Off-Season Demand Remains Weak, SHFE Aluminum to Maintain Fluctuating Trend in the Short Term [SMM Aluminum Futures Brief]

Published: Jan 7, 2025 16:40

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[SMM Aluminum Futures Brief Review: Poor Off-Season Demand, SHFE Aluminum to Maintain Fluctuating Trend in the Short Term] On the fundamentals side, supply-side pressure has slightly eased, but poor off-season demand and the continuous growth of social inventory buildup risks persist. In the short term, aluminum prices are expected to fluctuate downward. In the long term, attention should be paid to the US Fed's future stance on interest rate cuts and changes in the pace of consumption recovery.

》Check SMM Aluminum Product Prices, Data, and Market Analysis

SMM, January 7:

Today, the most-traded SHFE aluminum 2502 contract opened at 19,630 yuan/mt, with an intraday high of 19,725 yuan/mt and a low of 19,615 yuan/mt, closing at 19,680 yuan/mt, up 0.05%. Trading volume was 101,000 lots, and open interest was 139,000 lots.

SMM Comments: On the macro front, the Chinese government continued efforts to boost consumption, while regional conflicts remained unresolved. Fundamentals side, although several aluminum smelters in Sichuan and Guangxi reduced production in December, and some capacity resumption progress stalled, production still showed positive YoY growth. Demand side, market demand weakened further during the off-season, with operating rates in the aluminum processing industry declining steadily, and some aluminum processing plants nearing holiday shutdowns. Overall, fundamentals side, supply-side pressure eased slightly, but weak demand during the off-season and the risk of inventory buildup in social stocks continued to grow. In the short term, aluminum prices are expected to fluctuate downward. In the long term, attention should be paid to the US Fed's future stance on interest rate cuts and changes in the pace of consumption recovery.

The most-traded alumina 2502 contract opened at 4,280 yuan/mt, reached a high of 4,344 yuan/mt and a low of 4,194 yuan/mt, and closed at 4,294 yuan/mt, down 0.65%. Trading volume was 213,000 lots, and open interest was 104,000 lots.

SMM Comments: Recently, the weekly operating rate of alumina showed a slight rebound, and alumina supply increased slightly. With technological transformations and production cuts at aluminum smelters in Guangxi, Sichuan, and other regions, alumina demand declined slightly, and the previously tight alumina supply situation improved. By the end of December, alumina raw material inventories at aluminum smelters rebounded slightly, while downstream restocking and purchasing enthusiasm weakened. Acceptance of high-priced spot alumina decreased, and with reports of some low-price transactions, suppliers showed an increased willingness to sell. In the short term, spot alumina prices are likely to maintain a slight downward trend.

【The provided information is for reference only. This article does not constitute direct investment research advice. Clients should make cautious decisions and not substitute this for independent judgment. Any decisions made by clients are unrelated to SMM.】

Data Source Statement: Except for publicly available information, all other data are processed by SMM based on publicly available information, market communication, and relying on SMM‘s internal database model. They are for reference only and do not constitute decision-making recommendations.

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