Demand Continues to Weaken, SHFE Aluminum Fluctuates Slightly [SMM Aluminum Futures Brief]

Published: Jan 11, 2025 11:03

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[SMM Aluminum Futures Brief: Demand Continues to Weaken, SHFE Aluminum Fluctuates Slightly] Demand side, market demand continues to weaken during the off-season, with operating rates in the aluminum processing industry declining steadily. Some aluminum processing plants are approaching holiday shutdowns. Although pre-holiday concentrated restocking has led to an unexpectedly rapid inventory drawdown, providing short-term support to aluminum prices, the sustainability is expected to be limited. Key focus should be on the pullback in upstream spot alumina prices and its impact on aluminum cost side, as well as the downstream holiday schedules and the continuity of pre-holiday restocking pace.

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

SMM, January 11:

On Friday night, the most-traded SHFE aluminum 2502 contract opened at 20,235 yuan/mt, with a high of 20,250 yuan/mt and a low of 20,125 yuan/mt, closing at 20,185 yuan/mt, up 0.65%. Trading volume was 50,000 lots, and open interest was 113,000 lots.

SMM Comments: Macro side, mixed signals persist. The Chinese government continues efforts to boost consumption, while uncertainty over the US Fed's interest rate cut pace intensifies. Fundamentals side, aluminum capacity remained stable in early January, while alumina fundamentals maintained a slight surplus. Spot alumina prices are expected to continue their downward trend in the short term, and aluminum industry costs are likely to keep declining. Demand side, market demand weakened further during the off-season, with operating rates in the aluminum processing sector declining steadily. Some aluminum processing plants are nearing holiday shutdowns. Although pre-holiday stockpiling has led to an unexpected inventory drawdown, providing short-term support for aluminum prices, the sustainability of this trend is expected to be limited. Key focus points include the impact of spot alumina price pullbacks on aluminum costs, as well as downstream holiday schedules and the continuity of pre-holiday stockpiling.

On Friday night, the most-traded alumina 2502 contract opened at 4,062 yuan/mt, with a high of 4,132 yuan/mt and a low of 4,040 yuan/mt, closing at 4,093 yuan/mt, up 0.05%. Trading volume was 91,000 lots, and open interest was 90,000 lots.

SMM Comments: This week, the weekly operating rate of alumina saw a slight increase, while demand remained relatively stable. With low-price transactions gradually emerging in the market, some suppliers became more active in selling, leading to an increase in the availability of spot alumina in circulation and a wider discount of spot transactions to online prices. In the short term, some alumina capacity in Shanxi is expected to resume production, with supply anticipated to increase. On the demand side, aluminum operating rates remain relatively stable. Alumina fundamentals are expected to maintain a slight surplus, and spot alumina prices are likely to continue their downward trend in the short term.

[The information provided is for reference only. This article does not constitute direct investment research advice. Clients should make prudent decisions and not substitute this for independent judgment. Any decisions made by clients are unrelated to Shanghai Metals Market.]

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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