Bull-Bear Tug-of-War Continues, Aluminum Prices Fluctuate at Highs [[SMM Aluminum Morning Meeting Summary]]

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4.29 SMM Aluminum Morning Meeting Summary

Futures: In the previous night session, the most-traded SHFE aluminum 2506 contract opened at 19,940 yuan/mt, with a high of 19,950 yuan/mt and a low of 19,890 yuan/mt, closing at 19,930 yuan/mt, down 5 yuan/mt or 0.03% from the previous close. LME aluminum opened at $2,437/mt in the previous session, with a high of $2,443/mt and a low of $2,421.5/mt, closing at $2,435.5/mt, down $2/mt or 0.08%.

Macro: (1) European Central Bank (ECB) Governing Council member and Bank of France Governor Francois Villeroy de Galhau stated on Monday (April 27) that US President Donald Trump's tariff threats have brought uncertainty to economies worldwide, but with eurozone inflation declining, there is still room for further interest rate cuts in Europe. (Bearish★) (2) The US Dallas Fed Manufacturing Index for April hit its lowest level since May 2020, with a significant drop in a key Texas manufacturing indicator. (Bearish★) (3) Zhao Chenxin, Vice Chairman of the National Development and Reform Commission (NDRC), stated that China will introduce measures to stabilize employment and the economy, promoting high-quality development. (Bullish★)

Fundamentals: (1) According to SMM statistics, domestic mainstream consumption area aluminum ingot inventory stood at 643,000 mt on April 28, down 15,000 mt WoW from Thursday and 30,000 mt WoW from Monday. (Bullish★) (2) According to SMM statistics, domestic mainstream consumption area aluminum billet inventory stood at 162,600 mt on April 28, down 15,200 mt WoW from Thursday. (Bullish★) (3) On April 28, LME aluminum inventory recorded 419,600 mt, down 2,000 mt or 0.47% from the previous day. Over the past week, LME aluminum inventory decreased by 14,600 mt or 3.36%. Over the past month, LME aluminum inventory decreased by 46,500 mt or 9.97%. (Bullish★)

Primary aluminum market: On Monday morning, the SHFE aluminum center continued to move lower, falling below the daily average line to around 19,950 yuan/mt. In the spot market, east China remained focused on selling. After the aluminum price center moved lower, market trading improved slightly, but downstream restocking remained weak. The market traded at a discount of 10 yuan/mt against the SMM A00 average price. SMM A00 was at parity with the SHFE aluminum 2505 contract, unchanged from the previous session. SMM A00 aluminum ingot recorded 19,950 yuan/mt, down 120 yuan/mt from the previous session. In central China, after the market discount widened, hedging traders were relatively active in purchasing, coupled with downstream pre-holiday restocking demand, leading to a gradual improvement in market premiums. SMM Central China A00 recorded 19,870 yuan/mt against the SHFE aluminum 2505 contract, down 110 yuan/mt from the previous session. The Henan-Shanghai price spread was -80 yuan/mt. Actual market transactions were at parity to a discount of 10 yuan/mt against the SMM Central China price and a discount of 80 yuan/mt against the 2505 contract.

Secondary aluminum raw materials: On Monday, spot primary aluminum fell by 120 yuan/mt from the previous session, with SMM A00 spot closing at 19,950 yuan/mt. The overall aluminum scrap market followed the primary aluminum price decline. As the downstream peak season is about to end, orders are affected by marginal demand decline, and raw material purchasing remains as needed. On Monday, baled UBC aluminum scrap was quoted at 15,000-15,600 yuan/mt (excluding tax), and shredded aluminum tense scrap was quoted at 15,750-17,250 yuan/mt (excluding tax). By product, bare bright aluminum wire and shredded wrought aluminum alloy scrap continued to face tight supply, with price adjustments of 50-100 yuan/mt. In terms of the price difference between A00 aluminum and aluminum scrap, the price difference between A00 aluminum and mechanical casting aluminum scrap in Shanghai increased by 15 yuan to 1,857 yuan/mt, while the price difference between A00 aluminum and mixed aluminum extrusion scrap free of paint in Foshan narrowed by 21 yuan to 1,716 yuan/mt. In the short term, the aluminum scrap market is likely to hover at highs, but if primary aluminum experiences strong fluctuations due to macro factors (such as US Fed policies or geopolitical conflicts) or domestic secondary aluminum companies collectively cut production, aluminum scrap prices may face periodic pressure.

Secondary aluminum alloy: On Monday, aluminum prices fell below 20,000 yuan/mt, with SMM A00 aluminum down 120 yuan/mt to 19,950 yuan/mt from the previous session. Domestic SMM ADC12 prices fell by 100 yuan/mt to the range of 20,400-20,600 yuan/mt. In the import market, overseas ADC12 prices remained at $2,430-2,450/mt. Due to the domestic price decline, the immediate loss on imported ADC12 expanded to around 700 yuan/mt. On Monday, aluminum prices ended a three-day rally, dragged down by persistently weak demand. The secondary aluminum market continued its "more likely to fall than rise" trend, with most secondary aluminum plants following the price decline by 100 yuan/mt. However, some companies maintained their original quotes due to tight raw material supply or rigid cost support. As the Labour Day holiday approaches, downstream companies only conducted limited pre-holiday restocking, with overall market transactions improving slightly. In the short term, secondary aluminum alloy prices are expected to remain weak, with recent focus on pre-holiday restocking and the impact of tariff hikes on downstream orders.

Summary: From a macro perspective, a series of domestic policies have played a positive role in stabilizing the real estate market, maintaining a bullish macro atmosphere in China. Overseas, Trump's policy stance has been unpredictable, and there are still many uncertainties from attitude to policy implementation. Fundamentally, the cost side of the aluminum industry remains stable, while the demand side shows signs of structural recovery, benefiting from the continuous introduction of new orders in May, driving pre-holiday restocking demand for raw materials such as aluminum ingots and billets. Domestic aluminum ingot inventory reduction supports aluminum prices, but suppliers are actively selling at highs, leading to a pullback in spot premiums. Overall, whether China-US trade can achieve substantial easing remains to be seen. In the short term, the bull-bear imbalance remains evident. 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, limiting the upward momentum of aluminum prices. Pre-holiday domestic aluminum prices are expected to fluctuate.

【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.】