Strong Risk Aversion Sentiment as December Approaches, Aluminum Market Remains Pessimistic [SMM Aluminum Morning Briefing Nov 29]

Overnight, the most-traded SHFE aluminum 2501 contract opened at 20,235 yuan/mt, reached a high of 20,315 yuan/mt, a low of 20,220 yuan/mt, and closed at 20,275 yuan/mt, down 80 yuan/mt from the previous day, a decline of 0.39%. Yesterday, LME aluminum opened at $2,597/mt, hit a high of $2,603/mt, a low of $2,563/mt, and closed at $2,590/mt, down $12/mt, a decline of 0.46%.

Summary: On the macro front, the anticipated tariffs by Trump on Canada, Mexico, and China may trigger concerns over a global tariff war and trade war, putting pressure on the non-ferrous metals market. The ceasefire agreement between Lebanon and Israel lasted only one day, significantly increasing geopolitical uncertainties, and market risk aversion sentiment continues to rise. Domestically, positive signals were released as the General Office of the CPC Central Committee and the General Office of the State Council issued opinions on the reform and innovative development of digital trade, fostering and expanding digital trade business entities. On the fundamentals side, aluminum costs fluctuate at highs, raising market concerns about production cuts at high-cost enterprises. However, by the end of November, downstream buying sentiment weakened, and the spot market saw weak consolidation. In terms of inventory, the continuous improvement in railway shipments in Xinjiang has stabilized arrivals. Coupled with the limited sustainability of increase in aluminum ingot outflows from warehouses in the off-season, it may be difficult to prevent continuous inventory buildup. The off-season inventory turning point is expected to arrive soon, significantly weakening the support of low inventory for aluminum prices. In the short term, apart from the cost side, the aluminum market currently lacks additional support. The cancellation of export tax rebates for aluminum semis negatively impacts medium and long-term aluminum demand, putting overall market sentiment under pressure. Aluminum prices are expected to mainly fluctuate and consolidate in the near term.