4.27 SMM Morning Meeting Minutes
Futures:SHFE aluminum 2606 contract closed at 24,850 yuan/mt in the night session on April 24, down 0.06% from the previous close. Prices pulled back below the MA5, MA10, MA20, and MA40 moving averages, currently supported only by the MA60 (24,788.39). Short-term moving averages continued to decline, forming clear resistance, while the medium-term support level (MA40) was breached. Technical side, the MACD indicator's DIFF crossed below the DEA to form a death cross, with the histogram extending green bars. Bearish position-building signals emerged, and bullish momentum continued to weaken. On April 24, LME aluminum closed at $3,602/mt, up slightly by 0.31%, moving sideways. Prices operated above all moving averages, with a relatively strong trend structure; the MACD indicator's DIF (73.02) and DEA (74.89) formed a death cross at high levels, with the histogram slightly negative (-3.74), indicating weakening upward momentum.
Macro front:According to the CME "Fed Watch": the probability of the US Fed raising interest rates by 25 basis points in April was 0.5%, while the probability of keeping rates unchanged was 99.5%. The probability of a cumulative 25-basis-point interest rate cut by June was 5.1%, the probability of keeping rates unchanged was 94.4%, and the probability of a cumulative 25-basis-point rate hike was 0.5%. On April 26, Iranian Islamic Parliament Vice Speaker Nikzad stated that Iran's Supreme Leader Mojtaba Khamenei had issued a clear order that the Strait of Hormuz must not return to its pre-war status.
Fundamentals:As regional inventory divergence intensified, the spot price spread between south China and east China continued to widen, and the price conditions for cross-regional cargo flows had preliminarily taken shape. As of April 24, the mainstream price in the south China market — SMM A00 aluminum (Foshan) was at a discount of 345 yuan/mt against the 2605 contract, while the mainstream price in the east China market — SMM A00 aluminum was at a discount of 130 yuan/mt against the 2605 contract. The price spread between the two regions exceeded 200 yuan/mt, covering shipping, short-haul transport, and logistics costs, officially opening up the transfer space between Guangdong and Shanghai. Inventory side, on Monday this week, aluminum ingot inventory in China's major consumption areas stood at 1.465 million mt, flat WoW from Thursday, and up 12,000 mt WoW from Monday, indicating inventory buildup.
Primary aluminum market:Last Friday morning session, SHFE aluminum 2605 fluctuated downward. Driven by weekend restocking, pre-Labour Day holiday stockpiling, and a shortage of invoices, overall buyer purchasing sentiment for cargoes with invoices dated this month of aluminum ingots increased significantly, with mainstream transactions concentrated around SMM A00 aluminum average price to +10 yuan/mt. Last Friday, the east China market shipments sentiment index was 3.42, flat WoW; the purchasing sentiment index was 3.32, up 0.06 WoW. Approaching the weekend, some traders and downstream enterprises in central China initiated stockpiling demand, slightly boosting buying sentiment. However, against the backdrop of limited invoicing amounts, traders became more cautious in trading, with rising concerns over timely invoice fulfillment, which in turn suppressed market trading sentiment and kept transaction prices staying high. The actual transaction price range in the central China market ultimately hovered between parity with the central China price and a premium of 30 yuan over the central China price. Last Friday, the shipments sentiment index in the central China market was 2.81, down 0.01 WoW; the purchase sentiment index was 2.4, flat WoW.
Aluminum scrap:Last Friday, spot primary aluminum fell 30 yuan/mt from the previous trading day, while aluminum scrap market prices remained generally stable. Regarding the price difference between A00 aluminum and aluminum scrap, on April 24, the price difference between A00 aluminum and mixed aluminum extrusion scrap free of paint in Foshan was recorded at 2,815 yuan/mt, and the price difference between A00 aluminum and shredded aluminum tense scrap was 1,955 yuan/mt. Supply side, tightening supervision on reverse invoicing and the cancellation of tax rebates led to tight compliant invoiced supply. On the import front, March aluminum scrap imports surged 44.75% MoM to 197,300 mt, but import traders grew increasingly cautious about future purchases due to persistently rising LME prices, and subsequent imports are expected to pull back. Demand side, the "Golden March, Silver April" peak season saw divergent production starts — aluminum tense scrap buyers purchased as needed and operated with low inventory, with transactions dominated by rigid demand and strong wait-and-see sentiment, while wrought aluminum alloy scrap saw some support from peak-season stockpiling but with limited intensity. Overall, supply-side policy constraints are unlikely to ease in the short term, with tight compliant supply combined with yards holding back from selling providing support, and the increasing probability of a pullback in subsequent imports will further intensify tight supply conditions. Demand side, the divergence between aluminum tense scrap and wrought aluminum alloy scrap downstream remains unchanged, and aluminum price fluctuations along with a lack of orders continue to suppress purchase willingness. In the short term, the uncertain outlook for the US-Iran conflict, tight compliant supply, and the expected pullback in aluminum scrap imports will support aluminum scrap prices to hold up well.
Secondary aluminum alloy:Spot cargo side, last Friday the ADC12 market overall was in the doldrums. As aluminum prices weakened, cost support loosened somewhat, and some enterprises actively lowered their quotes. Meanwhile, downstream demand remained sluggish, pre-holiday stockpiling fell short of expectations, and transactions were sluggish, further suppressing upward momentum for prices. Coupled with increasing low-priced supply in the market and intensifying competition among enterprises, the price center shifted slightly downward. In the short term, under the dual impact of weakening cost support and insufficient demand, ADC12 prices may continue to be in the doldrums.
Aluminum market summary:Affected by the ongoing geopolitical conflict in the Middle East, navigation through the Strait of Hormuz was restricted, regional aluminum capacity saw production cuts, the global aluminum market supply deficit intensified, and the ex-China aluminum supply-demand gap became prominent. LME aluminum premiums recovered and rose, inventory continued to pull back to low levels, strongly supporting LME aluminum prices to strengthen. In contrast, in China, downstream processing enterprises saw declining operating rates, high aluminum prices suppressed purchase willingness, aluminum ingot warehousing in Wuxi was backed up, and China's social inventory saw inventory buildup again and remained at elevated levels. Overall, ex-China geopolitical risks persist and supply tightens, with LME aluminum prices maintaining a firm tone; in China, high inventory combined with weak demand limits SHFE upside room, and the divergence between domestic and overseas trends is evident. Overall, aluminum prices are expected to mainly fluctuate 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 use this as a replace for independent judgment. Any decisions made by clients are not related to SMM. ]
