Macroeconomic Factors Mixed, Peak Season Effects Begin to Show, Aluminum Prices Hold Up Well [SMM Aluminum Morning Briefing]

SMM September 15 News:

Futures-wise, the most-traded SHFE aluminum 2510 contract opened at 21,140 yuan/mt during the night session, with the highest price at 21,140 yuan/mt, the lowest price at 21,055 yuan/mt, and closed at 21,075 yuan/mt, down 45 yuan/mt from the previous close, a decline of 0.21%. The trading volume was 52,000 lots, and the open interest was 201,000 lots. LME opened at $2,676.5/mt, with the highest price at $2,703.5/mt, the lowest price at $2,673/mt, and closed at $2,701/mt.

On the macro front, bullish and bearish factors for aluminum prices are intertwined. On September 14, local time, China and the US held talks on economic and trade issues in Madrid, Spain. Previously, a spokesperson for the Ministry of Commerce stated that both sides would discuss unilateral tariff measures and other economic and trade issues. If progress can be made on tariffs, it will promote trade and provide bullish support for aluminum prices. Meanwhile, the MIIT and seven other departments issued the "Automobile Industry Stable Growth Work Plan (2025-2026)", proposing to achieve an annual auto sales target of around 32.3 million units in 2025, up about 3% YoY, and to advance the pilot program for intelligent and connected vehicle access and road passage, conditionally approving the production entry of L3-level car models. The development of the automotive industry, especially new energy vehicles, significantly boosts aluminum demand, as NEVs use much more aluminum per unit than traditional internal combustion engine vehicles. This plan will drive an increase in aluminum demand, providing bullish factors for aluminum prices. However, the US consumer confidence index fell from 58.2 last month to 55.4, below expectations, and the consumer expectations index also plummeted from 55.9 to 51.8. A decline in consumer confidence may lead to reduced consumption, which could have a bearish impact on aluminum prices.

Fundamentally, September is traditionally a peak season, and the proportion of liquid aluminum is expected to rebound slightly. Although weekly costs have declined somewhat due to weaker alumina support, demand has shown signs of recovery, with many extrusion enterprises reporting improved order conditions. The operating rate of leading domestic aluminum extrusion enterprises increased by 1 percentage point WoW to 54%. In terms of inventory, according to SMM statistics, the inventory of aluminum ingot in major domestic consumption areas was 637,000 mt on Monday, up 12,000 mt from Thursday of the previous week, and up 6,000 mt WoW from the previous Monday. Although outflows from warehouses have improved somewhat in September, premiums and discounts remain under pressure. It is reported that although in-transit cargoes are expected to decrease, the reduction is not yet significant, and whether the destocking turning point will appear smoothly in mid-September still needs further observation. Overall, domestic and overseas macro factors are mixed, and the fundamentals show signs of recovery. SMM expects aluminum prices to hold up well in the short term.

[The information provided is for reference only. This article does not constitute direct advice for investment research decisions. Clients should make prudent decisions and not rely solely on this information, as any decisions made by clients are unrelated to SMM.]