Aluminum ingot inventory shows initial signs of buildup, aluminum prices may maintain fluctuating trend in the short term [SMM Aluminum Futures Brief Comment]

View SMM Aluminum Product Quotes, Data, and Market Analysis

SMM May 27:

The most-traded SHFE aluminum 2507 contract opened at 20,175 yuan/mt today, hitting a high of 20,180 yuan/mt and a low of 19,965 yuan/mt, before closing at 20,040 yuan/mt, down 0.64%. Trading volume stood at 141,000 lots, while open interest reached 202,000 lots.

SMM Comments: Macro side, Minneapolis Fed President Kashkari stated Monday that major shifts in US trade and immigration policies are creating uncertainty for Fed officials to adjust rates before September, as the Trump administration engages in tariff negotiations with multiple governments. Fundamentals side, aluminum ingot inventories showed initial signs of buildup. SMM data showed Guangdong's aluminum ingot stocks at 223,000 mt, Wuxi at 142,000 mt, and Gongyi at 49,000 mt on May 27, totaling 414,000 mt across the three regions, up 1,000 mt from the previous day. Cost side, the specific impact of the Guinea incident on local bauxite supply remains to be assessed, but it may provide short-term sentiment-driven cost support for alumina. Demand side faces dual pressures from domestic seasonal weakness and trade uncertainties, with short-term operating rates at aluminum processing enterprises continuing to decline under pressure. Subsequent focus will be on whether downstream export orders can genuinely improve and offset weakening domestic demand expectations. Overall, current low inventories provide support for aluminum prices, but recent macro developments lack unexpected positives to further drive prices, while off-season demand pressures limit upside room. Short-term aluminum prices are likely to fluctuate rangebound, with attention on domestic and overseas demand performance, month-end inventory trends, and bauxite supply disruptions.

The most-traded alumina 2509 contract opened at 3,001 yuan/mt today, reaching a high of 3,052 yuan/mt and a low of 2,972 yuan/mt, before settling at 3,018 yuan/mt, up 0.57%. Trading volume was 574,000 lots, with open interest at 381,000 lots.

SMM Comments: Last week, some refineries in north China underwent maintenance, while others in south China completed repairs, leading to a rebound in operating capacity. Nationwide alumina operating capacity rose 1.09 million mt WoW. In the near term, new refinery maintenance is planned while some plants are expected to resume operations post-repair, likely resulting in a slight further increase in overall operating capacity. Amid bauxite supply disruption news, bauxite prices rose, which is expected to strengthen alumina cost support. Coupled with a short-term fundamentals landscape that has not shifted to surplus, upward momentum for prices remains. However, with supply recovery, alumina price gains may face resistance. Short-term spot alumina prices are likely to hold up well.

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