Returning to the 21,000 Mark? SHFE Aluminum Lacks Upward Momentum [SMM Aluminum Futures Brief]

View SMM Aluminum Product Quotes, Data, and Market Analysis

SMM March 25:

Today, the most-traded SHFE aluminum 2505 contract opened at 20,750 yuan/mt, with a high of 20,750 yuan/mt, a low of 20,590 yuan/mt, and closed at 20,705 yuan/mt, up 0.02%. The trading volume was 139,000 lots, and the open interest was 226,000 lots.

SMM Comment: From a macro perspective, on Monday, as data showed a rebound in US business activity in March, the US dollar index returned to the 104 level, eventually closing up 0.16% at 104.31. The SHFE aluminum night session continued to correct. The hawkish remarks from the US Fed's Bostic and the overall bearish US PMI data somewhat dampened external market sentiment. Domestically, the favorable macro tone remains unchanged. Finance Minister Lan Fo'an stated that fiscal policy in 2025 will be more proactive, with sustained and increased efforts. The central bank's Q1 meeting suggested strengthening monetary policy regulation and considering RRR cuts and interest rate cuts at an opportune time. The Finance Minister released positive signals, with central fiscal measures to vigorously promote consumption, including increasing pensions and issuing childcare subsidies to enhance consumption capacity. On the fundamentals side, the aluminum industry chain remains largely bullish, with the seasonal destocking trend of "Golden March, Silver April" becoming more evident. End-use consumption, such as NEVs, continues to grow steadily. The import window remains closed, with primary aluminum net imports in January-February 2025 seeing a significant YoY decline. Currently, aluminum prices maintain a trend of LME outperforming 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 declined. SMM expects domestic primary aluminum imports in March to be mainly long-term contract executions, with net imports unlikely to see an increase. SMM believes that continued destocking over the weekend and domestic policy support will bolster short-term prices. If expectations for US Fed interest rate cuts intensify or US-EU trade relations 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 mark still requires further upward momentum. Continued close attention to changes in macro sentiment and the actual release of downstream demand is necessary.

Today, the most-traded alumina 2505 contract opened at 3,075 yuan/mt, with a high of 3,115 yuan/mt, a low of 3,042 yuan/mt, and closed at 3,066 yuan/mt, up 0.1%. The trading volume was 283,000 lots, and the open interest was 208,000 lots.

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

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