SMM Aluminium Market Morning Comment (Jan 24)

Overnight, the most-traded SHFE 2403 aluminium contract opened at 18,700 yuan/mt, with its lowest and highest at 18,700 yuan/mt and 18,945 yuan/mt before closing at 18,910 yuan/mt, up 265 yuan/mt or 1.42%. LME aluminium opened at $2,159/mt yesterday, with its high and low at $2,237/mt and $2,156/mt respectively before closing at $2,232/mt, up by $77/mt or 3.57%.

The implementation of a package of sanctions by European Union mainly target Russian aluminium products. It was reported that the European Union began discussions on a new round of sanctions against Russia, which will be adopted on February 24. Domestically, China’s GDP grew by 5.2% in 2023. In December, total retail sales increased by 7.4% YoY, and the growth rate of added value in industries above the designated size hit a 22-month high. Real estate remained weak, manufacturing investment rebounded, and the overall macroeconomic atmosphere at home and abroad was weak. In terms of fundamentals, domestic aluminium supply has entered a stable period, primary aluminium import windows continue to open, and the net import volume of primary aluminium remains at a high level, impacting domestic market to a certain extent. Domestic primary aluminium social inventories may enter a seasonal inventory accumulation cycle at the end of the month, but considering the industry's aluminium liquid conversion rate of around 70%, it is expected that the total inventory before the CNY holidays this year will be far lower than the same period last year. In the short term, the overseas macroeconomic data was positive. In terms of fundamentals, the domestic aluminium downstream industries are entering the off-season, weighing on the aluminium prices.