SMM Morning Comment For Aluminium Market On August 17

SHANGHAI, Aug 17 (SMM) –

Overnight, the most-traded SHFE 2309 aluminium contract opened at 18,485 yuan/mt, with the lowest and highest prices at 18,450 yuan/mt and 18,540 yuan/mt before closing at 18,505 yuan/mt, up 30 yuan/mt or 0.16% from the previous trading day. LME aluminium opened at $2,142/mt on Wednesday with its high and low at $2,151.5/mt and $2,130/mt respectively before closing at $2,145.5/mt, an increase of $3/mt or 0.19% from the previous trading day.

On the macro side, as fears of a renewed interest rate hike resurfaced in the middle of the week, the positive macro sentiment came to an abrupt end. Recently, traders need to pay close attention to the multiple impacts of the Federal Reserve’s interest rate hike expectations and exchange rate fluctuations on the non-ferrous metal market. In terms of fundamentals, the output ratio of molten aluminum is still at a high level, and the amount of domestic ingots is still relatively small. It is difficult for the market to witness a large number of concentrated arrivals of ingots in the short term. Domestic aluminum ingots social inventory declined to nearly 500,000 mt, but with the resumption of production in Yunnan, aluminum ingots may arrive in some consumption areas. In mid-August, the downstream inventory restocking was active, which strengthened confidence over extended destocking of aluminum products and boosted spot premiums. In the short term, low inventories will still support aluminum prices. However, the uncertain macro sentiment and the expected supply increase will put pressure on the upward trend of aluminum prices. SMM predicted that the short-term aluminum prices will remain volatile, and follow-up attention should be paid to consumption and inventory.