SMM Aluminum Market Morning Comment (Jan 25)

Overnight, the most-traded SHFE 2403 aluminium contract opened at 19,075 yuan/mt, with high and low at 19,075 yuan/t and 18,920 yuan/mt before closing at 18,935 yuan/mt, down 90 yuan/mt or 0.47%. LME aluminum opened at $2,231/mt yesterday, with its high and low at $2,268/mt and $2,222/mt respectively before closing at $2,222/mt, down $10/mt or 0.45%.

US Treasury bond yields continued to rise, cooling down market expectations for an interest rate cut by the Federal Reserve in March. An industry survey shows that the interest rate cut is unlikely to happen until June. The domestic economy is showing a recovery trend, and macroeconomic policies are expected to strengthen counter-cyclical and inter-cyclical adjustments. The timing and scale of this RRR cut exceeded market expectations, reflecting the People's Bank of China's support for the real economy recovery. In terms of fundamentals, domestic aluminum supply has entered a stable period, primary aluminum import windows continue to open, and the net import volume of primary aluminum remains at a high level, impacting domestic market to a certain extent. Domestic primary aluminum social inventories may enter a seasonal inventory accumulation cycle at the end of the month, but considering the industry's aluminum liquid conversion rate of around 70%, it is expected that the total inventory before the CNY holidays this year will be far lower than the same period last year. In the short term, the overseas macroeconomic data was positive. In terms of fundamentals, the domestic aluminum downstream industries are entering the off-season, weighing on the aluminum prices.