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1.24 SMM Aluminum Morning Briefing
Futures: Overnight, the most-traded SHFE aluminum 2503 contract opened at 20,160 yuan/mt, hitting a high of 20,245 yuan/mt and a low of 20,160 yuan/mt, and closed at 20,195 yuan/mt, up 65 yuan/mt or 0.32%. On Thursday, LME aluminum opened at $2,628.5/mt, reached a high of $2,632/mt and a low of $2,605.5/mt, and closed at $2,629.5/mt, down $22/mt or 0.83%.
Macro: (1) US President Trump stated that he will request the US Fed to immediately cut interest rates and urged the world to follow suit, considering communication with Powell on interest rate issues (bullish ★); (2) US initial jobless claims for the week ending January 18 recorded 223,000, slightly above the market expectation of 220,000 and higher than the previous value of 217,000 (bullish ★); (3) The Ministry of Commerce reported that the total retail sales of consumer goods in 2024 reached 48.8 trillion yuan, up 3.5% from 2023, with consumption contributing 44.5% to economic growth, continuing to play a leading role in driving economic development (bullish ★).
Fundamentals: (1) According to SMM statistics, domestic aluminum ingot inventory stood at 460,000 mt on January 23, up 20,000 mt WoW (bearish ★★); (2) Domestic aluminum billet inventory reached 200,800 mt on January 23, up 49,700 mt WoW (bearish ★); (3) The operating rate of leading aluminum processing enterprises recorded 51.1% this week, down 6.3 percentage points WoW (bearish ★).
Primary Aluminum Market: On Thursday morning, the SHFE aluminum front-month contract fluctuated downward, with prices showing a significant decline during the second trading session. Fundamentals in Wuxi remained in a destocking phase, boosting suppliers' sentiment to stand firm on quotes. Spot discounts narrowed, and as the holiday approached, market transactions were concentrated among traders. On Thursday, SMM A00 aluminum was at a discount of 20 yuan/mt against the SHFE aluminum 2502 contract, narrowing by 10 yuan/mt from the previous trading day. SMM A00 aluminum ingot was recorded at 20,200 yuan/mt, down 40 yuan/mt from the previous trading day. In the central China market, supply and demand were both weak. After the futures market pulled back, suppliers' sentiment to stand firm on quotes strengthened, with actual transactions mainly at a premium of 10-30 yuan/mt against SMM central China prices.
Secondary Aluminum Raw Materials: On Thursday, primary aluminum spot prices fell by 40 yuan/mt from the previous trading day, with SMM A00 spot closing at 20,200 yuan/mt. Aluminum scrap prices fluctuated rangebound following aluminum prices. Fundamentals remained in a short-term supply and demand weak phase, as most suppliers entered the holiday period, while a few large enterprises continued procurement and sales. Aluminum scrap prices stabilized, with baled UBC aluminum scrap quoted at 14,850-15,700 yuan/mt (excluding tax) and shredded aluminum tense scrap at 16,350-17,850 yuan/mt (liquid aluminum, excluding tax). As the Chinese New Year holiday approached, traders entered the holiday period, tightening market supply and weakening overall transactions. In the short term, the price difference between primary metal and scrap is expected to fluctuate.
Secondary Aluminum Alloy: On Thursday, aluminum prices continued to fluctuate downward, with SMM A00 aluminum prices down 40 yuan/mt from the previous trading day to 20,200 yuan/mt, while secondary aluminum prices remained stable. Domestically, large secondary aluminum enterprises maintained quotes at 20,800-21,100 yuan/mt, while medium and small factories kept quotes at 20,500-20,700 yuan/mt. For imports, overseas ADC12 prices ranged from $2,440-2,470/mt, with immediate losses on imported ADC12 narrowing to within 100 yuan. As the Chinese New Year holiday approached, secondary aluminum plants largely ceased taking orders and shut down for the holiday. Downstream stockpiling also concluded, and with downstream production halting for the holiday, market transactions became increasingly sluggish. ADC12 prices are expected to remain largely stable before the holiday.
Summary: On the macro side, on Thursday, Trump made remarks calling for interest rate cuts, coupled with US initial jobless claims slightly exceeding expectations, leading to sideways movement in the US dollar index. Domestically, six departments issued a plan for long-term capital market inflows, signaling a warming macro atmosphere. Fundamentals side, supply disruptions decreased, and with ample supply, the cost side of the aluminum industry eased significantly. The immediate full average cost of domestic aluminum fell to 18,426 yuan/mt, weakening cost-side support for aluminum. On the demand side, as the Chinese New Year holiday approached, aluminum processing enterprises concentrated on entering the holiday period, with the operating rate of leading aluminum processing enterprises down 6.3 percentage points WoW, showing significant seasonal impact on demand. On the inventory side, social inventory may enter a continuous buildup phase during the Chinese New Year holiday, with domestic aluminum ingot inventory potentially reaching 500,000 mt before the holiday. In the short term, attention should focus on the pace of changes in macro sentiment domestically and abroad, the impact of falling spot alumina prices on the cost side of aluminum, and the effect of holiday-related shutdowns on downstream demand.
【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 SMM.】
