Ongoing Destocking and Positive Support from Domestic Policy Will Boost Short-Term Prices [SMM Aluminum Futures Brief]

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

SMM March 24 News:

Today, the most-traded SHFE aluminum 2505 contract opened at 20,665 yuan/mt, reached a high of 20,770 yuan/mt, a low of 20,640 yuan/mt, and closed at 20,750 yuan/mt, down 0.22%. The trading volume was 148,000 lots, and the open interest was 227,000 lots.

SMM Comment: From a macro perspective, last Friday, the US dollar index recorded its first weekly gain this month after Fed officials indicated no rush to cut interest rates, closing up 0.34% at 104.15, putting pressure on the SHFE aluminum night session. Domestically, the favorable macro front remains unchanged, with the country emphasizing increased policy efforts and stimulating market forces for synergistic effects, maximizing policy impact; the central bank's Q1 meeting suggested intensifying monetary policy regulation, with RRR cuts and interest rate cuts to be considered. The Minister of Finance sent positive signals, with the central government allocating substantial funds to boost consumption, including increasing pensions and providing child-rearing subsidies to enhance consumption capacity. On the fundamentals side, the aluminum industry chain is still mainly bullish, with the "Golden March, Silver April" seasonal destocking trend becoming more evident, and end-use consumption in sectors like NEVs steadily growing. The import window remains closed, and net imports of primary aluminum in January-February 2025 saw a significant YoY decline. Currently, LME outperforms SHFE, with the domestic import window closed and import losses fluctuating around 2,600 yuan/mt. Overseas suppliers' willingness to clear customs and ship to China has decreased. SMM expects that in March, domestic primary aluminum imports will mainly be based on long-term contracts, making it difficult to see an increase in net imports. SMM believes that continued destocking over the weekend and supportive domestic policies will underpin short-term prices. If expectations for US Fed interest rate cuts rise or if trade relations between the US and Europe further ease, aluminum prices may continue to fluctuate upward in the short term. However, 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.

Today, the most-traded alumina 2505 contract opened at 3,011 yuan/mt, reached a high of 3,094 yuan/mt, a low of 3,006 yuan/mt, and finally closed at 3,072 yuan/mt, up 1.76%; the trading volume was 301,000 lots, and the open interest was 203,000 lots.

SMM Comment: Recently, the weekly operating rate of alumina has been adjusted downward. As of last Thursday, according to SMM data, the total operating capacity of metallurgical alumina nationwide decreased to 88.01 million mt/year, but the reduction is limited. According to SMM data, as of last Thursday, the total operating capacity of domestic aluminum was 43.84 million mt/year, translating to an alumina demand capacity of around 84.4 million mt/year. Even considering net alumina exports, the fundamentals still show a supply surplus. In the short term, alumina prices are expected to remain under pressure. Continued attention should be paid to changes in alumina operating capacity.

[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 SMM.]