Macro Disturbances Suppress Price Elasticity, SHFE Aluminum's Fundamental Support and Demand Release Continue to Compete [SMM Aluminum Futures Brief Review]

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SMM March 31 News:

Today, the most-traded SHFE aluminum 2505 contract opened at 20,565 yuan/mt, with a high of 20,575 yuan/mt, a low of 20,465 yuan/mt, and closed at 20,480 yuan/mt, down 0.46%. The trading volume was 118,000 lots, and the open interest was 201,000 lots.

SMM Comment: On the macro side, the US core PCE price index unexpectedly accelerated, increasing uncertainty in the US economic outlook. The new round of US tariffs has been volatile, disturbing the global aluminum market, and SHFE aluminum was dragged down. Fundamentals side, the aluminum industry chain remains mainly bullish, with the seasonal destocking trend of "Golden March and Silver April" further clarified. Aluminum ingot inventory has sharply declined and is approaching the 800,000 mt mark. End-use consumption, such as NEVs, is steadily growing, and downstream restocking demand has also warmed up. As the peak consumption season approaches, order volumes and operating rates in most sectors have rebounded, coupled with continued destocking of social aluminum ingot inventory, providing bottom support for aluminum prices. However, the short-term market is still somewhat suppressed by external bearish factors, with the US dollar rebounding to a high level, pressuring base metals. Attention is focused on the support level of 20,500 yuan/mt for the most-traded SHFE aluminum contract. Continued close monitoring of macro sentiment changes and the actual release of downstream demand is necessary.

Today, the most-traded alumina 2505 contract opened at 2,994 yuan/mt, with a high of 3,006 yuan/mt, a low of 2,927 yuan/mt, and closed at 2,936 yuan/mt, down 2.04%. The trading volume was 151,000 lots, and the open interest was 206,000 lots.

SMM Comment: Last week, the weekly operating rate of alumina was lowered again, with the national total operating capacity of metallurgical alumina reduced to 87.3 million mt/year, down 700,000 mt/year WoW. However, the fundamental supply surplus of alumina has not yet reversed. According to SMM data, as of last Thursday, the total operating capacity of domestic aluminum was 43.88 million mt/year, translating to an alumina demand operating capacity of around 84.47 million mt/year, with theoretical demand increasing slightly but still below actual operations. Supply side, domestic bauxite supply remains low with limited increments; imported bauxite supply increments are driving the total domestic bauxite supply growth, and the supply-demand fundamentals of bauxite may be more relaxed than before, with bauxite prices likely to remain under pressure in the short term. Meanwhile, downstream aluminum plants reported that alumina procurement is mainly based on long-term contracts, and some plants with winter stockpiling have plans to actively reduce inventory. Last week, according to SMM statistics, alumina raw material inventory at aluminum plants decreased by 44,000 mt WoW. In the short term, alumina circulating supply is expected to remain relatively loose, and alumina prices may continue to operate under 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 as a substitute for independent judgment. Any decisions made by clients are unrelated to SMM.]