SMM March prices closed at $2444 a tonne, the highest since April 2018, as of 13:00 on May 5, up $23.50 a tonne from Friday's close. The increase was 1%. On May 4, LME aluminum inventory was 1.8278 million tons, down 7350 tons from the previous day, of which 1.2316 million tons were registered warehouse receipts, 596200 tons were cancelled warehouse, and the cancellation receipt ratio was 32.62. Although there was speculation about the Fed raising interest rates during the holiday, the dollar index rebounded slightly to around 91, and the epidemic in India once raised market concerns, Lunal continued the logic of manufacturing recovery before and after the epidemic, and bulls' confidence was not disturbed by the relevant negative information.

In terms of the domestic market, it is expected that after the festival, the main force of Shanghai Aluminum has broken through the 19000 yuan / ton mark before the festival, with a high point of 19015 yuan / ton, constantly brushing the new 10-year high. April-May domestic electrolytic aluminum is in the depot cycle, although the inventory has arrived briefly during the May Day holiday, but under the current consumption situation, the trend of going to the warehouse is expected to be uninterrupted in the short term, and the fundamental data still form a certain support for aluminum prices.

Fig. 1 comparison of monthly operating rate of SMM aluminum strip with that of Keqiang index

Fig. 2 comparison of social inventory and LME inventory trend of electrolytic aluminum in China

In terms of the domestic spot market, the domestic spot price rose slightly after the sharp rise in aluminum prices before the festival, and the spot discount to futures showed an expanding trend. Last Friday, the actual spot transaction in East China was near the monthly discount of 30-50 yuan / ton. in the post-holiday market, with the short-term accumulation of storage during the holiday and the high absolute aluminum price, it is expected that the short-term spot to futures discount market will continue, and it is more difficult to converge the discount.

Fig. 3 comparison of domestic electrolytic aluminum spot discount and social inventory trend of aluminum ingots