SMM Aluminum Market Morning Comment (July 24)

Market: The most-traded SHFE aluminum 2409 contract opened at 19,340 yuan/mt overnight, reaching a high of 19,410 yuan/mt and a low of 19,310 yuan/mt, and closed at 19,350 yuan/mt, up 60 yuan/mt, a decrease of 0.31%. The previous trading day, LME aluminum opened at $2,319/mt, hit a high of $2,327/mt and a low of $2,293/mt, and closed at $2,298.5/mt, down $16/mt, a decrease of 0.69%.

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, domestic aluminium supply continues to grow, with a significant YoY increase in net imports of primary aluminium. 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. 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.