SMM Aluminum Market Morning Comment (Apr 15)

The most-traded SHFE 2406 aluminum contract opened at 20,750 yuan/mt last Friday night, with its lowest and highest at 20,605 yuan/mt and 20,975 yuan/mt before closing at 20,650 yuan/mt, up 65 yuan/mt or 0.32%. LME aluminum opened at $2,457.5/mt last Friday, with its high and low at $2,512/mt and $2,454/mt respectively before closing at $2,478.5/mt, up $22.5/mt or 0.92%.

Summary: On the macro level, the recent strong employment data and high inflation data further delayed the Fed's interest rate cut expectations, and favourable policies such as "trade in" in China have been introduced. Consumption is optimistic. However, the situation in Middle East intensified on weekends. UK and the US imposed greater sanctions on Russian aluminum, triggering turbulence in global metals market. Fundamentally, the supply pressure is limited due to Yunnan's electricity supply and the continued closure of the import window. On the demand, high aluminum price suppressed downstream purchasing enthusiasm and operating rate. The spot discounts sustained, but driven by the destocking expectation of aluminum ingots, the discounts may narrow. Overall, the aluminum prices were more influenced by growing expectations of macroeconomic recovery and positive fundamentals rather than interest rate cut expectations. Aluminum prices may swing on a strong note in the second half of April. We need to pay attention to impact of high prices on downstream procurement and changes in domestic inventory.