SMM Aluminium Market Morning Comment (Jan 31)

The most-traded SHFE 2403 aluminium contract opened at 18,990 yuan/mt overnight, with its low and high at 18,970 yuan/mt and 19,055 yuan/mt before closing at 19,040 yuan/mt, up 90 yuan/mt or 0.47%. LME aluminum opened at $2,254.5/mt on Tuesday, with its low and high at $2,247.5/mt and $2,277.5/mt respectively before closing at $2,271.5/mt, up 0.91%.

On the macro front, US macro data demonstrated the resilience of the economy, and expectations for interest rate cuts once again cooled; In China, the macroeconomic environment was positive. The implementation of real estate “white list” and relaxation of purchase restrictions in Guangzhou, Suzhou and Shanghai greatly boosted domestic market sentiment. In terms of fundamentals, as CNY is drawing near, aluminium downstream industries slashed or halted their production, weakening demand and pushing up the inventory of aluminium ingot, but industry inventories remained at low levels driven by a high aluminum liquid ratio and downstream stockpiling before the CNY holiday. SMM predicts that the total domestic inventory accumulation during the 2024 CNY holidays may be lower than levels for the same period of previous years. In the short term, amid low inventory and no obvious imbalance between supply and demand, aluminium prices may fluctuate along with macro sentiment before CNY holidays.