Macro Factors Support Rise in Aluminum Prices; Continuous Monitoring of Terminal Export Changes [SMM Aluminum Morning Meeting Summary]

5.14 SMM Aluminum Morning Meeting Summary
Futures Market: On the previous trading day's night session, the most-traded SHFE aluminum 2506 contract opened at 19,995 yuan/mt, with a high of 20,185 yuan/mt and a low of 19,950 yuan/mt, closing at 20,155 yuan/mt. This represented a gain of 150 yuan/mt or 0.75% from the previous close. LME aluminum opened at $2,471.5/mt, with a high of $2,494.0/mt and a low of $2,467.5/mt, closing at $2,493.5/mt, up $23.5/mt or 0.95%.
Macro: (1) The US unadjusted CPI for April rose 2.3% YoY, the third consecutive month below expectations and the lowest since February 2021. Core CPI remained unchanged at 2.8% YoY, in line with market expectations. US President Trump leveraged the below-expectation inflation report to again pressure Fed Chairman Powell to cut interest rates as soon as possible. Traders continued to bet on the Fed's first rate cut in September and a second in October. (Bullish ★) (2) The Customs Tariff Commission of the State Council announced that, starting from 12:01 a.m. on May 14, it would adjust the tariff hike measures on imported goods originating from the US. (Bullish ★)
Fundamentals: (1) According to SMM statistics, as of May 13, aluminum ingot inventory in Guangdong was 238,000 mt; in Wuxi, it was 177,000 mt; and in Gongyi, it was 64,400 mt. The total inventory across the three locations was 479,400 mt, a decrease of 3,700 mt from the previous trading day. SMM expects that domestic inventory across the three locations will continue to destock in mid-May, but there may already be signs of a slowdown in the destocking speed. (Bullish ★) (2) According to SMM statistics, as of May 13, the total social inventory of secondary aluminum alloy ingots in Foshan, Ningbo, and Wuxi was 8,030 mt, an increase of 55 mt from the previous trading day. (Neutral)
Primary Aluminum Market: Yesterday morning, the center of SHFE aluminum continued to move higher, breaking through the 20,000 yuan/mt threshold. In east China, due to recent inventory destocking and low expectations for subsequent arrivals, suppliers generally had a strong sentiment to stand firm on quotes. The market mainly saw spot aluminum traded at a premium of 10 yuan/mt against SMM transactions. Yesterday, SMM A00 aluminum was reported at 20,010 yuan/mt, up 200 yuan/mt from the previous trading day, and traded at a discount of 20 yuan/mt against the 05 contract. In the central China market, inventory continued to destock, and suppliers had a strong sentiment to stand firm on quotes. However, after the aluminum price center moved higher, market demand decreased. Spot premiums in central China were reported high but closed lower during the day, suffering a price collapse, trading at a discount of 10 yuan/mt against SMM transactions in central China. SMM A00 aluminum in central China was recorded at 20,000 yuan/mt against the SHFE aluminum 2505 contract, up 190 yuan/mt from the previous trading day. The price spread between Henan and Shanghai was -10 yuan/mt, and it traded at a discount of 30 yuan/mt against the 2505 contract.
Secondary Aluminum Raw Materials: Yesterday, spot primary aluminum rose 200 yuan/mt from the previous trading day, with SMM A00 spot aluminum closing at 20,010 yuan/mt. The overall price in the aluminum scrap market increased. Entering the mid-to-late May period, with the transition between the off-season and peak season, downstream processing enterprises had weak order releases, and procurement was mainly based on immediate needs. Yesterday, baled UBC aluminum scrap was concentratedly quoted at 14,950-15,550 yuan/mt (tax not included), and shredded aluminum tense scrap was concentratedly quoted at 15,750-17,250 yuan/mt (tax not included). By region, price adjustments in Hubei, Anhui, Foshan, and Jiangxi were 100-150 yuan/mt, while in other regions such as Shanghai, Jiangsu, and Henan, price adjustments were 150-200 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 narrowed by 34 yuan/mt from last Friday to 1,836 yuan/mt. The price difference between A00 aluminum and aluminum extrusion scrap in Foshan increased by 153 yuan/mt from last Friday to 1,539 yuan/mt. In the short term, the aluminum scrap market may continue to fluctuate at highs. The tight supply situation for aluminum tense scrap products is unlikely to change, providing strong price support. Wrought aluminum alloy products will still be dominated by fluctuations in primary aluminum prices, with narrow adjustments expected.
Secondary aluminum alloy: Yesterday, SMM A00 aluminum prices rose by another 200 yuan/mt from the previous trading day to 20,010 yuan/mt, while domestic SMM ADC12 prices held steady within the range of 20,200-20,400 yuan/mt. In the import market, overseas ADC12 quotes were at $2,400-2,420/mt. Driven by the appreciation of the RMB against the US dollar and the increase in import spot prices, the immediate loss of imported ADC12 continued to narrow to around 300 yuan/mt. Yesterday, aluminum prices extended their gains, with most secondary aluminum smelters holding their quotes steady or raising them by 100 yuan/mt. Currently, downstream demand is in the transition period of the off-season, and transactions continue to be sluggish. However, due to the tight supply of raw materials and the reluctance of traders to sell, cost support continues to strengthen. It is expected that ADC12 prices will maintain a fluctuating rangebound trend in the short term.
Summary: On the macro side, domestic favorable policies remain unchanged, and positive progress has been made in the Sino-US tariff negotiations, which may drive up futures prices. On the fundamental side, the continuous inventory drawdown of domestic aluminum ingots provides support for aluminum prices. Subsequently, the rush to meet deadlines during the Sino-US tariff window period may continue to boost consumption, providing support for aluminum prices to rise. It is expected that domestic aluminum prices will fluctuate upward in the short term.
[The information provided is for reference only. This article does not constitute direct advice for investment research and decision-making. Clients should make cautious decisions and should not rely on this as a substitute for independent judgment. Any decisions made by clients are not related to SMM.]

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