SMM Morning Comment For Aluminium Market On December 21

SHANGHAI, December 21 (SMM) – The most-traded SHFE 2401 aluminum contract opened at 19,000 yuan/mt overnight, with its low and high at 18,920 yuan/mt and 19,000 yuan/mt before closing at 18,945 yuan/mt, down 100 yuan/mt or 0.53%. LME aluminum opened at $2,272/mt yesterday, with its high and low at $2,279/mt and $2,237.5/mt respectively before closing at $2,245.5/mt, down $19.5/mt or 0.86% compared to the previous day.
On the macro front, the Federal Reserve decided to keep the benchmark interest rate unchanged at the range of 5.25%-5.50% at its December meeting, in line with market expectations. The overall performance of domestic social financing data was good, and financial support for the real economy was strong. The credit structure has improved, and the macroeconomic atmosphere at home and abroad has improved, boosting market confidence. In terms of fundamentals, the supply side has entered a period of stable operation in the short term, but we still need to be wary of the risks of reductions in aluminum production capacity caused by extreme weather and power rationing in the heating season. On the demand side, some aluminum processing industries have started to pick up slightly. The market in the off-season seems to be less sluggish than usual thanks to year-end promotions in some end-use sectors. Delays in domestic aluminum ingot transportation and active downstream replenishment drove domestic aluminum ingot social inventories to be significantly reduced, which have fallen below 500,000 mt. In the short term, the supply of aluminum ingots in circulation is tight, and the macro atmosphere has improved, and some terminal sectors have also picked up, keeping front-month contract price firm.