SMM Morning Comment For Aluminum Market On October 16

SHANGHAI, Oct 16(SMM) – Last Friday night, the most-traded SHFE 2311 aluminum contract opened at 18,985 yuan/mt, with its lowest and highest at 18,875 yuan/mt and 18,985 yuan/mt before closing at 18,910 yuan/mt, down 30 yuan/mt or 0.16% compared with the previous trading day. LME aluminum opened at $2,204/mt on last Friday, with its high and low at $2,212/mt and $2,190/mt respectively before closing at $2,190/mt, a decrease of $11/mt or 0.5%.

Overall, external macro news disturbed market. The swinging expectations of short-term interest rate hikes and the intensification of the Palestinian-Israeli conflict added uncertainty to market. The domestic manufacturing PMI data in September rebounded to beyond 50%, further confirming the consumption recovery. Subsequent favorable policies and internal system adjustments are expected to further promote the economy. In terms of fundamentals, the domestic aluminum supply side was approaching its peak, and it is difficult to see a significant increase in the short term. Under various factors, although the domestic social inventory of aluminum accumulated in stages and soared after the holiday, the total volume still remained at a relatively low level over the same period in history. Based on the current survey of domestic aluminum downstream operations, downstream orders turned to gain after the holiday. Driven by the intensive downstream replenishment after the holiday, there were already signs of destocking in mid-week. In the short term, short-term inventory pressure may lift Shanghai aluminum and spot premiums, but in the medium and long term, with the growth rate of the supply side narrowing significantly, the tight supply-demand balance may remain, giving support to SHFE aluminum price and narrowing its downside room.