Overseas Geopolitical Tensions Continue, Domestic Aluminium Fundamentals Weaken, Focus on Changes in Aluminum Inventories

SHANGHAI, Mar 31 (SMM) - Overnight, the most-traded SHFE 2205 aluminium contract opened at 22,970 yuan/mt, with the highest and lowest prices at 23,030 yuan/mt and 22,830 yuan/mt before closing at 22,910 yuan/mt, up 230 yuan/mt or 1.01%. LME aluminium opened at $3,470.5/mt on Wednesday and closed at $3,546.5/mt, an increase of $97.5/mt or 2.83%.  

Macro: (1) Richmond Fed president is open to raising interest rates by 50 basis points in May, while Kansas Fed president is inclined to raise interest rates in a "steady and prudent" way (bearish factor ★)

As the Russian-Ukrainian negotiation did not make a breakthrough, the oil price stopped falling and rebounded. The Brent settlement price was $113.45/barrel, up 2.92%. (Bullish factor ★);

Fundamentals: (1) The overseas alumina price has fallen back. The alumina price FOB Western Australia was quoted at $508/mt yesterday. The correction in overseas price was mainly due to Australia's ban on alumina exports to Russia, which made more alumina available in the overseas spot market. The domestic alumina price was stable. (Bearish factor ★)

Rusal made an assessment of the threats the company faces at a time when Russia’s economy is increasingly isolated, including potential shortages of raw materials, loss of irreplaceable markets and rising financing costs. Due to the incapability to accurately assess the quantitative effects of all restrictions and impacts, Rusal warned that the situation could be worse if more sanctions or countermeasures were introduced against Russia. (Bullish factor ★);  

Spot market: Spot discounts in east China were mainly around 70 yuan/mt yesterday, and some traders lowered spot discounts by 10-20 yuan/mt. Deals were done mainly at 22,950-22,990 yuan/mt.   

On the supply side, the resumption of domestic aluminium production has accelerated, but the output has not reached the level of the same period last year. The pandemic has continued to affect the transportation efficiency of aluminium ingots in some areas. On the demand side, the COVID outbreaks in many places in China disrupted downstream production, thus aluminium social inventory began to grow. In the short term, the domestic market will face more negative factors, which are primarily reflected in the accumulation of social inventory in what should have been the peak consumption season and the impact of the pandemic on downstream sectors and logistics.

Disclaimer:

The above representation and data is based on market information SMM believes to be reliable at the time of acquiring as well as the comprehensive assessment by SMM research team, and any and all information provided in this article is for reference only. This article does not constitute a direct recommendation for investment or any decisions in any form and clients shall act on their own discreet and any decisions made by clients are not within the responsibility of SMM.