SHFE Aluminum Surges While Alumina Prices Fluctuate Downward [SMM Aluminum Futures Brief]

Published: Feb 7, 2025 15:12

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[SMM Aluminum Futures Brief Review: SHFE Aluminum Surges, Alumina Prices Fluctuate Downward] Fundamentals side, several aluminum smelters in Sichuan have gradually resumed production recently, leading to renewed pressure on the aluminum supply side. The average spot price of alumina in February is expected to drop significantly, further weakening cost side support. Demand side, it is still the off-season, but with the end of the Chinese New Year holiday, aluminum processing enterprises are gradually resuming operations, and downstream weekly operating rates have rebounded significantly, indicating an improvement in consumption. In the short term, aluminum prices are expected to fluctuate with adjustments as the main trend. Key focus in the coming days will be on U.S. economic data, post-holiday inventory performance, and the pace of downstream resumption.

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

SMM, February 7:

Today, the most-traded SHFE aluminum 2503 contract opened at 20,350 yuan/mt, with a high of 20,670 yuan/mt, a low of 20,305 yuan/mt, and closed at 20,600 yuan/mt, up 1.8%. Trading volume was 141,000 lots, and open interest was 173,000 lots.

SMM Comments: Macro side, initial US jobless claims mildly increased last week, and the Bank of England cut interest rates as expected. With no new tariff-related news, the market is broadly focused on the US January non-farm payroll report to be released on Friday. If January's data remains strong, it may further influence market expectations for future rate adjustments. Fundamentals side, several aluminum smelters in Sichuan have gradually resumed production recently, reigniting supply-side pressure. February's average spot price of alumina is expected to drop significantly, weakening cost-side support further. Demand side, it is still the off-season. With the end of the Chinese New Year holiday, aluminum processing enterprises are gradually resuming operations, and downstream weekly operating rates have rebounded significantly, showing improvement in consumption. In the short term, aluminum prices are expected to mainly fluctuate and adjust. Key focuses in the coming days include US economic data, post-holiday inventory performance, and the pace of downstream resumption.

Today, the most-traded alumina 2505 contract opened at 3,490 yuan/mt, with a high of 3,528 yuan/mt, a low of 3,465 yuan/mt, and closed at 3,481 yuan/mt, down 0.34%. Trading volume was 139,000 lots, and open interest was 131,000 lots.

SMM Comments: Overall, in the short term, alumina operating capacity continues to increase, and the alumina spot market supply is relatively ample compared to earlier periods, with spot transaction prices continuing to decline. In the near term, there are no clear expectations for production cuts in alumina. Supply remains stable, but some aluminum smelters in south-west China are gradually resuming production or undergoing technological transformation, leading to a slight recovery in demand. However, this is unlikely to reverse the relatively ample supply situation in the alumina spot market. Continued attention should be paid to bauxite prices and supply conditions.

[The information provided is for reference only. This article does not constitute direct investment research advice. Clients should make cautious decisions and not replace independent judgment with this information. 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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