Tariffs on Mexico Finalized, SHFE Aluminum Weakens Due to Alumina Drag [SMM Aluminum Futures Brief]

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

SMM, March 5:

Today, the most-traded SHFE aluminum 2504 contract opened at 20,600 yuan/mt, with a high of 20,660 yuan/mt and a low of 20,560 yuan/mt, closing at 20,620 yuan/mt, up 0.22%. Trading volume was 77,000 lots, and open interest was 183,000 lots.

SMM Comments: The macro environment recently presented a mixed picture. North American trade frictions continued to escalate, with Trump announcing reciprocal countermeasures against retaliatory tariffs from Canada and Mexico, while the U.S. Secretary of Commerce sent conflicting signals by suggesting fentanyl control in exchange for tariff relief. The policy volatility heightened market risk aversion sentiment. Domestically, the Two Sessions set a 2024 economic growth target of 5% and outlined plans to advance the "Three Major Projects," aiming to support real estate demand through urban village redevelopment and easing purchase restrictions. Fundamentals side, cost support showed signs of stabilization. Coupled with the seasonal demand boost from the "golden March and silver April," the operating rate of downstream processing enterprises increased by 4-5 percentage points WoW. Attention should focus on the sustained realization of March end-use consumption demand. Inventory-wise, as of Monday, domestic aluminum ingot and aluminum billet inventory saw an inventory buildup of only 6,500 mt, indicating a slowdown in the buildup pace. The inventory turning point is approaching, and supply-side pressure is expected to gradually ease. SMM analysis pointed out that driven by macro sentiment and trading expectations, SHFE aluminum remains more likely to rise than fall. However, concerns over intensified overseas trade frictions warrant close attention to policy expectations from the Two Sessions. In the short term, aluminum prices are expected to fluctuate upward at high levels.

Today, the most-traded alumina 2505 contract opened at 3,313 yuan/mt, with a high of 3,326 yuan/mt and a low of 3,266 yuan/mt, closing at 3,282 yuan/mt, down 0.94%. Trading volume was 75,000 lots, and open interest was 185,000 lots.

SMM Comments: Recently, domestic spot alumina prices have stabilized, mainly due to increased demand for alumina exports and transfer to delivery warehouse, which supported alumina prices. In the short term, spot alumina prices in some regions saw a slight rebound. However, overseas alumina prices declined, effectively closing the export window. Alumina transfer to delivery warehouse cannot provide sustained demand, and the market expects some new alumina capacity to gradually come online, leading to a strong expectation of a supply and demand imbalance for alumina. In the medium and long-term, spot alumina prices remain under pressure. In the short term, spot alumina prices may enter a phase of fluctuating adjustments. Continuous attention should be paid to the profitability of alumina exports and changes in bauxite prices.

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