Cost Side Continues Strong Support, SHFE Aluminum Futures Break Through [SMM Aluminum Morning Meeting Summary Dec 5]

Overnight, the most-traded SHFE aluminum 2501 contract opened at 20,535 yuan/mt, reached a high of 20,695 yuan/mt, a low of 20,535 yuan/mt, and closed at 20,650 yuan/mt, up 195 yuan/mt from the previous day, an increase of 0.95%. On Wednesday, LME aluminum opened at $2,607/mt, hit a high of $2,648.5/mt, a low of $2,603/mt, and closed at $2,638.5/mt, up $31.5/mt, an increase of 1.21%.

Summary: Macro front, political disputes in France and South Korea intensified, and the situations in the Middle East and Russia-Ukraine remained uncertain, keeping market risk aversion sentiment alive. US Fed officials were open to an interest rate cut in December, leading to a slight rebound in non-ferrous metals. Domestically, positive signals were released, with November's manufacturing PMI above the 50 mark, but potential risks of tariff and trade wars need attention. Fundamentals side, high costs of aluminum raised concerns about production cuts in high-cost enterprises, but downstream buying sentiment weakened in the off-season, leading to a weak spot market. Inventory-wise, although the shipping pace of goods from Xinjiang has recently eased, causing domestic aluminum ingot inventory to fluctuate, it is expected that the backlog in Xinjiang will continue to ease, and concentrated arrivals may pose pressure and risks. Meanwhile, although the year-end inventory buildup inflection point has been delayed, the limited sustainability of aluminum ingot outflows from warehouses during the off-season means that low inventory continues to provide short-term support for aluminum prices, but excessive optimism is not advisable. Overall, the cancellation of aluminum semis export tax rebates in December negatively impacts mid-term aluminum demand, but short-term market sentiment has eased somewhat, and the cost side, with alumina continuing to provide strong support, suggests that aluminum prices are expected to mainly fluctuate in the near term.