The US once again wielded the tariff stick, accelerating domestic inventory destocking and leading to range-bound consolidation of SHFE aluminum. [SMM Aluminum Morning Meeting Summary]

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4.17 SMM Aluminum Morning Meeting Summary

Futures: Last night, the most-traded SHFE aluminum 2506 contract opened at 19,550 yuan/mt, with a high of 19,635 yuan/mt, a low of 19,505 yuan/mt, and closed at 19,635 yuan/mt, up 65 yuan/mt or 0.33% from the previous close. Yesterday, LME aluminum opened at $2,373/mt, with a high of $2,390/mt, a low of $2,352/mt, and closed at $2,388.5/mt, up $16.5/mt or 0.7%.

Macro: (1) Fed Chairman Powell: Policy is in a good position, and we need to wait for clearer data before considering adjustments. Cryptocurrencies are gradually becoming mainstream, and related regulations are expected to be relaxed. Tariffs are likely to stimulate a temporary rise in inflation, and the impact may last for a long time. The current trend is that inflation and unemployment are rising together. Do not expect the Fed to intervene in the stock market's sharp decline. Trump's policies are constantly changing, and tariffs are higher than the Fed's highest estimates. It is understandable that the market is facing difficulties. (Bullish★) (2) The Ministry of Commerce responded to "the US raising tariffs on certain Chinese goods to 245%": The US has reached an irrational level in using tariffs as a tool and weapon, and China will not pay attention to it. (Bearish★) (3) The US March retail sales MoM recorded 1.4%, expected 1.3%, the largest increase since January 2023. (Bullish★)

Fundamentals: (1) Aluminum ingot inventory: According to SMM statistics, on April 17, the domestic mainstream consumption area's aluminum ingot inventory was 724,000 mt, down 35,000 mt WoW from Monday, and down 55,000 mt WoW from last Thursday. (Bullish★★) (2) Japanese port aluminum inventory: Japanese trading company Marubeni Corp. said that as of the end of March 2025, aluminum inventory at Japan's three major ports fell to 309,700 mt, down about 1.2% from the previous month. Specifically, inventory in Nagoya and Yokohama fell to varying degrees, while inventory in Osaka rebounded slightly. The following is the aluminum inventory at Japan's three major ports since 2019: (unit: mt) (Bullish★)

Primary aluminum market: Yesterday morning, the center of aluminum prices moved slightly higher but remained in the doldrums overall, fluctuating around 19,700 yuan/mt. In the spot market, after the center of aluminum prices fell, spot trades improved, and downstream purchases increased slightly. After the contract rollover, market supply tightened, and traders took the opportunity to stand firm on quotes. The market traded at a premium of 10 yuan/mt against the SMM A00 average price. SMM A00 was at a premium of 10 yuan/mt against the SHFE aluminum 2505 contract, up 10 yuan/mt from the previous trading day. SMM A00 aluminum ingot recorded 19,680 yuan/mt, flat from the previous trading day. Trading in the central China market improved during the day, and supply in the Shandong market was tight. Some downstream purchases were made in the central China market, and suppliers took the opportunity to stand firm on quotes. SMM Central China A00 recorded 19,640 yuan/mt against the SHFE aluminum 2505 contract, up 10 yuan/mt from the previous trading day. The price difference between Henan and Shanghai was -40 yuan/mt. Actual market transactions were at parity to a premium of 10 yuan/mt against the SMM Central China price, and at a discount of 30 yuan/mt against the 2504 contract.

Secondary aluminum raw materials: Yesterday, spot aluminum prices were flat from the previous trading day, with SMM A00 spot closing at 19,680 yuan/mt. The aluminum scrap market saw little overall price change yesterday, and downstream demand did not show a clear peak season trend, 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). In the short term, the circulation of aluminum scrap, especially aluminum tense scrap, remains tight. Although downstream scrap utilization enterprises generally have low operating rates, basic demand persists, providing support for aluminum scrap prices. In the short term, aluminum scrap prices may fluctuate rangebound with primary aluminum, and the price difference between A00 aluminum and aluminum scrap will mainly adjust rangebound.

Secondary aluminum alloy: Yesterday, aluminum prices remained stable, with SMM A00 aluminum price flat from the previous trading day at 19,680 yuan/mt. Secondary aluminum plants also mainly quoted stable prices, with domestic SMM ADC12 prices maintained in the range of 20,500-20,700 yuan/mt. Current downstream demand remains sluggish, providing weak support for prices. It is expected that secondary aluminum alloy prices will continue to fluctuate in the doldrums in the short term.

Summary: On the macro front, yesterday the US White House imposed a 245% tariff on certain Chinese goods, and China stated that it would not pay attention to it. Although the market is concerned, there is no sign of panic spreading. Recently, due to the disturbance of tariff events, US inflation and unemployment have risen together. Under dual pressure, Fed Chairman Powell stated that he needs to wait for clearer data before considering the next interest rate cut, and the monetary policy outlook is unclear. On the supply side, although operating capacity of aluminum has increased in April, the domestic capacity ceiling limits significant growth. Weekly aluminum ingot inventory fell sharply by 35,000 mt, and the acceleration of destocking continues to provide strong support for the bottom of aluminum prices. On the demand side, there is a wait-and-see sentiment in the market due to the impact of tariffs, but after the decline in aluminum prices, new orders from end-users increased slightly, and the purchasing power of processing enterprises rebounded. Aluminum outflows from warehouses performed well. In summary, the rebound in non-ferrous metals is supported by easing macro sentiment, and the continued destocking of aluminum supports aluminum prices. In the short term, aluminum prices will maintain a fluctuating trend, and subsequent attention should be paid to tariff policy adjustments and the export situation of aluminum semis and end-users.

【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 not related to SMM.】