Alumina Decline Slows, SHFE Aluminum Fluctuates and Rebounds [SMM Aluminum Futures Brief]

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

SMM, February 18:

Today, the most-traded SHFE aluminum 2504 contract opened at 20,660 yuan/mt, with a high of 20,680 yuan/mt, a low of 20,585 yuan/mt, and closed at 20,665 yuan/mt, up 0.02%. Trading volume was 58,000 lots, and open interest was 222,000 lots.

SMM Comments: US Fed's Harker stated that the current economic situation supports temporarily maintaining stable interest rate policies. Meanwhile, Fed Governor Bowman also noted that stronger confidence in declining inflation is needed before further interest rate cuts. Inflation is expected to decline, but upside risks remain. Domestically, President Jinping emphasized that the private economy has broad prospects and great potential, and it is an opportune time for private enterprises and entrepreneurs to shine. The Two Sessions are expected to boost macro expectations. The 14th meeting of the Standing Committee of the 14th National People's Congress will be held in Beijing from February 24 to 25 to review the draft law on promoting the private economy and the draft amendment to the Civil Aviation Law submitted by the State Council. Overseas, trade barriers are intensifying, but domestic enterprises and market sentiment have shown limited response. In the short term, the global aluminum market will undergo structural adjustments influenced by policies, requiring continuous attention to changes in European and American trade policies and major consumer market demand. Fundamentals side, aluminum supply is facing renewed pressure for resumption. In February, domestic aluminum operating capacity is expected to increase slightly. The average spot price of alumina continues to weaken, driving aluminum costs further downward, with cost-side support continuing to weaken. Although both supply and demand are increasing and post-holiday demand recovery has exceeded expectations, aluminum futures and spot prices remain strong despite the lack of cost support. Inventory-wise, the market is still in a post-holiday inventory buildup phase, with inventories expected to increase rapidly during the week. On the demand side, the operating rate of leading domestic downstream aluminum processing enterprises rebounded significantly this week, up 5.7 percentage points WoW to 56.8%, mainly driven by post-Chinese New Year resumption of production. However, recovery varies across sectors. In the future, with increasing PV demand and full resumption of production by end-users, and limited supply-side growth, aluminum prices are expected to remain in a high-level fluctuation in the short term.

Today, the most-traded alumina 2505 contract opened at 3,402 yuan/mt, with a high of 3,456 yuan/mt, a low of 3,400 yuan/mt, and closed at 3,439 yuan/mt, up 1.12%. Trading volume was 99,000 lots, and open interest was 157,000 lots.

SMM Comments: In terms of supply, some alumina refineries in north China have recently undergone maintenance, which may slightly impact short-term supply. However, with the gradual release of new capacity domestically and internationally, expectations of a supply surplus are further strengthening. On the demand side, aluminum enterprises in Sichuan and other regions are gradually resuming production, boosting alumina demand. Meanwhile, the opening of the alumina export window may redirect some domestic supply to international markets, alleviating supply pressure. On the cost side, the sharp decline in alumina prices has weakened bauxite demand, leading to lower offers from holders and a decline in imported ore prices, reducing production costs. Nevertheless, spot prices in north China remain below the theoretical cost line. Overall, the market has not yet seen large-scale production cuts, cost-side downward pressure persists, spot supply remains abundant, and prices are likely to remain under downward pressure in the short term.

[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.]