The macro sentiment was cautious in the week. According to preliminary estimates by the US government, the US GDP grew at an annual rate of 1.6%. The economy's main growth engine (preliminary quarterly real personal consumption expenditures) grew by 2.5%. In addition, a report released by the US Bureau of Economic Analysis showed that the closely watched underlying inflation indicator (the preliminary reading of annualised US core PCE price index in the first quarter) rose by 3.7%, significantly higher than expectations, suggesting that the Fed would not cut interest rates before September. Domestic GDP grew by 5.3% in the first quarter. The economy sustained stable growth amid continuous efforts of policies
The aluminum operating capacity continued to grow. Yunnan's power supply was relatively stable. According to SMM’s preliminary estimates, the operating aluminium capacity in China recovered to around 42.4 million mt. The domestic aluminum costs continued to rise in the week, mainly as spot alumina prices picked up, and other costs stabilized. As of Apr 25, SMM estimates that the immediate cost of domestic aluminum was about 16,891 yuan/mt. The domestic aluminum real-time profits were about 3,419 yuan/mt, down 20 yuan/mt WoW. Overseas: The import window remained closed. Most of the imported primary aluminum in the market were the arrivals of orders placed in March. The import losses in April were obvious, and the amount of primary aluminum for sale is expected to decline, which are mostly under long-term orders. The domestic aluminum downstream operating rate remained stable in the week, the price of spot aluminum fell sharply, and the purchasing enthusiasm of downstream enterprises improved, dragging down the inventory. US President Biden called for tariffs on China’s aluminum semis. Mexico announced a new import policy, imposing tariffs on aluminum semis products from China. SMM data showed that the total amount of domestic aluminum semis exports to the US and Mexico in 2023 reached about 240,000 mt and 500,000 mt respectively. The imports of aluminium semis in these two countries accounted for about 14% of China’s exports, which may affect China's aluminum semis export profits and export volumes.
From a technical perspective, the model predicts that the price range of SMM A00 aluminum average price will be [20,080, 20,740], the price center will be 20,400, the unit is yuan/mt, the extreme price range will be [19,840, 21,070], the normal price range will be [20,000, 20,850], and the conservative price range will be [20,160, 20,630]. The price is expected to move sideways or swing on a soft note. The support range will be [20,000, 20,160], and the resistance range will be [20,630, 20,850]. The model predicts that the price range of the most-traded SHFE aluminium contract will be [20,120, 21,075], with the price center of 20,540, and the unit is yuan/mt. The extreme price range will be [19,670, 21,470], the normal price range will be [19,970, 21,210], and the conservative price range will be [20,270, 20,940]. The price is expected to move sideways or swing on a soft note. The support range will be [19,970, 20,270], and the resistance range will be [20,940, 21,210].
Summary: On the macro front, The S&P Global Flash US Manufacturing PMI posted 49.9 in April, lower than market expectations. The resilience of the US economy loosened, the GDP growth rate in the first quarter was lower than expected, and the expectation of interest rate cuts fell again. Domestically, GDP grew by 5.3% YoY in the first quarter, but recent photovoltaic installation data performed poorly, depressing market expectations. In addition, amid international trade frictions, the exports environment for aluminum semis will deteriorate in the future. On the fundamentals, the domestic aluminum supply maintained a growth trend, the imported primary aluminum suffered severe losses, and the expectation of a decline in the impact of primary aluminum imports strengthened. The downstream operating rate was generally stable, and the downstream enthusiasm for stocking at low prices is still moderate. The spot aluminum inventory dropped during the week, providing certain support for aluminum prices. In addition, the operating rate at domestic mine is unlikely to improve, and the alumina prices swung on a strong note, somehow supporting aluminum prices. The aluminum prices may fluctuate amid bullish and bearish factors. SMM predicts that most-traded SHFE aluminum will fluctuate at 19,970-20,940 yuan/mt this week, and LME aluminum may fluctuate at $2,530-2,700/mt. We need to pay attention to the downstream stocking before Labour Day holiday and overseas inflation data.
