SMM Aluminum Market Morning Comment (May 16)

Overnight, the most-traded SHFE 2407 aluminum contract opened at 20,538 yuan/mt, with the highest and lowest prices at 20,645 yuan/mt and 20,450 yuan/mt before closing at 20,580 yuan/mt, up 95 yuan/mt or 0.46%. LME aluminum opened at $2,550.5/mt in the previous trading day, with its low and high at $2,539/mt and $2,620/mt respectively before closing at $2,600/mt, up 1.92%.

Summary: On the macro front, the US employment data was relatively weak, US CPI fell as expected in April, and the monthly retail sales rate unexpectedly fell in April, indicating that price pressures are easing, supporting the Fed's intention to maintain high interest rates; the domestic Ministry of Finance issued super-long special treasury bonds, coupled with new policy directions for real estate and new energy vehicles, is expected to drive the real economy. Fundamentally, as the power supply in Yunnan returned to stability, aluminum production resumption is still continuing. According to SMM's research, the annual production capacity is about 350,000 mt. Domestic inventories of aluminum ingots and billets continued to drop, but the inventory of aluminum ingots only decreased by 10,000 mt YoY. Domestic supply and demand contradictions may gradually emerge. Against the backdrop of an overall bullish macro sentiment, coupled with the resilient support of domestic downstream consumption, aluminum prices are expected to move rangebound.