Government Crackdowns to Affect Mainly Private Aluminum Smelters with Captive Power Plants, SMM Says

[SMM Flash News] According to SMM data, cast aluminum alloy social inventory fell 13,900 mt WoW this week, with the decline widening further from last week. First, the spot-futures price spread widened, and spot traders accelerated shipments, driving a faster inventory drawdown; second, overall demand did not improve, low-price competition in the market intensified, and enterprises accelerated the pace of inventory digestion by cutting prices to compete for orders.

This week, the weekly operating rate of leading downstream aluminum processing enterprises in China rebounded 1.1 percentage points MoM to 64%.

Futures: Overnight, the most-traded alumina 2605 futures contract opened at 2,940 yuan/mt in the night session, hit a high of 2,947 yuan/mt and a low of 2,904 yuan/mt, and finally closed at 2,917 yuan/mt, down 22 yuan/mt from the previous day; open interest increased by 1,414 lots to 224,400 lots, with bulls and bears still locked in a tug-of-war. Technically, the closing price was below MA5 (2,983.60) and MA10 (3,007.20), indicating some overhead resistance to further gains, but remained above MA30 (2,892.70), providing some support at the bottom. Meanwhile, the MACD indicator showed DEA (50.64) crossing above DIF (43.42), forming a low-level death cross, with the histogram at -14.44. Alumina futures are expected to remain in the doldrums in the short term, and continued attention should be paid to geopolitical developments, the commissioning plan for new capacity, and inventory changes.