4.14 SMM Morning Meeting Minutes
Futures:SHFE aluminum closed at 25,020 yuan/mt in the night session, up 1.36%. Prices stood above all moving averages (MA5=24,742, MA10=24,726, MA40=24,407, MA60=24,375), with the moving average system in a bullish oscillating alignment. The MACD indicator DIF (125.21) and DEA (84) formed a golden cross upward, confirming a clear bullish trend with continuously expanding red bars. The suggested core trading range for SHFE aluminum is 24,600-25,100. LME aluminum closed at $3,625/mt, up 17.50%. Prices stood above all moving averages MA5 (3,536.4), MA10 (3,502.65), MA40 (3,315.55), and MA60 (3,254.43), with the moving average system in a bullish alignment, establishing a short-term strong rebound pattern. The MACD indicator DIF (81.8) and DEA (61.87) formed a golden cross, with both lines rising in tandem. The suggested core trading range for LME aluminum is 3,500-3,650.
Macro Front:Ex-China, the US Central Command announced that the US military would impose a blockade in the Gulf of Oman and the Arabian Sea east of the Strait of Hormuz, applicable to all vessels regardless of flag. In China, in March, CPI rose 1.0% YoY, maintaining a mild increase, with the growth rate higher than the Q1 average. The Producer Price Index (PPI) rose 0.5% YoY, marking the first increase after 41 consecutive months of decline.
Fundamentals:Supply side, ex-China, directly impacted by geopolitical conflicts, Middle Eastern aluminum enterprises cut production. UAE's EGA smelter and Alba were successively struck by Iranian missiles and drones, and combined with Qatalum's initiated production cut process, the three smelters had a combined production cut of approximately 2.43 million mt. The global aluminum supply gap is expected to widen, with concerns over ex-China supply continuing to escalate. LME inventory maintained a downward trend, with the latest data showing destocking to 399,200 mt. In March, the share of available Russian aluminum inventory in LME warehouses surged from 60% in February to 92% in March. In China, the proportion of liquid aluminum rebounded in March as downstream sectors fully resumed work after the holiday, up significantly by 9.3 percentage points MoM to 73.7%, higher than early-month expectations. Entering the traditional peak consumption season in April, downstream operating rates continued to rise, and the proportion of liquid aluminum is expected to climb further. Inventory side, high aluminum prices in China suppressed downstream willingness to actively restock, with downstream enterprises generally purchasing as needed based on orders and maintaining low inventory operations, with no large-scale stockpiling behavior for now. On Monday, China's aluminum ingot social inventory saw an inventory buildup of 11,000 mt WoW, with short-term inventory remaining at a relatively ample level.
Primary Aluminum Market:In the morning session, SHFE aluminum 2604 fluctuated downward, with the trading center moving lower compared to the previous day. Affected by some futures-spot warrant-building shipments, overall selling sentiment in the market was relatively high, available cargoes in the market were fairly sufficient, and market transactions declined after the opening. Transactions were mainly concentrated around a discount of 10 yuan/mt to the SMM A00 aluminum average price. Yesterday, the east China market shipment sentiment index was 3.41, up 0.17 WoW; the purchasing sentiment index was 3.01, flat WoW. Yesterday, aluminum futures prices pulled back. Combined with persistently high inventory levels in central China, traders and downstream processing enterprises held relatively pessimistic expectations for price increases. Overall buying sentiment in the market was poor, and suppliers tended to dump shipments in bulk when the price spread between the two regions and east China was relatively small, driving market offers steadily lower. Ultimately, overall offers in the central China market fell from a premium of 20 yuan to the central China price all the way down to a discount of 10 yuan to the central China price. Yesterday, the central China market shipment sentiment index was 2.77, up 0.01 WoW; the purchasing sentiment index was 2.4, down 0.04 WoW.
Aluminum scrap:Yesterday, spot primary aluminum edged down from the previous trading day, and the aluminum scrap market overall followed suit. Yesterday, the tightening regulatory stance on the "reverse invoicing" policy remained unchanged, compliance costs in the aluminum scrap recycling chain stayed elevated, and actually available invoiced cargoes remained tight. Demand side, the divergence in shipments between aluminum tense scrap and wrought aluminum alloy scrap intensified. For aluminum tense scrap materials such as shredded aluminum tense scrap and ADC12 aluminum shavings, downstream scrap utilization enterprises including secondary alloy producers mostly maintained purchasing as needed with low inventory operations. For wrought aluminum alloy scrap materials such as baled UBC and 5-series/3-series plate off-cuts, downstream secondary aluminum plate/sheet and strip enterprises were in peak production season with relatively high stockpiling enthusiasm. However, overall, high price levels combined with wild swings in aluminum prices continued to suppress purchasing enthusiasm among scrap utilization enterprises. Price difference between A00 aluminum and aluminum scrap: the price difference between A00 aluminum and mixed aluminum extrusion scrap free of paint in Foshan was recorded at 2,948 yuan/mt, and the price difference between A00 aluminum and shredded aluminum tense scrap was 1,658 yuan/mt. The aluminum scrap market is expected to hover at highs in a consolidation pattern next week, with the mainstream range for shredded aluminum tense scrap (priced based on aluminum content) around 20,800-21,300 yuan/mt (tax-exclusive). Supply-side policy constraints are unlikely to ease in the short term, and tight compliant cargoes combined with suppliers holding back cargoes continue to underpin prices. Demand side, the divergence between aluminum tense scrap and wrought aluminum alloy scrap is set to continue. Primary aluminum remains subject to fluctuations due to factors such as Middle East geopolitical conflicts. Combined with a lackluster downstream peak-season recovery, the overall tug-of-war between sellers and buyers continues. Caution is warranted against market risks arising from aluminum price fluctuations at highs and poor cargo circulation.
Secondary aluminum alloy:Spot cargo side, the ADC12 market overall ran stable on Monday. Affected by primary aluminum prices moving sideways, cost-side drivers were limited. Enterprises generally lacked willingness to actively adjust prices, mostly adopting a wait-and-see stance. Demand side, downstream purchasing maintained a rigid-demand pace, transaction performance showed no notable improvement, and overall market trading sentiment remained subdued. Against the backdrop of weak supply and demand and converging cost fluctuations, ADC12 prices are likely to continue to move sideways in the near term.
Aluminum Market Summary:Supply side, the substantial damage previously inflicted has become irreversible. Aluminum capacity in the Middle East suffered direct military strikes, with UAE's EGA and Bahrain's Alba successively attacked and production facilities damaged. The expected global aluminum supply gap widened significantly, and concerns over ex-China supply continued to escalate. Meanwhile, China entered the traditional peak consumption season, with the proportion of liquid aluminum rebounding sharply to 73.7%, downstream operating rates rising steadily, and demand-side support remaining solid. Overall, macro-level strait transit restrictions and conflict escalation risks resonated with fundamental supply hard damage and low global inventory, jointly providing strong bottom support for aluminum prices. However, weak interest rate cut expectations, higher-than-expected aluminum ingot inventory buildup in China, and adverse expectations on consumption and inflation from recent high fluctuations in oil prices all notably weighed on the upside room for aluminum prices, with aluminum prices fluctuating at highs in the near 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 replace independent judgment with this information. Any decisions made by clients are not related to SMM.]
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