Bearish Macro Expectations Outweigh Positive Impact from Overseas Aluminium Output Cuts

SHANGHAI, Jun 24 (SMM) - Overnight, the most-traded SHFE 2207 aluminium contract opened at 19,425 yuan/mt, with its low and high at 19,250 yuan/mt and 19,570 yuan/mt before closing at 19,295 yuan/mt, down 190 yuan/mt or 0.98%. LME aluminium opened at $2,520/mt on Thursday and closed at $2,438/mt, down $71/mt or 2.8%. 

Macro: (1) US Fed official Bowman said that it would be appropriate to support the Fed to raise interest rates by another 75 basis points at the FOMC monetary policy meeting in July, and then raise interest rates by 50 basis points in several subsequent meetings. The current number one task of the Federal Reserve is to reduce high inflation in the United States. (Bearish factor ★) 
(2) Markit’s preliminary manufacturing PMI for the US was 52.4 in June, a 23-month low, and was significantly lower than the expected 56 and 57 in May. The preliminary reading of the U.S. manufacturing output index in June fell to 49.6 from 55.2 in May, falling below 50 for the first time since the outbreak of the pandemic two years ago. (Bearish factor ★) 
Fundamentals 
As of June 23, aluminium ingot social inventory across eight major markets in China totalled 751,000 mt, down 34,000 mt from a week ago and 172,000 mt lower than the end of May. This was also 124,000 mt lower than in the same period last year. (Bullish factor ★)
Inventory of aluminium billets declined 7,400 mt from a week ago to 111,600 mt as of June 23. Inventory increased in Wuxi, but declined across all the other four regions. (Bullish factor ★)
(3) The Hawesville aluminium smelter of Century Aluminium in the United States plans to suspend production from June 27 due to high energy prices. The aluminium smelter has an installed production capacity of 250,000 mt, and the initial planned shutdown period is 9-12 months. (neutral) 
The overall transaction in the spot market remained weak. 
Under the interference of US interest rate hikes and expectations for economic downturn, SHFE aluminium fell again yesterday, setting a new low for the year. At present, the domestic aluminium supply maintains a steady rise. It is expected that the operating aluminium capacity will reach a high of 40.8 million mt by the end of June. The demand side has picked up, but it is not as strong as in the same period last year. In addition, high temperature weather has slightly affected downstream production in some areas. Transactions in the spot market were sluggish amid pessimism. In the short term, aluminium prices will remain pressured due to macro tightening and growing supply.