SMM Aluminum Market Morning Comment (June 4)

Overnight, the most-traded SHFE 2407 aluminum contract opened at 21,280 yuan/mt, hit a high of 21,310 yuan/mt, a low of 21,160 yuan/mt, and closed at 21,215 yuan/mt, down 65 yuan/mt, a decrease of 0.31%. The previous trading day, LME aluminum opened at $2,662.5/mt, hit a high of $2,691/mt, a low of $2,637.5/mt, and closed at $2,664/mt, up $9/mt or 0.34%.

Summary: On the macro front, recent data shows that the US economy is gradually slowing down, with manufacturing and construction spending data weaker than expected. This suggests that the US Fed may start cutting interest rates later this year. The market is now looking forward to Wednesday's ADP employment report and Friday's US non-farm payrolls data. On the fundamentals, domestic aluminum operating capacity continues to rise, with Yunnan's resumption progressing well and expected to be completed in June, which may gradually highlight supply-side pressure. Aluminum ingot social inventory has been accumulating continuously. From the demand side, recent aluminum prices hit a record high for the year and have been highly volatile, inhibiting downstream procurement enthusiasm, leading to a decline in orders and operating rates for aluminum processing enterprises. Additionally, as we are currently in the transition phase between peak and off-peak seasons, many sectors are seeing slight declines in orders, and the overall operating rate is expected to weaken steadily. SMM expects short-term aluminum prices to fluctuate wildly at a high level.