SMM Aluminum Market Morning Comment (Jan 3)

Overnight, the most-traded SHFE 2402 aluminum contract opened at 19,670 yuan/mt, with low and high at 19,400 yuan/mt and 19,750 yuan/mt before closing at 19,465 yuan/mt, down 290 yuan/mt or 1.47%. LME aluminum opened at $2,388.5/mt yesterday, with its high and low at $2,398/mt and $2,316.5/mt respectively before closing at $2,325.5/mt, a decrease of $62/mt or 2.6%.

On the first trading day after New Year's Day, the People's Bank of China tightened liquidity, and the inventory of both aluminum ingots and aluminum billets accumulated. A series of bearish news, which, combined with continuous rise in SHFE aluminum prices previously, resulted in the exit of bulls, thus SHFE aluminum saw a retaliatory correction. However, the market still expected the Federal Reserve to cut interest rates. On the cost side, alumina prices surged, and the restoration of coal import tariffs has given support to aluminum prices. In the short term, aluminum prices are expected to be difficult to drop significantly, and may fluctuate within a wide range.