Spot aluminum ingot in major consuming regions may soon face a situation of weak supply and demand, with short-term aluminum prices mainly fluctuating at highs [SMM Aluminum Futures Brief Comment]

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SMM News on June 19:

Today, the most-traded SHFE aluminum 2508 contract opened at 20,520 yuan/mt, with a high of 20,560 yuan/mt, a low of 20,400 yuan/mt, and closed at 20,465 yuan/mt, down 0.22%. Trading volume was 76,000 lots, and open interest was 223,000 lots.

SMM Commentary: On the macro front, the US Fed kept interest rates unchanged as expected. Fed Chairman Powell stated at a press conference that price increases triggered by tariffs would become more pronounced in the coming months, and the Fed needs to be confident that inflation is declining before it can begin to cut interest rates. On the fundamentals side, domestic operating capacity of electrolytic aluminum remained stable. The reduction in casting ingot volume contributed to the continued destocking of domestic aluminum ingot inventory. On the cost side, there are expectations of weakening prices for alumina and auxiliary materials, weakening the cost support for electrolytic aluminum. On the demand side, it faces dual pressures from domestic seasonal weakness and trade uncertainties, and the operating rate of aluminum processing enterprises will be under pressure in the short term. Overall, the current low inventory and expectations of a higher proportion of liquid aluminum provide strong support for aluminum prices. However, the off-season pressure on the demand side limits the upside room. Spot aluminum ingots in major consumption areas may soon face a situation of weak supply and demand, with aluminum prices expected to fluctuate at highs in the short term.

Today, the most-traded alumina 2509 contract opened at 2,911 yuan/mt, with a high of 2,918 yuan/mt, a low of 2,884 yuan/mt, and closed at 2,901 yuan/mt, down 0.31%. Trading volume was 135,000 lots, and open interest was 3.01 million lots.

SMM Commentary: On the cost side, bauxite prices are mainly fluctuating and adjusting, with relatively stable production costs for alumina. The theoretical profit of the alumina industry has narrowed somewhat with the decline in spot prices, but it still maintains a theoretical profit of over 300 yuan/mt. On the supply and demand side, operating capacity of alumina remains at a high level, and the supply of alumina in the spot market is looser compared to the previous period. Overall, alumina spot prices are expected to continue to be under pressure in the short term.

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