Domestic policy intensifies to boost demand, SHFE aluminum fluctuates at highs [SMM aluminum futures brief comment]

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

SMM June 28 Report:

Last night, the most-traded SHFE aluminum 2508 contract opened at 20,575 yuan/mt, with a high of 20,620 yuan/mt, a low of 20,555 yuan/mt, and closed at 20,580 yuan/mt. Trading volume was 54,000 lots, and open interest was 274,000 lots.

SMM Comment: On the macro front, domestic policy support has boosted demand, and the issuance of trade-in funds is conducive to driving aluminum consumption resilience. Overseas, if the EU reduces tariffs on US goods to reach a trade agreement, it may alleviate trade conflicts, reduce the risk of supply chain disruptions, and indirectly support aluminum prices. On the demand side, the downstream sector has entered the traditional off-season, with operating rates for aluminum wire and cable, extrusions, etc., declining significantly. Aluminum processing enterprises in central China have entered a semi-shutdown state due to losses, with low purchase willingness, and spot prices remaining low. Despite the strong resilience of demand in the new energy sector (such as PV and automobiles), the demand for PV installation rush has weakened after June, and home appliance production schedules have declined significantly MoM, resulting in insufficient overall demand support. On the inventory side, SMM domestic aluminum ingot inventory fell slightly by 1,000 mt to 463,000 mt on June 26, with initial signs of inventory buildup pressure. With the deepening of the consumption off-season and the increase in casting ingot production, inventory has begun to face certain pressure. Overall, aluminum prices will face tests from inventory turning point confirmation and off-season demand pressure in the coming week, maintaining a high-level fluctuation in the short term.

Today, the most-traded alumina 2509 contract opened at 2,980 yuan/mt, with a high of 3,004 yuan/mt, a low of 2,972 yuan/mt, and closed at 2,989 yuan/mt. Trading volume was 111,000 lots, and open interest was 296,000 lots.

SMM Comment: In the short term, alumina operating capacity is expected to remain high, and the supply in the spot market is expected to remain relatively loose, exerting top pressure on alumina spot prices. On the cost side, long-term contract prices for bauxite in Q3 are expected to remain stable or decline, with overall alumina production costs expected to remain stable or slightly decrease. With the continuous decline in alumina prices, the cost support effect is expected to gradually manifest. In the short term, alumina spot prices are expected to remain in the doldrums.

Today, the most-traded cast aluminum alloy 2511 contract opened at 19,835 yuan/mt, with a high of 19,835 yuan/mt, a low of 19,780 yuan/mt, and closed at 19,785 yuan/mt. Trading volume was 800 lots, and open interest was 8,000 lots.

SMM Comment: This week, cost support and weak off-season demand have continued to battle, with the ADC12 price temporarily stabilizing after a 50-100 yuan/mt decrease this week. However, the impact of low-priced goods has intensified market competition. In the short term, cost support remains, but it faces pressure from the deepening off-season and inventory buildup. The ADC12 price is expected to remain fluctuating in the short term, with a need to focus on marginal changes in raw material circulation and signs of demand-side improvement.

[The information provided is for reference only. This article does not constitute direct advice for investment research decisions. Clients should make prudent decisions and should not replace their independent judgment with this information. Any decisions made by clients are not related to SMM.]