Low inventory of aluminum ingots provides support for aluminum prices, while price increases may be hindered amid the recovery of alumina supply [SMM Aluminum Futures Brief Comment]

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SMM, May 26:

Today, the most-traded SHFE aluminum 2507 contract opened at 20,180 yuan/mt, with a high of 20,220 yuan/mt, a low of 20,135 yuan/mt, and closed at 20,155 yuan/mt, down 0.10%. Trading volume was 73,000 lots, and open interest was 206,000 lots.

SMM Commentary: On the macro side, Minneapolis Fed President Neel Kashkari said on Monday that significant shifts in US trade and immigration policies are creating uncertainty for Fed officials regarding interest rate adjustments before September, as the Trump administration is currently engaged in tariff negotiations with multiple governments. On the fundamentals side, short-term supply-side changes have been relatively small. The drawdown in domestic aluminum ingot inventory is providing support for aluminum prices. According to SMM statistics, as of May 26, the inventory of aluminum ingots in major domestic consumption areas was 534,000 mt, down 23,000 mt from last Thursday and 51,000 mt from last Monday. On the demand side, there is dual pressure from domestic seasonal weakness and trade uncertainties. The operating rate of aluminum processing enterprises continues to be under pressure in the short term. Going forward, attention should be paid to whether downstream export orders can truly improve and offset the expected weakening of domestic demand. Overall, the current low inventory is providing support for aluminum prices. However, in the near term, there have been no unexpected macroeconomic positives to further drive aluminum prices higher, and the off-season pressure on the demand side limits upside room. In the short term, aluminum prices are expected to remain rangebound and fluctuate. Attention should be paid to domestic and overseas demand performance, the inventory trend at month-end, and disruptions in bauxite supply.

Today, the most-traded alumina 2509 contract opened at 3,102 yuan/mt, with a high of 3,126 yuan/mt, a low of 3,036 yuan/mt, and closed at 3,060 yuan/mt, down 1.39%. Trading volume was 724,000 lots, and open interest was 391,000 lots.

SMM Commentary: Last week, some enterprises in north China underwent maintenance, while some alumina refineries in south China completed maintenance, leading to a rebound in operating capacity. Overall, the national alumina operating capacity increased by 1.09 million mt WoW. In the near future, some new alumina enterprises are planning maintenance, while some enterprises are expected to complete maintenance and resume operating capacity. Overall, operating capacity is expected to continue to rebound slightly. Affected by disruptions in bauxite supply, bauxite ore prices have risen, and the cost support for alumina is expected to strengthen. Coupled with the fact that the short-term fundamentals have not shifted to a surplus pattern, there is still upward momentum in prices. However, with supply recovery, alumina price increases may encounter resistance. In the short term, alumina spot prices are expected to hold up well.

[The information provided is for reference only. This article does not constitute direct investment research and decision-making advice. 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.]