International Turmoil Causes SHFE Aluminum to Plunge Continuously [SMM Aluminum Futures Brief Review]

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

SMM, February 25:

Today, the most-traded SHFE aluminum 2504 contract opened at 20,670 yuan/mt, with a high of 20,730 yuan/mt and a low of 20,435 yuan/mt, closing at 20,530 yuan/mt, down 0.99%. Trading volume was 185,000 lots, and open interest was 213,000 lots.

SMM Comments: Macro side, market surveys indicate that signs of a slowdown in US economic growth have significantly intensified. According to S&P Global, the expansion rate of US business activity in February fell to its lowest level since September 2023, reflecting cautious sentiment among businesses regarding the economic outlook. Fundamentals side, cost side support continued to weaken; supply side saw a slight increase, with overall changes being relatively small; demand side, driven by rising aluminum prices, end-users adopted a wait-and-see approach, downstream aluminum semis enterprises saw little improvement in shipments, and the turnover days of raw material inventories at factories struggled to recover, focusing mainly on just-in-time restocking and consuming finished product inventories. Inventory side, weekly inventories in major aluminum consumption regions monitored by SMM recorded 845,000 mt, with an inventory buildup of 27,000 mt. While the absolute inventory level continued to rise, the growth rate slowed. Currently, most suppliers are optimistic about aluminum prices in the future and expect that after entering March, the inventory turning point will gradually emerge. With policy support, aluminum ingot inventories are expected to remain low in the long term, and sentiment to hold back cargoes in the spot market has strengthened. Under the scenario of strong expectations but weak reality, aluminum prices are experiencing significant fluctuations driven by macro sentiment and trading expectations. However, the weak fundamentals provide limited sustained upward momentum for aluminum prices, leading to short-term price corrections.

Today, the most-traded alumina 2505 contract opened at 3,400 yuan/mt, with a high of 3,420 yuan/mt and a low of 3,370 yuan/mt, closing at 3,390 yuan/mt, up 0.21%. Trading volume was 93,000 lots, and open interest was 162,000 lots.

SMM Comments: Recently, there have been reports of minor alumina production cuts and maintenance in northern regions, coupled with concentrated news of domestic alumina exports, which have boosted alumina prices and improved market sentiment. This week, spot alumina prices in China rebounded slightly. However, with the slight rebound in domestic spot alumina prices and the decline in overseas spot alumina prices, the domestic alumina export window has gradually closed. Currently, operating capacity for alumina remains at a high level, while the incremental demand for aluminum is limited. The fundamental structure has not been completely reversed, and there is still resistance at the top for alumina prices. In the short term, alumina prices may enter a phase of fluctuation and adjustment. Moving forward, attention should be paid to the alumina export window and changes in operating capacity.

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