On the Eve of the Full Implementation of US Tariff Policies, Market Sentiment Remains Cautious, Aluminum Prices Maintain Fluctuating Trend [SMM Aluminum Morning Meeting Summary]

》Click to view SMM aluminum industry chain database

》Order to view SMM metal spot historical prices

4.2 SMM Aluminum Morning Meeting Summary

Futures: Overnight, the most-traded SHFE aluminum 2505 contract opened at 20,425 yuan/mt, with a high of 20,465 yuan/mt, a low of 20,365 yuan/mt, and closed at 20,415 yuan/mt, down 70 yuan/mt, or 0.34%. Yesterday, LME aluminum opened at $2,542/mt, with a high of $2,551.5/mt, a low of $2,502/mt, and closed at $2,504.5/mt, down $34/mt, or 1.34%.

Macro: (1) Huang Yun, spokesperson for the State Taxation Administration, revealed at a press conference on April 1 that the administration plans to promote the "buy and refund" policy for departure tax refunds nationwide. (Neutral) (2) The White House stated that the tariffs announced by Trump on April 2 will take effect immediately. Trump will deliver a speech at the Rose Garden at 4 PM local time on Wednesday (04:00 Beijing time on Thursday). (Bearish★) (3) Canadian Prime Minister Carney said that if the US imposes tariffs as scheduled on April 2, Canada will take countermeasures. (Bearish★)

Fundamentals: (1) According to SMM statistics, domestic aluminum production in March 2025 (31 days) increased 3.7% YoY and 11.2% MoM. The proportion of liquid aluminum in domestic aluminum smelters rebounded to normal levels, with the industry's liquid aluminum proportion up 3.2 percentage points MoM and 0.15 percentage points YoY to 74.2%. (Bearish★) (2) China's metallurgical-grade alumina production in March 2025 (31 days) increased 8.86% MoM and 11.32% YoY. By the end of March, China's metallurgical-grade alumina existing capacity was around 105.02 million mt, with actual operating capacity down 1.68% MoM and the operating rate at 84.64%. (Bearish★)

 Primary aluminum market: On Tuesday morning, aluminum prices fluctuated rangebound around 20,450 yuan/mt, and returned to around 20,550 yuan/mt in the second session. In the spot market, downstream in east China maintained just-in-time procurement, and the market was still impacted by low-priced sources and hedging warrants, with SMM A00 trading mainly at parity. SMM A00 was at parity against the SHFE aluminum 2504 contract, flat from the previous trading day, and SMM A00 aluminum ingot was recorded at 20,560 yuan/mt, flat from the previous trading day. In central China, after a sharp decline in aluminum prices, downstream restocking increased, and SHFE aluminum turned into a backwardation structure. With the spot-futures price spread widening, suppliers were more active in selling, and the market fell from a premium of 20 yuan/mt against central China to near parity. SMM central China A00 was recorded at 20,490 yuan/mt against the SHFE aluminum 2504 contract, flat from the previous trading day, with the Henan-Shanghai price spread at -70 yuan/mt. Actual market transactions were at parity to a premium of 10 yuan/mt against SMM central China prices, and at -70 yuan/mt against the 2504 contract.

Secondary aluminum raw materials: On Tuesday, spot primary aluminum was flat from the previous trading day at 20,560 yuan/mt, and aluminum scrap prices were mostly flat with aluminum prices. On Tuesday, baled UBC was flat at 15,300-15,850 yuan/mt (excluding tax), and shredded aluminum tense scrap was quoted at 16,250-17,100 yuan/mt (excluding tax). On Tuesday, aluminum scrap prices were mostly flat, with downstream demand remaining sluggish, and scrap utilization enterprises mainly making just-in-time procurement. Overall market transactions were moderate. In the short term, aluminum scrap prices may follow primary aluminum in narrow fluctuations.

Secondary aluminum alloy: On Tuesday, SMM A00 aluminum prices were flat from the previous trading day at 20,560 yuan/mt, and domestic SMM ADC12 prices were flat in the range of 20,900-21,100 yuan/mt. Currently, end-use consumption momentum is insufficient, and the downward pressure on aluminum prices is being transmitted. Downstream enterprises generally maintain just-in-time procurement. Due to insufficient orders, production losses, or funding pressure, some enterprises have started to lower their operating rates. Considering the balance between cost support and weak demand, it is expected that aluminum alloy prices will maintain a narrow fluctuating trend in the short term.

Summary: In recent weeks, macro-wise, as Trump has been escalating and fluctuating on tariff policies, concerns about a US economic recession have intensified. On the fundamentals side, the aluminum industry chain remains mainly bullish, with the seasonal destocking trend of "Golden March and Silver April" becoming more evident, and aluminum ingot inventories continuing to decline to around 800,000 mt. 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, and the continuous destocking of social aluminum ingot inventories has provided bottom support for aluminum prices. However, in the short term, the market is still somewhat suppressed by external bearish factors, and with the full implementation of US tariff policies imminent, market sentiment remains cautious. In the short term, aluminum prices will maintain a fluctuating trend. Continued close attention should be paid to changes in macro sentiment 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 decisions cautiously and not use this as a substitute for independent judgment. Any decisions made by clients are unrelated to SMM.]