Macro Sentiment Improved, Fundamental Support Remained, Aluminum Prices Fluctuated at Highs [SMM Aluminum Morning Meeting Summary]

4.25 SMM Aluminum Morning Meeting Summary

Futures: In the previous night session, the most-traded SHFE aluminum 2506 contract opened at 19,905 yuan/mt, with a high of 19,960 yuan/mt and a low of 19,845 yuan/mt, closing at 19,955 yuan/mt, up 25 yuan/mt or 0.13% from the previous close. LME aluminum opened at $2,441/mt, with a high of $2,461/mt and a low of $2,429/mt, closing at $2,459.5/mt, up $16.5/mt or 0.68%.

Macro: (1) US President Trump made a series of remarks on the Russia-Ukraine conflict. Trump pointed out that both Ukraine and Russia have the will to achieve peace, and both sides must join the negotiations. He also revealed that he has set a deadline on the Russia-Ukraine issue, after which the US stance will change. (Bullish★) (2) Trump is considering a tiered tariff plan for China. The Ministry of Foreign Affairs and the Ministry of Commerce denied that China and the US are negotiating on tariffs. (Bearish★) (3) Vice Premier He Lifeng attended and spoke at the deployment meeting of the cross-border trade facilitation special action. He pointed out that the organization and implementation of the special action should be well managed, and on the basis of achieving phased results, mature measures and experience should be replicated and promoted nationwide as soon as possible. Efforts should be made to cultivate and strengthen new momentum for foreign trade development, and to stimulate vitality, respond to external shocks, and stabilize growth with a better port business environment. (Bullish★)

Fundamentals: (1) According to SMM statistics, on April 24, the domestic mainstream consumption area aluminum ingot inventory was 658,000 mt, down 15,000 mt from Monday and down 31,000 mt WoW. SMM expects that as the Labour Day holiday approaches, there will be varying degrees of pre-holiday restocking demand in mainstream consumption areas. The destocking trend will remain unchanged in the second half of April, and domestic aluminum ingot inventory is expected to pull back to 600,000-650,000 mt by the end of April, but attention should be paid to the risk of phased inventory buildup after the holiday. On April 24, the domestic mainstream consumption area aluminum billet inventory was 177,800 mt, down 18,900 mt from Monday. (Bullish★) (2) On April 23, COMEX aluminum inventory increased by 24 mt to 17,525 mt. (Bearish★)

Primary Aluminum Market: Yesterday, SHFE aluminum fluctuated in the morning session, with sentiment slightly improving due to news of potential tariff relief between China and the US. The futures market touched a high of 20,000 yuan/mt in the morning, and SHFE aluminum closed at 19,965 yuan/mt in the first trading session. In the spot market, east China and central China saw moderate trading, mainly due to ample supply in the spot market, with suppliers selling more and some traders reporting significant sales from aluminum plants. Specifically, spot premiums in east China pulled back again due to ample supply. Early market transactions were at -10 against SMM, and later, as traders increased purchases, trading was moderate. SMM A00 aluminum was quoted at 19,980 yuan/mt, up 70 yuan/mt from the previous day, with a premium of 10 yuan/mt against the May contract, narrowing by 10 yuan/mt from the previous day. In central China, trading was moderate, with suppliers offloading goods and downstream purchases weak. Early transactions were mainly at -10 against SMM in central China. SMM central China A00 was recorded at 19,890 yuan/mt against the SHFE aluminum 2505 contract, up 60 yuan/mt from the previous day. The Henan-Shanghai price spread was -90 yuan/mt, with actual market transactions at a discount of 10 yuan/mt against SMM central China and a discount of 80 yuan/mt against the 2505 contract.

Secondary Aluminum Raw Materials: Aluminum scrap prices remained largely unchanged from the previous day, with downstream peak season nearing its end and orders affected by marginal demand decline. Raw material purchases were maintained as needed. Today, baled UBC was quoted at 14,950-15,550 yuan/mt (excluding tax), and shredded aluminum tense scrap was quoted at 15,850-17,350 yuan/mt (excluding tax). By product, shredded aluminum tense scrap and wheel hub removed from vehicle were in tight supply, with prices unchanged from the previous day, while 6-series aluminum shavings rose by 200-250 yuan/mt. In the short term, aluminum scrap prices remain high, mainly due to low operating rates among downstream scrap utilization enterprises and tight domestic aluminum tense scrap supply, supporting scrap prices. In terms of the price difference between A00 aluminum and aluminum scrap, the price difference for mechanical casting aluminum scrap in Shanghai was 1,861 yuan/mt; the price difference for aluminum extrusion scrap in Foshan was 1,648 yuan/mt, mainly fluctuating rangebound.

Secondary Aluminum Alloy: According to SMM statistics, on April 24, the domestic secondary aluminum alloy ingot social inventory totaled 8,700 mt, down 90 mt from the previous day. Yesterday, aluminum prices continued to rebound, with SMM A00 aluminum up 70 yuan/mt to 19,980 yuan/mt from the previous day. 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 $2,430-2,450/mt, with the immediate loss on imported ADC12 still around 600 yuan/mt. Aluminum prices have rebounded for two consecutive days, but the demand side of the secondary aluminum market lacks effective support, with downstream purchasing enthusiasm remaining sluggish. Short-term upward momentum is insufficient. Secondary aluminum alloy prices are expected to continue fluctuating rangebound, with attention on downstream pre-holiday restocking sentiment.

Summary: On the macro front, the domestic bullish atmosphere remains unchanged. Yesterday, Trump indicated a potential reduction in tariffs on China, improving sentiment and stimulating a rebound in the futures market. Fundamentally, domestic aluminum ingot destocking supports aluminum prices, but suppliers are actively offloading goods, and spot premiums have pulled back. In terms of aluminum consumption, the operating rate of the aluminum wire and cable sector is improving, while other sectors are slightly weakening. SMM learned that as the transition between peak and off-peak seasons approaches and the PV installation rush nears its end, downstream aluminum orders are expected to decline. Aluminum prices lack significant upward momentum in the short term, and domestic aluminum prices are expected to fluctuate rangebound.

[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.]

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