SMM Sep. 18 Aluminum Morning Brief:
Futures side, the most-traded SHFE aluminum 2511 contract opened at 20,890 yuan/mt in the previous trading day's night session, with the highest price at 20,890 yuan/mt, the lowest at 20,715 yuan/mt, and closed at 20,750 yuan/mt, down 190 yuan/mt or 0.91% from the previous close. Trading volume was 125,000 lots, and open interest was 259,000 lots. In the previous trading day, LME aluminum opened at $2,712.5/mt, reached a high of $2,716/mt, a low of $2,679/mt, and closed at $2,689.5/mt.
On the macro front, the US Fed cut interest rates by 25 basis points as expected, in line with market consensus. However, some investors had hoped for signals of potentially larger future rate cuts, an expectation dashed by Chair Powell's relatively hawkish stance. While defining this cut as a "risk management cut," Powell explicitly stated that "more aggressive cuts did not garner broad support" and reiterated that tariff impacts on inflation are only temporary. The dot plot showed the committee's median projection for the full year is only 75 basis points of cumulative cuts, lower than some market participants' easing expectations. Immediately after the announcement, the US dollar index pulled back, but as Powell ruled out more aggressive easing, it rebounded sharply to close up 0.37%. The stronger dollar and diminished easing expectations put aluminum prices under pressure. Fundamentals side, according to SMM statistics, aluminum ingot inventory in major domestic consumption areas recorded 638,000 mt today, up 1,000 mt from this Monday and up 13,000 mt WoW from last Thursday. Although outflows from warehouses showed some improvement entering September, premiums and discounts remained under pressure. It is reported that while in-transit cargoes are expected to decrease, the decline is still not significant. Inventory data this week showed a buildup, and whether the destocking inflection point will smoothly emerge in mid-September requires further observation. Overall, from a macro perspective, the US Fed cut rates by 25 bps as scheduled, but Powell's remarks increased subsequent market uncertainty, boosting risk-off sentiment. The aluminum market's fundamentals show no significant improvement for now. SMM expects aluminum prices to remain in the doldrums in the near term, with some upside pressure.
[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.]
