3.24 SMM Aluminum Morning Meeting Summary Futures: The most-traded SHFE aluminum 2505 contract opened at 20,665 yuan/mt, reached a high of 20,720 yuan/mt, a low of 20,650 yuan/mt, and closed at 20,655 yuan/mt, down 140 yuan/mt, or 0.67%. LME aluminum opened at $2,662/mt, hit a high of $2,668/mt, a low of $2,620.5/mt, and closed at $2,624.5/mt, down $32.5/mt, or 1.22%.
Macro: (1) On Friday, Fed officials made hawkish comments: Fed's Goolsbee: Must wait for clarity when facing significant uncertainty. Fed's Williams: Current moderately restrictive monetary policy is "fully appropriate"; Fed Governor Waller: I favor continuing the current pace of balance sheet reduction. As we approach adequate reserve levels, it will be appropriate to slow or stop the runoff. (Bearish ★) (2) The Fed reported a loss of $77.6 billion, marking the second consecutive year of substantial losses. (Bullish ★) (3) The central bank's Q1 meeting: Suggested increasing the intensity of monetary policy regulation and considering RRR cuts and interest rate cuts at an opportune time. (Bullish ★★) (4) Lan Fanan: The central government is providing substantial financial support to boost consumption, including raising pensions and offering childcare subsidies to enhance consumer spending. (Bullish ★★)
Fundamentals: (1) According to SMM statistics, on March 24, domestic mainstream consumption area electrolytic aluminum ingot inventory was 827,000 mt, down 7,000 mt from last Thursday, and down 35,000 mt WoW. (Bullish ★★) (2) Primary aluminum imports: According to customs data, in January 2025, domestic primary aluminum imports were approximately 161,000 mt, almost flat MoM, and down 34.8% YoY; in February, imports were about 200,000 mt, up 24.0% MoM, and down 10.7% YoY. For January-February, total primary aluminum imports were around 362,000 mt, down 23.4% YoY. (Bullish ★) (3) Primary aluminum exports: In January 2025, domestic primary aluminum exports were about 8,000 mt, down 33.4% MoM, and up 814.8% YoY; in February, exports were about 3,000 mt, down 59% MoM, and up YoY. For January-February, total primary aluminum exports were about 12,000 mt, up 1,116.9% YoY. Net primary aluminum imports: For January-February 2025, net primary aluminum imports were approximately 349,800 mt, down 25.7% YoY. (Bullish ★) (4) LME inventory continues to decline: LME inventory data released on March 21 showed that aluminum inventory decreased by 3,600 mt, or 0.74%, to 483,925 mt. The largest change occurred in Port Klang, with a decrease of 2,000 mt. (Bullish ★) Primary Aluminum Market: On Friday, the East China region saw improved trading due to weekend restocking, but downstream enterprises faced high aluminum prices, limiting restocking efforts, and premiums were under pressure. The market traded SMMA00 at parity to 10 yuan/mt. SMMA00 was at a discount of 30 yuan/mt against the SHFE 2504 contract, up 10 yuan/mt from the previous trading day, with SMM A00 aluminum ingot recorded at 20,790 yuan/mt, down 20 yuan/mt from the previous trading day. In the Central China market, due to the previous drop in aluminum prices, downstream restocking increased, leading to destocking growth, boosting supplier confidence. Suppliers mostly held back, expecting higher prices, and premiums remained firm. However, as prices rebounded to high levels, downstream buying interest waned, and trading activity significantly decreased. SMM Central China A00 against the SHFE 2504 contract was recorded at 20,670 yuan/mt, down 30 yuan/mt from the previous trading day, with the price spread between Central China and East China at -120 yuan/mt. Actual market transactions were at parity to a discount of 10 yuan/mt against the SMM Central China price. After the previous shift in the price center, downstream restocking increased, accelerating destocking nationwide, and premiums became firmer. Under the peak season expectations of "Golden March and Silver April," high aluminum prices will gradually be absorbed by the downstream, but in the short term, if aluminum prices rebound to high levels, the spot market premiums will face some resistance.
Secondary Aluminum Raw Material: The aluminum scrap market adjusted narrowly on Friday, with downstream maintaining purchasing as needed. On Friday, baled UBC scrap aluminum was concentrated at 15,250-16,100 yuan/mt (excluding tax), and shredded aluminum tense scrap was concentrated at 16,450-17,950 yuan/mt (excluding tax). In the short term, the weak supply and demand situation in the domestic aluminum scrap market is unlikely to improve significantly, and with both primary and secondary aluminum prices fluctuating at highs, downstream buyers are only maintaining purchasing as needed, and aluminum scrap prices may follow primary aluminum and fluctuate rangebound. Secondary Aluminum Alloy: On Friday, the domestic SMM ADC12 price remained unchanged at 21,100-21,300 yuan/mt; in the import market, overseas ADC12 prices remained strong, quoted above $2,500/mt, while domestic prices were under pressure, and with a slight depreciation of the RMB, the immediate loss for importing ADC12 expanded to 500 yuan/mt. On Friday, aluminum prices fluctuated slightly, and the secondary aluminum market remained stable. Currently, downstream demand remains weak, and the market is more likely to fall than rise in the short term.
Summary: From a macro perspective, on Friday, the US dollar index recorded its first weekly gain this month, closing up 0.34% at 104.15, as Fed officials indicated no rush to cut interest rates, putting pressure on the night session of SHFE aluminum. Domestically, the favorable macro front remains, with the country focusing on increasing policy intensity and stimulating market forces to maximize policy effects. The central bank's Q1 meeting suggested intensifying monetary policy regulation and considering RRR cuts and interest rate cuts at an opportune time. The Minister of Finance signaled positive measures, with the central government providing substantial financial support to boost consumption, including raising pensions and offering childcare subsidies to enhance consumer spending. Fundamentally, the aluminum industry chain remains bullish, with the seasonal destocking trend in "Golden March and Silver April" becoming clearer, and end-use consumption in NEVs steadily growing. The import window remains closed, and net primary aluminum imports for January-February 2025 were significantly lower YoY. Currently, aluminum prices still show LME outperforming SHFE, with the import window closed and import losses hovering around 2,600 yuan/mt. Overseas suppliers' willingness to clear and ship to China has decreased, and SMM expects that domestic primary aluminum imports in March will mainly be long-term contracts, with little increase in net imports. SMM believes that continued destocking over the weekend and domestic policy support will prop up short-term prices. If expectations for US Fed interest rate cuts rise or trade relations between the US and Europe further ease, aluminum prices may continue to fluctuate upward, but whether SHFE aluminum can return to the 21,000 yuan/mt level still requires further upward momentum. Close attention should be paid to changes in US tariff policies and the actual release of downstream demand. [The information provided is for reference only. This article does not constitute direct advice for investment research decisions. Clients should make prudent decisions and not rely solely on this information. Any decision made by clients is unrelated to Shanghai Metals Market.]
