Downstream aluminum orders are expected to continue declining, with insufficient momentum for aluminum prices to rise sharply again [SMM Aluminum Futures Brief Comment]

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SMM, April 30:

Today, the most-traded SHFE aluminum 2506 contract opened at 20,035 yuan/mt, with a high of 20,035 yuan/mt, a low of 19,900 yuan/mt, and closed at 19,910 yuan/mt, down 0.65%. Trading volume was 73,500 lots, and open interest was 184,000 lots.

SMM Commentary: Overall, the domestic macroeconomic environment remains favorable. Yesterday, Trump's stance on China regarding his signature tariff policy softened, improving market sentiment and stimulating a rebound in the futures market. On the cost side of the aluminum industry, conditions remained stable, while the demand side showed signs of structural improvement. Benefiting from the continuous influx of new orders in May, there was an increase in stocking demand for raw materials such as aluminum ingots and billets ahead of the holiday. The drawdown in domestic aluminum ingot inventory provided support for aluminum prices. As of April 30, aluminum ingot inventory in China's major consumption areas was 614,000 mt, down 29,000 mt from Monday. However, suppliers were actively selling at higher prices, causing spot premiums to pull back. SMM believes that whether substantive easing in Sino-US trade can be achieved remains to be seen. In the short term, the imbalance between bullish and bearish factors is still evident. As the transition between the off-season and peak season approaches and the PV installation rush nears its end, downstream aluminum orders are expected to decline, and the momentum for aluminum prices to rise sharply again is insufficient. It is expected that domestic aluminum prices will fluctuate mainly before the holiday.

Today, the most-traded alumina 2509 contract opened at 2,715 yuan/mt, with a high of 2,741 yuan/mt, a low of 2,709 yuan/mt, and closed at 2,729 yuan/mt, up 0.96%. Trading volume was 215,000 lots, and open interest was 262,000 lots.

SMM Commentary: This week, with the commissioning of new capacity and the resumption of production from maintenance, alumina operating capacity rebounded significantly, increasing by 3.48 million mt/year WoW. In the short term, some alumina refineries have plans for maintenance and production cuts, but at the same time, new alumina capacity will further ramp up production, and alumina operating capacity may experience slight fluctuations. Overall, the tightening of alumina spot supply caused by the concentration of maintenance and production cuts in the early stage is expected to ease, and short-term prices are expected to fluctuate.

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