Summary of SMM Aluminium Morning Meeting on July 31, 2023

Last Friday night, the most-traded SHFE 2309 aluminium contract opened at 18,400 yuan/mt, with the lowest and highest prices at 18,305 yuan/mt and 18,415 yuan/mt before closing at 18,355 yuan/mt, down 20 yuan/mt or 0.11% from Thursday. LME aluminium opened at $2,204.5/mt on Friday, with its high and low at $2,229/mt and $2,195/mt respectively before closing at $2,227/mt, an increase of $18/mt, or 0.81%, from Thursday.

On the macro level, there are growing expectations that policy tightening by major central banks such as the Fed and the European Central Bank is nearing an end, boosting the outlook for global growth and energy demand. In terms of fundamentals, the resumption of aluminium production in Yunnan is speeding up, and it is expected that some large smelters in the region will be able to produce at full capacity by the end of August, potentially fueling the total domestic operating capacity to a record high. At present, the amount of resumed production is mainly liquid aluminum, and there is no large aluminum ingot oversupply pressure. In the short term, the inflection point of inventory has not yet appeared, and there is no imminent oversupply. On the demand side, favorable policies have promoted real estate, automobile, and other related consumption to gradually pick up, driving the operating rate of extrusion and other aluminum downstream factories to rise, but some sectors are still in the off-season, and the impact of follow-up policies still needs further observation. The low inventory in the off-season may give support to aluminium prices. SHFE aluminium may move range bound in the short term.