Macro Sentiment Swings, Economic Outlook Worrisome, Solid Fundamentals Provide Bottom Support for SHFE Aluminum [SMM Aluminum Morning Meeting Summary]

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4.16 SMM Aluminum Morning Meeting Summary

Futures market: Last night, the most-traded SHFE aluminum 2506 contract opened at 19,590 yuan/mt, with a high of 19,640 yuan/mt, a low of 19,550 yuan/mt, and closed at 19,565 yuan/mt, down 60 yuan/mt or 0.31% from the previous close. Yesterday, LME aluminum opened at $2,380/mt, with a high of $2,393/mt, a low of $2,369.5/mt, and closed at $2,372/mt, down $6.5/mt or 0.27%.

Macro front: (1) Trump: The suspension of tariffs is due to a transition period and the need for flexibility (Bullish★) (2) According to foreign media, the US and EU have made little progress in bridging trade differences, and the EU expects the US to maintain its tariff policy. (Bearish★) (3) Premier Li Qiang emphasized during a survey in Beijing that greater efforts should be made to promote consumption, expand domestic demand, and strengthen the domestic circulation. The real estate market in China still has significant development potential in the current and future periods. (Bullish★)

Fundamentals: (1) Aluminum ingot inventory: According to SMM statistics, on April 15, Guangdong aluminum ingot inventory was 242,500 mt; Wuxi aluminum ingot inventory was 246,200 mt; Gongyi aluminum ingot inventory was 107,200 mt. The total inventory in these three regions was 595,900 mt, down 3,500 mt from the previous trading day. (Bullish★) (2) Aluminum billet inventory: According to SMM statistics, domestic aluminum billet inventory in two regions: Guangdong aluminum billet inventory was 129,200 mt, Wuxi aluminum billet inventory was 35,600 mt, totaling 164,800 mt, down 4,600 mt MoM. (Bullish★) (3) Secondary alloy ingot inventory: According to SMM statistics, on April 15, the social inventory of secondary aluminum alloy ingots in Foshan, Ningbo, and Wuxi totaled 7,358 mt, down 658 mt from the previous trading day. (Bullish★)

Primary aluminum market: Yesterday morning, the aluminum price center continued to move below the daily average line, to around 19,700 yuan/mt. In the spot market, after the price center fell, spot trades improved, and downstream purchases increased slightly, with transactions at a premium of 10 yuan/mt against the SMM A00 average price. SMM A00 was at parity with the SHFE aluminum 2504 contract, up 10 yuan/mt from the previous trading day. SMM A00 aluminum ingot was recorded at 19,680 yuan/mt, down 80 yuan/mt from the previous trading day. In central China, intraday trades improved, but only among traders, with no significant increase in downstream purchases. Due to the expected damage to export orders from recent tariff issues, downstream enterprises are generally cautious in purchasing, with limited raw material stockpiling. SMM Central China A00 was recorded at 19,630 yuan/mt against the SHFE aluminum 2504 contract, down 80 yuan/mt from the previous trading day. The Henan-Shanghai price spread was -50 yuan/mt, with actual transactions at parity to a discount of 10 yuan/mt against the SMM Central China price, and a discount of 50 yuan/mt against the 2504 contract.

Secondary aluminum raw materials: Yesterday, spot primary aluminum was down 80 yuan/mt from the previous trading day, with SMM A00 spot closing at 19,680 yuan/mt. The aluminum scrap market saw little overall price change, with no significant peak season demand from downstream, maintaining purchasing as needed. Yesterday, baled UBC was quoted at 14,800-15,400 yuan/mt (excluding tax), and shredded aluminum tense scrap was quoted at 15,850-17,350 yuan/mt (excluding tax). By region, Hunan, Hubei, Foshan, and Jiangxi showed a clear stance on firm quotes, without following the primary aluminum market for significant price adjustments. Other regions such as Shanghai, Jiangsu, Henan, and Anhui followed A00 with slight price reductions. By product, although prices for shredded aluminum tense scrap and wheel hub removed from vehicle remained flat compared to the previous trading day, some regions saw initial signs of active price increases for mechanical casting aluminum scrap due to tight supply. In the short term, aluminum scrap, especially aluminum tense scrap, remains in tight circulation. Although downstream scrap utilization enterprises generally have low operating rates, basic demand persists, providing support for aluminum scrap prices, with the price difference between A00 aluminum and aluminum scrap adjusting narrowly.

Secondary aluminum alloy: Yesterday, aluminum prices rebounded, with SMM A00 aluminum down 80 yuan/mt from the previous trading day to 19,680 yuan/mt. Domestic SMM ADC12 prices remained stable in the range of 20,500-20,700 yuan/mt. In the import market, overseas ADC12 was quoted at $2,460-2,470/mt. As spot import prices were down 100 yuan/mt, the immediate loss for imported ADC12 slightly expanded. Yesterday, aluminum prices weakened again, with most secondary aluminum plants holding steady on quotes, while some enterprises lowered prices by 100 yuan/mt. Current downstream demand remains sluggish, providing weak support for prices. It is expected that secondary aluminum alloy prices will continue to fluctuate weakly in the short term.

Summary: On the macro front, the US dollar index rebounded slightly on Tuesday, recovering above the 100 mark, up 0.46%. Recent tariff events continue to impact the global aluminum trade chain. Yesterday, Trump initiated a Section 232 investigation to impose additional tariffs on semiconductors and semiconductor manufacturing equipment, while US-EU trade negotiations showed "zero progress," with the EU expecting the US to maintain tariffs, casting a shadow over global economic development prospects. LME aluminum remained under pressure at low levels. On the supply side, although operating capacity for primary aluminum increased in April, the domestic capacity ceiling limits significant growth, coupled with the continued destocking of aluminum ingot inventory, providing support for the bottom of aluminum prices. On the demand side, the market is in a wait-and-see mood due to tariff impacts, but new orders from end-users increased slightly after the aluminum price fell, and purchases by processing enterprises rebounded, with primary aluminum outflows from warehouses performing well. Overall, non-ferrous metals rebounded as macro sentiment eased, and continued destocking of aluminum inventory supported aluminum prices. In the short term, aluminum prices will maintain a fluctuating trend, with subsequent attention needed on tariff policy adjustments and the export situation of aluminum semis and end-users.

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