Macro front, overseas macro was bearish. US Fed's Bostic believed there would be only one interest rate cut this year as inflation progress would slow. The new round of US tariffs remained volatile, disturbing the global aluminum market. The S&P Global Manufacturing PMI in March recorded 49.8, the lowest since March, indicating overseas demand still awaited recovery, with some funds seeking safe havens. Domestically, the favorable macro atmosphere remained unchanged, with fiscal policy maintaining a loose direction to promote domestic demand recovery.
Fundamentals side, domestic aluminum operating capacity saw a slight increase, mainly due to the completion of the resumption of previously cut production. The contribution of the slots started in February to production had already been reflected. The cost side of the aluminum industry rebounded slightly within the week. As of this Thursday, the domestic aluminum immediate full average cost was around 16,960 yuan/mt, down 103 yuan/mt WoW, mainly due to the pullback in alumina prices, leading to a slight downward shift in aluminum costs. Demand side, aluminum ingot inventories in mainstream domestic consumption areas continued to decline, providing support for aluminum prices. Moreover, as subsequent arrivals were expected to remain low, suppliers stood firm on quotes, and spot premiums rose. According to SMM statistics, on March 27, domestic mainstream consumption area aluminum ingot inventories were 802,000 mt, down 25,000 mt MoM from Monday. Additionally, approaching the "Golden March and Silver April" peak season, downstream aluminum processing enterprises' orders on hand and operating rates were in a rebound range, coupled with new PV installations triggering rush demand in H1, component factories' production schedules and procurement volumes increased, while automotive aluminum remained in a prosperous range, overall providing support for aluminum consumption.
Overall, the macro aspect was mixed, with the domestic macro favorable melody unchanged, while overseas uncertainties were strong, leading some funds to seek safe havens. Fundamentals side, both supply and demand showed growth trends. Approaching the consumption peak season, most sectors' order volumes and operating rates rebounded, coupled with sustained demand for social aluminum ingot inventories, aluminum prices still had upward momentum. It is expected that the most-traded SHFE aluminum contract will operate around 20,700-21,100 yuan/mt next week, while LME aluminum will operate around $2,600-2,680/mt.
