SMM Aluminium Market Morning Comment (Feb 29)

Overnight, the most-traded SHFE 2404 aluminium contract opened at 18,765 yuan/mt, with high and low at 18,820 yuan/mt and 18,750 yuan/mt before closing at 18,805 yuan/mt, up 15 yuan/mt or 0.08%. LME aluminum opened at $2,203.5/mt on Wednesday, with its high and low at $2,203.5/mt and $2,177/mt respectively before closing at $2,191, down $9/mt or 0.41%.

Summary: From a macro perspective, this week’s key inflation data, the US core personal consumption expenditures (PCE) price index, will be released on Thursday night. The market currently expects the PCE price index to rise 0.4% MoM. Fundamentally, an aluminium smelter in Inner Mongolia is now resuming production after power outage forced it to shut down on Monday. On the demand, operating rates of aluminium downstream enterprises are recovering. The seasonal inventory growth of aluminium ingots continues, but the total volume is at a low level for the same period in recent years, which provides certain support for aluminium prices. However, the aluminium ingots supply increased, which coupled with recent opening of import window may inhibit the upward room of aluminium prices. Overall, aluminium prices continue to move rangebound, and we need to pay attention to aluminium supply, recovery of consumption, and the inventory decline of aluminium ingot and aluminium billets.