Tariff Disturbances and Inventory Reduction Game, Aluminum Prices Fluctuated Downward Today [SMM Aluminum Futures Brief]

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SMM April 16 News:

Today, the most-traded SHFE aluminum 2506 contract opened at 19,565 yuan/mt, with a high of 19,650 yuan/mt, a low of 19,485 yuan/mt, and closed at 19,545 yuan/mt, down 0.10%. The trading volume was 102,000 lots, and the open interest was 221,000 lots.

SMM Comment: 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 232 trade investigation, while US-EU trade negotiations showed "zero progress." The EU expects the US to maintain tariffs, and the impact of tariffs continues to ferment, casting a shadow over global economic development prospects. LME aluminum remains under pressure at low levels. On the supply side, although the operating capacity of aluminum in April increased, the domestic capacity ceiling limits significant growth. Coupled with the continued destocking of aluminum ingot inventory, according to SMM statistics, on April 16, Guangdong aluminum ingot inventory was 240,900 mt; Wuxi aluminum ingot inventory was 241,800 mt; Gongyi aluminum ingot inventory was 104,000 mt, with total inventory in the three regions at 586,700 mt, down 9,200 mt from the previous trading day. LME aluminum inventory decreased by 2,350 mt or 0.53%, providing support for the bottom of aluminum prices. SMM believes that the recent significant correction in aluminum prices has led to a noticeable strengthening in outflows from warehouses, and the overall arrivals this weekend were relatively low, maintaining a fast destocking pace. Among them, arrivals in Wuxi decreased by about 800 mt WoW from last Monday, while arrivals in South China decreased by about 4,000 mt. Although Gongyi still saw a certain amount of Russian aluminum ingots entering the warehouse, the concentration after the Qingming Festival has eased. Overall, the arrivals of domestic sources this week decreased significantly WoW, and the recent significant correction in aluminum prices has led to unexpectedly strong outflows from warehouses. It is expected that domestic aluminum ingot inventory will maintain a fast destocking pace in the short term. Cost side, the spot price of alumina fell, leading to a decline in the comprehensive cost of aluminum. On the demand side, the market has a fear of falling prices under the impact of tariffs, but new orders from end-users increased slightly after the decline in aluminum prices, and the purchasing power of processing enterprises rebounded, with inventory continuing to destock. In summary, the rebound in non-ferrous metals under eased macro sentiment, coupled with the continued destocking of aluminum inventory, 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.

Today, the most-traded alumina 2505 contract opened at 2,826 yuan/mt, with a high of 2,835 yuan/mt, a low of 2,800 yuan/mt, and closed at 2,815 yuan/mt, down 0.35%. The trading volume was 84,000 lots, and the open interest was 114,000 lots.

SMM Comment: Last week, alumina plant maintenance events were concentrated, and the operating capacity of alumina at several plants decreased. At the same time, some alumina capacities that began maintenance in March ended their maintenance period, and operating capacity rebounded slightly. Overall, as of last Thursday, the national alumina operating capacity decreased to 84.82 million mt/year, down 1.91 million mt/year WoW. As of last Thursday, the operating capacity of aluminum increased to 43.9 million mt/year, and the theoretical demand for alumina operating capacity was 84.51 million mt/year, tightening alumina supply in the short term. However, last week, the weekly alumina raw material inventory of aluminum plants totaled 2.67 million mt, up 50,000 mt WoW. Coupled with alumina inventory in delivery warehouses approaching 300,000 mt, alumina inventory pressure still exists, and prices may not rebound significantly in the short term. Alumina prices may remain in the doldrums in the short term.

[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 unrelated to SMM.]