Macro Tailwinds Support Aluminum Price Floor, Inventory Inflection Point Yet to Arrive Constrains Upside Room [SMM Aluminum Morning Brief]

SMM September 5:

Futures side, the most-traded SHFE aluminum 2510 contract opened at 20,620 yuan/mt in the previous trading day's night session, with the highest price at 20,715 yuan/mt, the lowest at 20,605 yuan/mt, and closed at 20,625 yuan/mt, up 20 yuan/mt or 0.10% from the previous close. Trading volume was 46,000 lots, and open interest was 202,000 lots. In the previous trading day, LME opened at $2,612.5/mt, with the highest price at $2,614/mt, the lowest at $2,588/mt, and closed at $2,590/mt.

Currently, the aluminum market's macro front shows a multi-dimensional bullish resonance pattern, providing strong support for aluminum prices. From overseas policies and economic data, the US ADP employment data for August released on Thursday fell short of expectations, reflecting growth resistance in the US labour market and directly strengthening market expectations for subsequent US Fed interest rate cuts. Additionally, Trump signed an executive order to implement the US-Japan trade agreement, clarifying tariff adjustments to avoid double taxation and continuing the stability of aluminum-related trade policies, supporting the competitive advantage of US domestic aluminum enterprises. From the domestic policy perspective, the National Standardization Administration will formulate and revise over 4,000 national standards in areas such as AI and the Internet of Things, accelerating the development of emerging industries and driving aluminum demand growth. Fundamentally, supply-side replacement capacity continues to increase, with weekly production rising slightly to 847,300 mt. Cost side, the domestic aluminum full cost was 16,618 yuan/mt, down 36 yuan/mt WoW, with the industry average profit narrowing to around 3,991 yuan/mt, a decrease of 84 yuan/mt WoW. This week, the operating rate of leading aluminum extrusion enterprises recorded 53%, up 1 percentage point MoM. Downstream demand marginally improved, with the proportion of liquid aluminum increasing and casting ingot volume decreasing. However, the aluminum ingot inventory turning point has not yet arrived, and actual demand has not significantly improved. Downstream enterprises have limited upward cost space. Aluminum prices are expected to remain under pressure at 20,900-21,000 yuan/mt, but interest rate cut expectations coupled with peak season expectations still exist, providing some support below. In the short term, prices are expected to move sideways.

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