SMM Daily Aluminium Market Comment And Forecast (May 10)

SHANGHAI, May 10 (SMM) - Overnight, the most-traded SHFE 2306 aluminium contract opened at 18,325 yuan/mt, with the highest and lowest prices at 18,345 yuan/mt and 18,260 yuan/mt before closing at 18,300 yuan/mt, down 10 yuan/mt or 0.05%.

LME aluminium opened at $2,327/mt on Tuesday, with its high and low at $2,338.5/mt and $2,293/mt respectively before closing at $2,315/mt, a drop of $3.5/mt or 0.15%.

Overseas macro sentiment has picked up. The US interest rate hike expectations and the debt ceiling negotiations have all sent positive signals, thus the downward pressure on the aluminium market has eased slightly, but there are still many uncertainties in the future. The exports of aluminium semis declined month-on-month. The overall demand was lower than expected. The domestic aluminium supply maintained a slight growth trend. The cost of the aluminium industry has dropped significantly, and it is difficult to have strong support on aluminium prices. The output and operating rate of aluminium smelters increased in April, driven by production resumption. In May, the domestic operating aluminium capacity and output are expected to increase further. An increasing amount of molten aluminium has been made into billets rather than ingots, pushing up billet inventory.  If the end demand is still lower than expected in the future, smelters may 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, thus giving some support to aluminium prices. SMM expects the short-term aluminium prices to come under pressure, but the downside room may be limited under the support of low inventory. Factors to watch: macro front and supply in Yunnan.