Macro and Fundamental Factors Intertwined, Aluminum Prices Mainly Maintain Fluctuating Trend [SMM Aluminum Morning Meeting Summary]

》Click to View the SMM Aluminum Industry Chain Database

》Subscribe to Access SMM Historical Spot Metal Prices

2.27 SMM Aluminum Morning Briefing

Futures Market: Overnight, the most-traded SHFE aluminum 2504 contract opened at 20,650 yuan/mt, hit a high of 20,660 yuan/mt, a low of 20,500 yuan/mt, and closed at 20,560 yuan/mt, down 50 yuan/mt or 0.24%. Yesterday, LME aluminum opened at $2,643/mt, reached a high of $2,665/mt, a low of $2,621/mt, and closed at $2,628/mt, down $11/mt or 0.42%. 

Macro: (1) On Wednesday, Trump stated that his administration would soon announce a 25% tariff on goods imported from the EU. (Bullish ★) (2) The Financial Institute of the Chinese Academy of Social Sciences indicated that signs of recovery in the capital and real estate markets emerged in early 2025. A new technological cycle has begun, leading to a revaluation of Chinese assets. The rebound in commercial housing sales areas has driven second-hand housing prices in first-tier cities to stabilize after declines. However, the transmission of increased sales volume and stable prices to improvements in real estate investment still faces a significant time lag. (Bullish ★)

Fundamentals: (1) According to SMM statistics, as of February 26, aluminum ingot inventories stood at 248,800 mt in Guangdong, 326,800 mt in Wuxi, and 149,300 mt in Gongyi, with a total decrease of 2,500 mt compared to the previous trading day. Regarding domestic aluminum billet inventories, Guangdong recorded 157,700 mt, and Wuxi recorded 72,200 mt, with a total decrease of 300 mt. (Bullish ★); (2) On February 26, LME aluminum inventory was recorded at 529,500 mt, down 1,550 mt or 0.29% from the previous day. Over the past week, LME aluminum inventory decreased by 18,500 mt or 3.37%, and over the past month, it decreased by 63,200 mt or 10.66%. (Bullish ★)

Primary Aluminum Market: On Wednesday morning, the SHFE aluminum front-month contract fluctuated rangebound, with the price center moving higher compared to the previous day. Coupled with the destocking of aluminum ingots in Wuxi, market trading sentiment was stimulated. Specifically, trading in east China was active, and spot discounts narrowed by 20 yuan/mt compared to the previous trading day. On Wednesday, SMM A00 aluminum was at a discount of 30 yuan/mt against the SHFE aluminum 2503 contract, with SMM A00 aluminum ingot recorded at 20,530 yuan/mt, up 140 yuan/mt from the previous trading day. In the central China market, stimulated by futures market rebounds and eased congestion of platform cargoes, traders were active, with transactions against SMM central China at +10-20 yuan/mt. Downstream purchases were slightly weaker, with transactions concentrated at parity to +10 yuan/mt. Overall, spot discounts narrowed, and actual market transactions were mainly at parity to +20 yuan/mt against SMM central China. On Wednesday, the price spread between Henan and Shanghai was around a discount of 120 yuan/mt. SMM central China A00 aluminum against the SHFE aluminum 2503 contract was recorded at 20,410 yuan/mt, up 150 yuan/mt from the previous trading day.

Secondary Aluminum Raw Materials: On Wednesday, primary aluminum spot prices surged by 140 yuan/mt compared to the previous trading day, with SMM A00 spot aluminum closing at 20,530 yuan/mt. Aluminum scrap market quotations mainly followed the rise in aluminum prices. On Wednesday, baled UBC aluminum scrap was quoted at 14,950-15,800 yuan/mt (excluding tax), and shredded aluminum tense scrap was quoted at 16,350-17,950 yuan/mt (liquid aluminum, excluding tax). In the short term, with the resumption of production upstream and downstream in the aluminum scrap market, procurement pressure has eased. However, constrained by generally weak downstream demand, there is no significant improvement, and aluminum scrap prices have limited room for increase.

Secondary Aluminum Alloy: On Wednesday, aluminum prices rebounded, with SMM A00 aluminum prices rising by 140 yuan/mt from the previous trading day to 20,530 yuan/mt, while secondary aluminum prices remained stable. Domestically, SMM ADC12 prices were flat at 21,100-21,300 yuan/mt. In the import market, overseas ADC12 prices remained stable in the $2,480-2,500/mt range. ADC12 import immediate profit and loss remained in a slight loss state, and the import window remained closed. On Wednesday, with the rebound in aluminum prices, the secondary aluminum market generally adopted a wait-and-see attitude, with manufacturers mainly maintaining stable quotations. Currently, manufacturers' operating rates have returned to normal, but downstream demand remains weak, overall transactions are average, and social and production site inventories are accumulating, leading to insufficient momentum for price increases. In the short term, ADC12 prices are expected to continue fluctuating rangebound, with upside room constrained by supply growth pressure and the slow pace of demand recovery, while downside is supported by aluminum scrap costs. Attention should be paid to recent raw material circulation and the recovery of end-use consumption.

Summary: Macro side, with US President Trump wielding the "tariff stick" and sparking inflation concerns, on Tuesday (February 25, US Eastern Time), Richmond Fed President Thomas Barkin made hawkish remarks, stating that the US Fed might have to raise interest rates to counter economic trends that could drive inflation higher. Fundamentals side, cost-side support continued to weaken; supply side saw slight and stable increases with relatively small changes overall; demand side, driven by rising aluminum prices, end-user enterprises adopted a wait-and-see approach, and shipments from downstream aluminum semis enterprises showed no significant improvement. The turnover days of raw material inventories at factories struggled to rise, with procurement mainly based on rigid demand and consumption of finished product inventories. Domestic aluminum ingot and aluminum billet social inventories climbed to 1.194 million mt, after consecutively breaking through the critical thresholds of 1.1 million mt and 1.2 million mt. Most suppliers are optimistic about the aluminum market outlook 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 spot market sentiment of holding back cargoes is strengthening. Macro sentiment remains unstable, consumption realization still needs observation, and the market cautiously anticipates aluminum price fluctuations and adjustments.

【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.】