SMM Aluminium Market Daily Comment and Forecast

SHANGHAI, May 4 (SMM) – At last Friday’s night session, the most-traded SHFE 2306 aluminium contract opened at 18,485 yuan/mt, with the highest and lowest prices at 18,515 yuan/mt and 18,405 yuan/mt before closing at 18,470 yuan/mt, up 5 yuan/mt or 0.03%.

LME aluminium opened at $2,355/mt on Wednesday. With its low and high at $2,316.5/mt and $2,360/mt before closing at $2,322.5/mt, a drop of $33/mt or 1.4%.

On the macro front, the US GDP grew by 1.1% in the first quarter, which slowed down more than expected, mainly due to the decline in corporate investment and inventory. Under the high interest rate level, companies are relatively pessimistic about the future macroeconomic prospects. On fundamentals, the domestic aluminium supply maintained a slight growth trend, and the cost of the industry has dropped significantly, which will deprive aluminium prices of cost support. An increasing amount of molten aluminium has been made into billets rather than ingots, driving the social inventory of aluminium ingots to keep falling. The current downstream operating rates diverge from the inventory data. If the end demand is still lower than expected in the future, aluminium billet inventory may grow, which will drive smelters to produce more ingots instead of billets. As it takes time for weak consumption to be reflected in inventory, aluminium ingot inventory may remain low and continue to drop in May. SMM predicts that aluminium prices will come under downward pressure after the Labour Day holiday, but low inventory may limit the downside room.