Aluminum Morning Meeting Summary]

4.24 SMM Aluminum Morning Meeting Summary

Futures: In the previous night session, the most-traded SHFE aluminum 2506 contract opened at 19,930 yuan/mt, with a high of 20,015 yuan/mt and a low of 19,930 yuan/mt, closing at 19,995 yuan/mt, up 85 yuan/mt or 0.43% from the previous close. LME aluminum opened at $2,397.5/mt, with a high of $2,451.0/mt and a low of $2,397.0/mt, closing at $2,443.0/mt, up $53.0/mt or 2.22%.

Macro: (1) The Ministry of Ecology and Environment recently issued the "Notice on the Work Related to the National Carbon Emission Trading Market in 2025," which clearly requires key emission units in the power generation, steel, cement, and aluminum smelting industries to manage their emission lists, ensure the quality of carbon emission data, and complete quota allocation and settlement tasks on time. According to the notice, units with annual direct emissions of 26,000 mt of CO2e will be included in the key emission units list and managed by the national carbon market, no longer participating in local carbon market management. (Bullish★) (2) The Ministry of Foreign Affairs responded to "the US President's statement that tariffs on China may be significantly reduced" and "the White House's statement that progress has been made in US-China trade agreement negotiations": We do not want to fight a tariff war initiated by the US, nor are we afraid of it; if the US truly wants to resolve issues through dialogue and negotiation, it should stop threats and coercion and engage in dialogue with China on the basis of equality, respect, and mutual benefit. (Bullish★) (3) Foreign media reported that the US President will exempt some tariffs for car manufacturers. Additionally, the US President will also exempt tariffs on steel and aluminum. The Wall Street Journal reported that Chinese tariffs may be reduced to 50%-65%. (Bullish★)

Fundamentals: (1) According to SMM statistics, on April 23, aluminum ingot inventory in Guangdong was 240,600 mt; in Wuxi, it was 217,000 mt; and in Gongyi, it was 85,900 mt, totaling 543,500 mt across the three regions, down 9,700 mt from the previous trading day. SMM believes that today's daily inventory of domestic aluminum ingots in the three regions decreased sharply by nearly 10,000 mt. Although Guangdong maintained a slight inventory buildup, Wuxi saw a destocking of 8,400 mt today, with a noticeable rebound in destocking. The destocking obstruction yesterday was likely just a "false alarm" due to suppliers holding back cargoes at the beginning of the week. SMM expects that the destocking pace in East China and Gongyi will drive domestic aluminum ingot inventory to maintain a downward trend in late April. (Bullish★) (2) On April 23, in terms of domestic aluminum billet inventory in two regions, Guangdong had 98,800 mt, and Wuxi had 30,400 mt, totaling 129,200 mt, down 7,100 mt WoW. (Bullish★)

Primary Aluminum Market: Yesterday, SHFE aluminum fluctuated in the morning session, initially surging rapidly due to macro sentiment before fluctuating downward, closing at 19,885 yuan/mt in the first trading session. In the spot market, shipments in East China and Central China remained sluggish, mainly due to ample supply in the spot market, with suppliers selling more, and some traders reported that aluminum plants were actively selling. Specifically, spot premiums in East China fell again today due to ample supply. Early in the market, SMM transactions were at -10, gradually shifting to -20, with a few at -30. SMM A00 aluminum was quoted at 19,910 yuan/mt, up 30 yuan/mt from the previous trading day, with a premium of 20 against the 05 contract, narrowing by 20 yuan/mt from the previous trading day. Transactions in Central China continued to weaken, with suppliers offloading cargoes, while downstream purchasing was weak. Early in the market, SMM Central China transactions were mainly at -10, with a few at -20. SMM Central China A00 recorded 19,830 yuan/mt against the SHFE aluminum 2505 contract, up 20 yuan/mt from the previous trading day. The Henan-Shanghai price spread was -80 yuan/mt, with actual market transactions at a discount of 10 yuan/mt against SMM Central China prices and a discount of 60 against the 2505 contract.

Secondary Aluminum Raw Materials: Yesterday, the overall price of aluminum scrap remained largely unchanged from the previous trading day. As the downstream peak season is about to end, orders are affected by marginal demand decline, and raw material procurement remains as needed. Baled UBC was quoted at 14,950-15,550 yuan/mt (excluding tax), and shredded aluminum tense scrap was quoted at 15,850-17,350 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, so prices remained unchanged from the previous trading day. In the short term, the high price of aluminum scrap is mainly due to the low operating rates of downstream scrap utilization enterprises and tight domestic aluminum tense scrap circulation, supporting aluminum scrap prices. In terms of the price difference between A00 aluminum and aluminum scrap, the price difference for mechanical casting aluminum scrap in Shanghai was 1,791 yuan/mt; the price difference for aluminum extrusion scrap in Foshan was 1,588 yuan/mt, mainly with narrow adjustments.

Secondary Aluminum Alloy: According to SMM statistics, on April 23, the social inventory of secondary aluminum alloy ingots in Foshan, Ningbo, and Wuxi totaled 7,704 mt, down 80 mt from the previous trading day. Yesterday, aluminum prices pulled back slightly, with SMM A00 aluminum up 30 yuan/mt to 19,910 yuan/mt from the previous trading 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. Although aluminum price fluctuations narrowed during the week, downstream purchasing enthusiasm remained sluggish, leading to slower shipments from secondary aluminum plants and some accumulation of finished product inventories. Short-term price upward momentum is insufficient, and secondary aluminum alloy prices are expected to continue in the doldrums.

Summary: On the macro front, the domestic bullish atmosphere remains unchanged. Yesterday, Trump indicated that tariffs on China may be reduced, improving market sentiment and stimulating a rebound in futures. Fundamentally, domestic aluminum ingot destocking supports aluminum prices, but suppliers are actively selling, and spot premiums have pulled back. In terms of aluminum consumption, the operating rate of the aluminum wire and cable sector is improving, while other sectors are slightly weakening. SMM learned that as the transition between peak and off-peak seasons approaches and the PV installation rush nears its end, downstream aluminum orders are expected to decline, and aluminum prices lack significant upward momentum. In the short term, domestic aluminum prices are expected to fluctuate.

[The information provided is for reference only. This article does not constitute direct investment research advice. 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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