SMM Aluminum Market Morning Comment (July 22)

Last Friday night, the most-traded SHFE aluminum 2409 contract opened at 19,555 yuan/mt, with a high of 19,600 yuan/mt, a low of 19,515 yuan/mt, and closed at 19,515 yuan/mt, down 100 yuan/mt, a decrease of 0.51%. The previous trading day, LME aluminum opened at $2,381.5/mt, with a high of $2,385.5/mt, a low of $2,350/mt, and closed at $2,350/mt, down $35.5/mt, a decrease of 1.49%.

Summary: On the macro front, the probability of Trump being elected has increased. The 20th Third Plenary Session of the CPC Central Committee concluded, potentially bringing new positive news, together with the renewed uncertainties from the Israeli-Palestinian conflict and the Russian-Ukrainian war, adding uncertainty to the market. On the fundamentals, domestic aluminum production supply is increasing, with some capacity still awaiting resumption. Downstream aluminum processing and end-user demand have entered the off-season, with the aluminum processing industry's operating rate falling to a low point. Social inventory destocking is weak and remains at a high level for the same period in nearly three years. The spot market may maintain spot discounts in the short term. The aluminum market currently lacks upward driving factors, as the off-season aluminum fundamentals continue to be bearish. SMM expects short-term aluminum prices to remain weak, with attention needed on macro changes impacting aluminum prices in the short term.