SMM Aluminum Market Morning Comment (July 23)

Market: Overnight, the most-traded SHFE aluminum 2409 contract opened at 19,360 yuan/mt, reaching a high of 19,400 yuan/mt and a low of 19,300 yuan/mt, and closed at 19,360 yuan/mt, down 90 yuan/mt, a decrease of 0.46%. The previous trading day, LME aluminum opened at $2,345/mt, reached a high of $2,364.5/mt, a low of $2,296/mt, and closed at $2,314.5/mt, down $35.5/mt, a decrease of 1.51%.

Summary: On the macro front, expectations for a rate cut in Europe have strengthened, and China has lowered the one-year and five-year LPR, resulting in ample market liquidity. On the fundamentals side, domestic aluminum supply continues to grow, with a significant YoY increase in net imports of primary aluminum. However, downstream aluminum processing and end-user demand have entered the off-season, and the operating rate in the aluminum processing industry has hit a low. Social inventory is at a three-year high for the same period, and spot discounts are expected to persist. In the short term, aluminum fundamentals remain relatively stable, continuing to exert downward pressure on aluminum prices, while macro fluctuations are relatively large. It is crucial to focus on the impact of macro changes on aluminum prices in the short term.