Continuous destocking of aluminum ingots provides strong support for aluminum prices, while Guinea's mining rights boost alumina prices sharply during the day [SMM Aluminum Futures Brief Comment]

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SMM, May 15:

Today, the most-traded SHFE aluminum 2507 contract opened at 20,235 yuan/mt, with a high of 20,290 yuan/mt, a low of 20,150 yuan/mt, and closed at 20,185 yuan/mt, down 0.35%. Trading volume was 112,000 lots, and open interest was 201,000 lots.

SMM Commentary: On the macro front, China's domestic supportive policies remain unchanged, and positive developments in the Sino-US tariff negotiations may drive up futures quotes. On the fundamental side, the drawdown in domestic aluminum ingot inventory provides support for aluminum prices. As of May 15, China's social inventory of aluminum ingots stood at 581,000 mt, a decrease of 19,000 mt from Monday. LME inventory decreased by 2,025 mt from yesterday to 397,275 mt. The rush to meet deadlines during the upcoming Sino-US tariff window period is expected to continue boosting consumption and supporting aluminum prices. It is anticipated that domestic aluminum prices will fluctuate upward in the short term.

Today, the most-traded alumina 2509 contract opened at 2,974 yuan/mt, with a high of 3,028 yuan/mt, a low of 2,966 yuan/mt, and closed at 2,988 yuan/mt, up 0.30%. Trading volume was 749,000 lots, and open interest was 325,000 lots.

SMM Commentary: This week, maintenance and production cuts have been concentrated among alumina producers in south China, with operating capacity decreasing by 2.9 million mt/year on a MoM basis, further tightening spot supply. Additionally, alumina producers have been facing losses in recent months, leading to a strong intention to stand firm on quotes. Coupled with maintenance and production cuts, spot supply has tightened, resulting in a significant rebound in spot prices. On the futures front, alumina futures have rebounded strongly, driven by the shift in alumina fundamentals to a deficit, as well as news on production dynamics among domestic alumina producers, the revocation of mining rights for several miners in Guinea, and favourable macro news. In the short term, alumina spot supply is expected to remain tight due to the concentration of maintenance and production cuts, and prices are expected to hold up well. However, as alumina maintenance concludes and new capacity is released, operating capacity is expected to rebound. It is necessary to continue monitoring alumina producers' maintenance, production cuts, and production resumptions.
 

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