Pressure from off-season demand limits upside room for aluminum prices, with spot alumina prices holding up well in the short term [SMM Spot Aluminum Brief Comment]

》Check SMM's aluminum product quotes, data, and market analysis

SMM, May 28:

Today, the most-traded SHFE aluminum 2507 contract opened at 20,170 yuan/mt, with a high of 20,190 yuan/mt, a low of 20,090 yuan/mt, and closed at 20,095 yuan/mt, down 0.42%. Trading volume was 68,000 lots, and open interest was 204,000 lots.

SMM Commentary: On the macro front, US consumer confidence in May was significantly better than economists' expectations, and the US dollar index rose further. On the fundamentals side, there were relatively small changes in the short-term supply side. Destocking provided strong support for aluminum prices. According to SMM statistics, aluminum ingot inventory in Guangdong was 218,000 mt; in Wuxi, it was 136,000 mt; and in Gongyi, it was 51,500 mt. The total inventory across the three locations was 405,500 mt, a decrease of 8,500 mt from the previous trading day. On the cost side, the specific impact of the Guinea incident on local bauxite supply remains to be assessed. In the short term, it may provide sentiment-based cost support for alumina. On the demand side, there is dual pressure from domestic seasonal weakness and trade uncertainties. In the short term, the operating rate of aluminum processing enterprises continues to be under pressure. Subsequent 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 provides support for aluminum prices. However, in the near term, there are 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. Attention should be paid to domestic and overseas demand performance, the inventory trend at the end of May, and the supply disruptions of bauxite.

Today, the most-traded alumina 2509 contract opened at 3,013 yuan/mt, with a high of 3,033 yuan/mt, a low of 2,953 yuan/mt, and closed at 2,991 yuan/mt, down 0.73%. Trading volume was 546,000 lots, and open interest was 371,000 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 operating capacity of alumina increased by 1.09 million mt WoW last week. 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 the supply disruptions of bauxite, bauxite 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 the repair of supply, 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 use this as a substitute for independent judgment. Any decisions made by clients are unrelated to SMM.]