Signals of policy easing boost market confidence, US dollar weakens, overnight aluminum prices rise slightly [SMM Aluminum Morning Meeting Summary]

SMM Aluminum Morning Meeting Summary on May 21

Futures Market: Overnight, the most-traded SHFE aluminum 2507 contract opened at 20,135 yuan/mt, with a high of 20,190 yuan/mt, a low of 20,120 yuan/mt, and closed at 20,185 yuan/mt, up 110 yuan/mt or 0.55% from the previous close. On Tuesday, LME aluminum opened at $2,481.5/mt, with a high of $2,494.5/mt, a low of $2,480/mt, and closed at $2,490/mt, up $9/mt or 0.36%.

Macro: (1) The People's Bank of China (PBOC) lowered the one-year and five-year Loan Prime Rates (LPR) from 3.1% and 3.6% to 3% and 3.5%, respectively. (Bullish ★) (2) Major state-owned banks, including the Bank of China, Industrial and Commercial Bank of China, and China Construction Bank, lowered RMB deposit rates on May 20. The three-year and five-year deposit rates were both lowered by 25 basis points to 1.25% and 1.3%, respectively. (Bullish ★) (3) PBOC Governor Pan Gongsheng chaired and spoke at a symposium on financial support for the real economy, emphasizing the implementation of a moderately loose monetary policy to meet the effective financing needs of the real economy and maintain reasonable growth in the total amount of finance. (Bullish ★)

Fundamentals: (1) According to data from the General Administration of Customs, domestic primary aluminum imports in April 2025 were approximately 250,500 mt, up 12.8% MoM and 14.6% YoY. From January to April, cumulative primary aluminum imports totaled approximately 634,300 mt, down 11.2% YoY. In April 2025, domestic primary aluminum exports were approximately 13,700 mt, up 54.6% MoM and 643.0% YoY. From January to April, cumulative primary aluminum exports totaled approximately 34,500 mt, up approximately 139.6% YoY. In April 2025, the net import of domestic primary aluminum was 236,800 mt, up 11.1% MoM and 14.8% YoY. From January to April, the cumulative net import of domestic primary aluminum was approximately 799,800 mt, down 13.6% YoY. (Neutral) (2) According to SMM statistics, on May 20, aluminum ingot inventory in Guangdong was 238,000 mt; in Wuxi, it was 162,000 mt; and in Gongyi, it was 57,500 mt. The total inventory in these three locations was 457,500 mt, down 4,500 mt from the previous trading day. (Bullish ★)

Primary Aluminum Market: On Tuesday, the SHFE aluminum futures market fluctuated rangebound in the morning session. In the spot market, with aluminum prices returning above 20,000 yuan/mt, transactions in the east China and Gongyi markets were generally sluggish. However, the reduction in arrivals in east China provided support for spot premiums. Nevertheless, downstream purchasing as needed amid high aluminum prices resulted in slightly insufficient upward momentum. Specifically, in east China, trading was generally sluggish today, with overall purchasing as needed. Market transactions were conducted at a premium of +10 yuan/mt against the SMM average price. Today, SMM A00 aluminum was reported at 20,210 yuan/mt, down 20 yuan/mt from the previous trading day, with a premium of 70 yuan/mt against the June contract, unchanged from the previous trading day. In the central China market, there were relatively more shipments yesterday, with inbound shipments expected to be moderate and transactions being average. Transactions in the central China market were mainly concentrated on shipments at a small premium to the SMM central China average price. SMM A00 aluminum closed at RMB 20,140/mt against the SHFE aluminum 2506 contract, down by RMB 10/mt from the previous trading day. The price spread between Henan and Shanghai was RMB 70/mt, narrowing by RMB 10/mt from the previous trading day, and it was on par with the 2506 contract. In the short term, with high aluminum prices and an increase in inbound inventory shipments, market transactions have weakened, and there is insufficient upward momentum for premiums. It is expected that premiums and discounts will fluctuate in the future.

Secondary aluminum raw materials: On Tuesday, spot primary aluminum prices fell by RMB 20/mt from the previous trading day. SMM A00 spot aluminum closed at RMB 20,210/mt. Regional price performances in the aluminum scrap market varied significantly. As the market transitions from the off-season to the peak season in late May, downstream processing enterprises are experiencing weak order releases, with procurement mainly driven by immediate needs. Baled UBC aluminum scrap was concentratedly quoted at RMB 15,200-15,800/mt (tax not included), while shredded aluminum tense scrap was concentratedly quoted at RMB 15,800-17,300/mt (tax not included). In the short term, the aluminum scrap market is expected to continue fluctuating at highs. The tight supply situation for aluminum tense scrap products is unlikely to change, providing strong price support. Wrought aluminum alloy scrap products will still be dominated by fluctuations in primary aluminum prices, with narrow adjustments expected.

Secondary aluminum alloy: Aluminum prices slightly declined yesterday, and the secondary aluminum market maintained stable operations. Domestic SMM ADC12 prices remained in the range of RMB 20,300-20,500/mt. In the import market, overseas ADC12 quotes were mostly in the range of $2,400-2,410/mt, with actual transaction prices in some regions falling below $2,400/mt. The immediate loss for imported ADC12 remained around RMB 300/mt. Affected by both cost support and the off-season in demand, ADC12 prices are in a dilemma, with narrow fluctuations expected to dominate in the short term.

Summary: On the macro front, dragged down by the US Fed's cautious attitude towards the economy, the US dollar fell again on Tuesday. Domestically, signals of monetary policy easing were released, improving market expectations and stimulating economic growth and investment and consumption demand. On the fundamentals side, there have been relatively small changes in the short-term supply side. On the cost side, the specific impact of the Guinea incident on local bauxite supply remains to be assessed, and it may provide emotional support to the alumina cost side in the short term. The demand side is facing dual pressures from domestic seasonal weakness and trade uncertainties, making significant growth difficult in the short term. Overall, positive macro factors and low inventory provide support for aluminum prices, but the off-season pressure on the demand side limits upside room. In the short term, attention should be paid to the performance of domestic and overseas demand, as well as the supply situation of bauxite.

[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 unrelated to SMM.]

》Click to view the SMM aluminum industry chain database

》Subscribe to view historical spot prices of SMM metals