4.29 SMM Morning Meeting Minutes
Futures:SHFE aluminum 2606 contract closed at 24,535 yuan/mt in the night session on April 28, down 0.30% from the previous close. Prices pulled back below the MA5, MA10, MA20, MA40, and MA60 moving averages, with short-term moving averages continuing to press downward, and mid-term support levels were breached. Technical side, the MACD indicator DIFF crossed below DEA forming a death cross, with histogram bars continuing to expand as green bars. Combined with bulls actively reducing positions, this indicated sustained weakening of bullish momentum. On April 28, LME aluminum closed at $3,539/mt, down 0.95%, showing an overall weakening trend from high levels. Prices fell below the MA5 and MA10 moving averages, with the trend structure turning weaker; the MACD indicator DIFF (62.07) and DEA (71.36) formed a death cross at high levels, with the histogram slightly negative (-18.57), and short-term upward momentum notably slowed down.
Macro front:The Political Bureau of the CPC Central Committee held a meeting on April 28 to analyze and study the current economic situation and economic work. The meeting noted that planning and construction of water networks, new-type power grids, computing power networks, next-generation communication networks, urban underground pipeline networks, and logistics networks are expected to be strengthened. The meeting emphasized deepening the rectification of "involution-style" competition and fully implementing the "AI+" initiative. The meeting also noted efforts to stabilize the real estate market and to stabilize and strengthen capital market confidence. Goldman Sachs economist Mericle David expected that the statement following the US Fed meeting would likely acknowledge improved labor market conditions and rising inflation data, but would maintain existing policy guidance unchanged. According to CME "FedWatch": the probability of the US Fed keeping rates unchanged in April was 100%. The probability of a cumulative 25 basis point interest rate cut by June was 2.6%, while the probability of keeping rates unchanged was 97.4%.
Fundamentals:In March, the aluminum billet operating rate rebounded significantly by 11.8 percentage points MoM to 53.2%, but was still down 4.1 percentage points YoY. Downstream extrusion enterprises basically completed resumption of work after the Lantern Festival, with both raw material purchase willingness and intensity improving. The aluminum billet market was in an accelerated recovery phase, and both social inventory and in-factory inventory of aluminum billets showed notable destocking. SMM expects China's aluminum billet supply side to maintain stable operations in April, with the operating rate expected to edge up slightly to around 53.3%. However, this remains below the peak season levels of the same period in previous years, and the intensifying cut-throat competition in the industry remains severe.
Primary aluminum market:Yesterday morning, SHFE aluminum 2605 fluctuated downward. Affected by pre-holiday restocking, invoice shortages, and the sharp decline in aluminum prices, overall buyer purchase sentiment was strong. Mainstream transactions for cargoes with invoices dated this month were concentrated around SMM A00 aluminum average price to +20 yuan/mt. Yesterday, the east China market shipments sentiment index was 3.01, down 0.31 WoW; the purchase sentiment index was 3.58, up 0.29 WoW. In central China, downstream processing enterprises' stockpiling sentiment improved somewhat, but invoicing quotas declined. Traders' concerns over whether invoices could be issued on schedule suppressed overall market transactions. Yesterday's purchase sentiment edged down slightly WoW, but traders' willingness to hold prices firm was notable, and prices did not continue to decline. Ultimately, the central China market transaction price range hovered around the central China price between a 10 yuan premium and a 10 yuan discount. Yesterday, the central China market shipments sentiment index was 2.82, down 0.01 WoW; the purchase sentiment index was 2.33, down 0.01 WoW.
Aluminum Scrap:Yesterday, spot primary aluminum fell sharply by 340 yuan/mt from the previous trading day, and aluminum scrap market prices declined overall. Supply side, tightening regulation on reverse invoicing and the cancellation of tax rebates led to tight compliant invoiced supply. Import side, March aluminum scrap imports reached 197,300 mt, up 44.75% MoM, but import traders grew increasingly cautious on purchase sentiment as LME prices continued to rise, and imports are expected to pull back going forward. Demand side, the peak season "Golden March, Silver April" saw divergent production starts. Aluminum tense scrap enterprises purchased as needed with low inventory operations, transactions were driven by rigid demand, and wait-and-see sentiment was strong. Wrought aluminum alloy scrap saw some stockpiling support during the peak season but with limited momentum. Overall, supply-side policy constraints are unlikely to ease in the short term, tight compliant supply combined with yards holding back from selling provided support, and the increasing probability of a pullback in imports will further intensify tight supply. Demand side, the divergence between aluminum tense scrap and wrought aluminum alloy scrap downstream remained unchanged, and aluminum price fluctuations and lack of orders continued to suppress purchase willingness. In the short term, the US-Iran conflict outlook remains uncertain, and tight compliant supply along with expected pullback in aluminum scrap imports will support aluminum scrap prices to hold up well.
Secondary Aluminum Alloy:Spot cargo side, yesterday ADC12 market prices mostly fell. SMM ADC12 price dropped 200 yuan/mt from the previous trading day to 23,900 yuan/mt. Demand side continued to show weak performance. Approaching the holiday, downstream stockpiling willingness was insufficient, trading atmosphere was subdued, and some enterprises reported slowing shipments, with supply-demand imbalance becoming more apparent. Meanwhile, cost support weakened simultaneously, further increasing downward pressure on prices. In the short term, under the dual-weak pattern of cost and demand, ADC12 prices are expected to remain in the doldrums, and market confidence awaits recovery.
Aluminum Market Summary:Affected by ongoing Middle East geopolitical conflicts, navigation through the Strait of Hormuz was restricted, regional aluminum capacity cut production, the global aluminum market supply deficit intensified, and the ex-China aluminum supply-demand gap became prominent. LME aluminum premiums recovered and rose, and inventory continued to pull back to low levels, providing solid bottom support for LME aluminum. In contrast, in China, downstream processing enterprises showed weak recovery in operating rates, persistently high aluminum prices continued to suppress end-user purchase willingness, aluminum ingot warehousing in Wuxi faced backlogs, and social inventory in China built up again and stayed high. Overall, ex-China geopolitical risks persisted and the supply landscape tightened, with LME supported by fundamental resilience; in China, high inventory combined with weak demand continued to constrain price rise. Recently, aluminum prices both in China and ex-China weakened in tandem, and the divergence pattern converged.
[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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