Bearish macro sentiment overseas, SHFE aluminum fluctuated rangebound today [[SMM] Aluminum Futures Brief Comment]

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SMM, May 9:

Today, the most-traded SHFE aluminum 2506 contract opened at 19,560 yuan/mt, with a high of 19,645 yuan/mt, a low of 19,530 yuan/mt, and closed at 19,585 yuan/mt, up 0.54%. Trading volume was 116,000 lots, and open interest was 182,000 lots.

SMM Commentary: On the macro front, China agreed to engage with the US during the period, but no clear results have emerged yet. Additionally, US Fed Chair Powell indicated that there is no rush to cut interest rates, and the overseas macro environment remains bearish. Domestically, three ministries announced a package of financial policies to stabilize the market and expectations, with the central bank announcing ten policy measures. The favourable domestic macro environment remains unchanged, but the realization of the policy's positive impacts still needs to be observed. From a fundamental perspective, the significant pullback in aluminum prices after the holiday stimulated downstream buying sentiment. Domestic social inventory of aluminum ingots shifted from inventory buildup to destocking, with the turning point of inventory buildup yet to arrive, providing support for aluminum prices. However, it is worth noting that as we enter mid-to-late May, the transition between peak and off-peak seasons, combined with the end of the PV installation rush and a decline in export orders, has led to strong market expectations of weakening demand, eroding the upward momentum of aluminum prices and attracting short positions. Overall, on the macro front, the transmission of domestic favourable policies still requires time, and the tariff war has yet to yield results, with bearish influences persisting. On the fundamental front, the destocking of domestic aluminum ingot inventory provides support for aluminum prices, but expectations of subsequent demand weakness and weakening costs of aluminum both support short positions. With short positions entering the market and the futures market declining, amidst the interplay of bullish and bearish factors, domestic aluminum prices are expected to fluctuate considerably in the short term.

Today, the most-traded alumina 2509 contract opened at 2,800 yuan/mt, with a high of 2,864 yuan/mt, a low of 2,780 yuan/mt, and closed at 2,827 yuan/mt, up 84 yuan/mt or 3.06%. Trading volume was 970,000 lots, and open interest was 280,000 lots.

SMM Commentary: This week, alumina enterprises saw both increases and decreases in operating capacity, with the total operating capacity slightly decreasing by 80,000 mt/year. It is expected that some alumina enterprises will conduct maintenance in the near future, while new alumina capacity is expected to continue to come online and ramp up production, potentially leading to fluctuations in alumina's operating capacity in the short term. Recently, downstream feedback indicates that spot cargo availability is tight in some regions. With suppliers standing firm on quotes, spot prices may rebound slightly. However, on the cost side, bauxite prices have fallen significantly compared to the previous period, weakening the cost support. Overall, the alumina market is influenced by a mix of bullish and bearish factors, and prices are expected to fluctuate in the short term.

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