Expectations for US Fed interest rate cut are fluctuating, SHFE aluminum fluctuates upward today [SMM Aluminum Futures Brief Comment]

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

SMM News on June 25:

Today, the most-traded SHFE aluminum 2508 contract opened at 20,300 yuan/mt, with a high of 20,360 yuan/mt, a low of 20,240 yuan/mt, and closed at 20,355 yuan/mt. Trading volume was 117,000 lots, and open interest was 254,000 lots.

SMM Commentary: On the macro front, the ceasefire between Israel and Iran has eased geopolitical risks, reducing the demand for capital flight, which is short-term bearish for aluminum prices. US Fed Chair Powell's neutral stance, combined with potential expectations for US Fed interest rate cuts and pressure from Trump, may boost the economy, providing support for aluminum prices. The PBOC and six other departments jointly issued a document to stimulate consumption, which is bullish for end-user aluminum demand. On the fundamental side, domestic aluminum smelters' operating capacity remains stable, with the proportion of liquid aluminum staying high, and the market supply of casting ingots remains tight. On the demand side, overall, most downstream sectors are in the traditional off-season. Downstream production cuts in central China have been significant, with weak spot transactions and sustained large discounts in the market. The weakening off-season demand in the PV and home appliance sectors cannot be ignored, with a noticeable drop in the operating rates of related sectors. The wire and cable sector has seen a decline in operating rates due to the end of the previous delivery period and high aluminum prices. In terms of inventory, the destocking pace has slowed, and low inventory still supports the futures market. Inventory buildup occurred on Monday this week, and it needs to be observed whether the destocking turning point has officially formed. However, spot premiums/discounts have gradually pulled back. Overall, in the short term, aluminum prices are suppressed by inventory accumulation and geopolitical easing. However, in the medium term, macro policies (such as domestic consumption stimulus and expectations for US Fed interest rate cuts) may boost demand. It is expected that aluminum prices will fluctuate downward in the short term, and subsequent focus should be on changes in inventory and demand.

Today, the most-traded alumina 2509 contract opened at 2,894 yuan/mt, with a high of 2,920 yuan/mt, a low of 2,885 yuan/mt, and closed at 2,919 yuan/mt. Trading volume was 233,000 lots, and open interest was 285,000 lots.

SMM Commentary: Last week, some alumina refineries completed maintenance and resumed production. Meanwhile, considering ore costs, there were new reports of production cuts. The operating capacity of alumina refineries increased and decreased in parallel. Overall, the operating capacity of alumina refineries decreased by 440,000 mt/year MoM to 88.57 million mt/year last week. Spot alumina supply remained loose, and the total inventory of alumina at aluminum smelters increased by 8,600 mt to 2.655 million mt last week. In the short term, the alumina fundamental side is expected to maintain a relatively loose pattern, and spot alumina prices are expected to drop back slightly. Affected by the easing of overseas geopolitical conflicts, the futures market fluctuated downward yesterday. However, influenced by uncertainties in overseas economic policies, the night session fluctuated upward at one point. Subsequent attention should be paid to the capacity changes of domestic alumina enterprises and their profitability.

Today, the most-traded cast aluminum alloy ag2511 futures contract opened at 19,625 yuan/mt, with a high of 19,700 yuan/mt and a low of 19,530 yuan/mt, and finally closed at 19,700 yuan/mt. The trading volume was 3,000 lots, and the open interest was 8,000 lots.

SMM Commentary: On Tuesday, the SMM ADC12 price remained stable at 19,900-20,100 yuan/mt. Pressured by the ongoing traditional off-season, demand remained weak, and market transactions were sluggish. The lack of growth in terminal orders constrained the upward movement of ADC12 prices, while the influx of low-priced goods exacerbated market competition. However, the cost side remained relatively firm, providing some support to prices. It is anticipated that under the deepening impact of the off-season, ADC12 prices will remain in the doldrums in the short term. Close attention should be paid to changes in raw material circulation and signs of marginal improvement in demand.

[The information provided is for reference only. This article does not constitute direct advice for investment research decisions. Clients should make cautious decisions and not rely on this as a substitute for independent judgment. Any decisions made by clients are unrelated to SMM.]