Bears/Shorts Enter Market, SHFE Aluminum Plummets After Holiday [SMM Aluminum Futures Brief Comment]

Check SMM's aluminum product quotes, data, and market analysis

SMM, May 6:

Today, the most-traded SHFE aluminum 2506 contract opened at 19,770 yuan/mt, with a high of 19,860 yuan/mt, a low of 19,760 yuan/mt, and closed at 19,760 yuan/mt, down 0.55%. Trading volume was 50,500 lots, and open interest was 186,000 lots.

SMM Commentary: From a macro perspective, a series of domestic policies have played a positive role in stabilizing the real estate market, and the bullish macro atmosphere in China remains unchanged. In overseas markets, Trump's policy stance has been inconsistent, and there are still many uncertainties from his stance to policy implementation. The shadow of the tariff war continues to loom over the capital markets, and the significant uncertainty continues to have a negative impact on market trends. On the fundamental side, the cost side of the aluminum industry has remained stable, and the demand side is at a critical period between the off-season and peak season. However, except for the aluminum wire and cable sector, which saw an increase in operating rates against the trend in the week before the holiday, the downstream sectors generally performed poorly. Entering May, there are expectations of a decline in subsequent orders for aluminum downstream products. Driven mainly by restocking demand before the holiday, the destocking of domestic aluminum ingot inventory accelerated again at the end of April, approaching the 600,000 mt mark, providing a certain degree of upward support for aluminum prices before the holiday. However, domestic aluminum product arrivals during this year's Labour Day holiday are expected to be higher than those of the same period last year. Attention should be paid to the risk of periodic inventory buildup after the holiday due to concentrated arrivals. Coupled with the overall bearish expectations on the macro front, it is expected that domestic aluminum prices will remain in the doldrums after the holiday.

Today, the most-traded alumina 2509 contract opened at 2,686 yuan/mt, with a high of 2,723 yuan/mt, a low of 2,683 yuan/mt, and closed at 2,715 yuan/mt, up 23 yuan/mt or 0.84%, with open interest at 290,000 lots.

SMM Commentary: With the commissioning of new capacity and the resumption of production from maintenance, the operating capacity of alumina has rebounded significantly. In the last week before the holiday, the operating capacity increased by 3.48 million mt/year on a WoW basis. In the short term, some alumina refineries have plans for maintenance and production cuts, but at the same time, new alumina capacity will further ramp up production, and the operating capacity of alumina may show slight fluctuations. On the cost side, caustic soda prices have remained largely stable, while bauxite prices have decreased, leading to a decline in alumina costs and alleviating the loss pressure on alumina refineries. Overall, the tightening of alumina spot supply caused by the concentration of maintenance and production cuts in the early stage is expected to ease, and short-term prices are expected to fluctuate.

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