On the macro front, China's macroeconomic conditions continued to improve during the period. The NDRC highlighted achievements during the 14th Five-Year Plan, stating China's economic growth is projected to exceed 35 trillion yuan, with this year's total economic output expected to reach around 140 trillion yuan. Additionally, a new round of national subsidy policies was released, maintaining the theme of consumption promotion, though the actual positive impact on industries will take time to materialize. Overseas, US President Trump posted tariff hike letters to leaders of eight countries on social media platforms. Brazil will face a 50% tariff, while Libya, Iraq, Algeria, and Sri Lanka will be subject to 30% tariffs. Brunei and Moldova will see 25% rates, and the Philippines 20%, effective August 1. Previously, Trump had sent the first batch of tariff letters to 14 countries including Japan and South Korea, with rates ranging from 25% to 40%. He also hinted at more such letters this week, indicating ongoing overseas tariff disruptions.
Fundamentally, domestic aluminum operating capacity saw a slight decline, mainly due to the Shandong-Yunnan aluminum capacity replacement project, which adopted a "stop first, start later" approach. The proportion of liquid aluminum dipped further to 74.78%, with ingot casting volume increasing. Meanwhile, aluminum ingot inventory continued its destocking trend today, largely tied to shipment schedules and lower arrivals. The market is already deep in the off-season, and high prices further dampened demand. Cost side, aluminum production costs edged down this week. As of Thursday, the average immediate fully-loaded cost stood at around 16,550 yuan/mt, up 80 yuan/mt WoW, driven by a slight rise in spot alumina prices. Smelter profits fell by approximately 120 yuan/mt WoW. Demand side, most downstream sectors remained sluggish amid the off-season. The aluminum price rally during this period exacerbated demand suppression, with aluminum processing operating rates staying weak. PV module production schedules for July are expected to remain largely stable MoM, but some border frame manufacturers, operating at losses, voluntarily reduced orders, leading to lower operating rates. Inventory-wise, SMM data showed domestic aluminum social inventory at 466,000 mt on July 10, down 12,000 mt from Monday. The inventory buildup trend reversed to destocking, providing solid support for aluminum futures and spot prices, though its sustainability requires verification.
Overall, domestically, the positive macro sentiment persists, while overseas tariff impacts warrant caution. Fundamentally, fluctuating domestic aluminum ingot inventories continue to support prices, but downstream demand weakness in the off-season is evident, with spot premiums/discounts widening further. Close attention should be paid to inventory and demand changes. Next week, the most-traded SHFE aluminum contract is expected to trade around 20,500-21,000 yuan/mt, while LME aluminum may range between $2,550-2,660/mt.
