April 17 SMM Morning Meeting Minutes
Futures:SHFE aluminum closed at 25,585 yuan/mt in the night session, up 0.97%. The price remained above all moving averages (MA5=25,190, MA10=24,949, MA40=24,582, MA60=24,459), with the moving average system showing a bullish alignment, maintaining the uptrend. The MACD indicator's DIF (235.19) and DEA (138.21) maintained a golden cross and moved upward in sync, with the red bars further expanding, indicating strong bullish momentum. With the price firmly above the moving averages, the short-term bullish trend for SHFE aluminum continues. The core trading range for SHFE aluminum is suggested at 25,100-25,800. LME aluminum closed at $3,644/mt, up 0.55%. The price stayed above all moving averages—MA5 (3,568.2), MA10 (3,529.8), MA40 (3,346.3), and MA60 (3,271.6)—with the moving average system showing a bullish alignment, continuing the short-term strong upward trend. The DIF (92.4) and DEA (72.1) maintained a golden cross and moved upward in sync, with the red bars expanding, indicating sustained upward momentum. The core trading range for LME aluminum is suggested at 3,550-3,700.
Macro front:Overseas, on April 16 local time, US Secretary of Defense Hagesse stated at a press conference that the Treasury Department is launching an operation codenamed "Economic Fury" to "impose maximum economic pressure on Iran." (Bullish★) Domestically, on April 16, the National Bureau of Statistics (NBS) released the Q1 national economic performance data, showing GDP growth of 5.0% YoY. Major macro indicators rebounded in Q1, with new momentum growing rapidly, marking a positive start to the national economy. (Bullish★)
Fundamentals:Supply side, affected by large-scale production cuts at Middle Eastern aluminum plants, the ex-China primary aluminum market shows a clear supply gap. Aluminum price trends indicate LME aluminum outperforming SHFE aluminum, with the SHFE/LME price ratio declining and import losses widening. Net imports of primary aluminum into China are expected to decrease, but domestic operating aluminum capacity remains high, so the supply side has not yet shown a significant gap. Demand side, due to reduced aluminum supply, high energy costs, and tight supply, some downstream processing plants ex-China have cut or halted production. Domestically, as the peak season progresses, downstream operating rates have rebounded, coupled with increased export orders for some aluminum products, demand performance is moderate. However, aluminum billet production has contracted slightly due to mediocre processing fees, and overall billet operating rates have rebounded less than expected. Overall, this week's liquid aluminum operating rate fell 0.08 percentage points WoW. National aluminum ingot social inventory showed destocking of 11,000 mt compared to Monday but inventory buildup of 1,000 mt WoW. Reports suggest Gongyi's aluminum ingot social inventory has peaked, while Wuxi still has some ingots awaiting warehousing. Whether the social inventory peak will arrive smoothly warrants attention.
Primary aluminum market: During yesterday's morning session, the SHFE aluminum 2605 contract fluctuated at highs. Driven by the sharp rise in aluminum prices, overall market selling sentiment was strong, while buying sentiment also rose MoM from the previous day. However, due to ample spot aluminum availability, mainstream transaction prices mainly ranged between SMM A00 aluminum at discounts of 20-10 yuan/mt. The east China market selling sentiment index stood at 3.71 yesterday, up 0.13 MoM, while the procurement sentiment index reached 2.96, up 0.06 MoM. During the night session, SHFE aluminum surged rapidly. Trading activity in central China remained subdued yesterday, with initial pre-market offers opening lower and continuing to decline. Downstream processing enterprises mostly adopted a wait-and-see approach, with only a few large mills making just-in-time procurement. Purchase sentiment weakened further compared to the previous day. Final transaction prices in central China mainly ranged between discounts of 10-50 yuan to the central China benchmark. The central China market selling sentiment index was 2.85 yesterday, up 0.03 MoM, while the buying sentiment index dropped to 2.32, down 0.05 MoM.
Aluminum scrap: The US-Iran conflict disrupted traffic through the Strait of Hormuz, boosting market sentiment and pushing aluminum prices higher. Spot primary aluminum prices rose MoM from the previous trading day again yesterday, driving overall aluminum scrap prices upward, though market participants remained cautious. Supply side, regulatory tightening on the "reverse invoicing" policy continues to elevate compliance costs in scrap recycling, keeping actual tax-included available supply tight. Scrap yards showed strong price-holding and reluctance to sell, while traders in some regions adopted a lock-and-watch approach toward high-priced material, resulting in limited actual market availability. Demand side, the traditional "Golden March, Silver April" peak season demand remains weak. Downstream tense scrap utilization enterprises maintain their purchase-as-needed and low-inventory strategies, with limited acceptance of high-priced resources, leading to conservative procurement pace. Wrought aluminum alloy scrap enterprises are in peak production season with relatively higher stockpiling enthusiasm, but price support remains limited. Next week, the aluminum scrap market is expected to hold up well at highs, with shredded aluminum tense scrap (priced based on aluminum content) likely to trade within the 21,000-21,500 yuan/mt (tax-excluded) range. Policy constraints on the supply side are unlikely to ease in the short term, maintaining tight compliant supply. Risks to Strait of Hormuz transit from the US-Iran conflict persist, with high aluminum prices and scrap yard reluctance providing floor support. However, demand recovery falls below expectations, as downstream scrap users generally maintain low inventories and purchase-as-needed strategies, with high prices suppressing overall transactions. Close monitoring is needed on the actual impact of US-Iran tensions on aluminum price fluctuations and end-user order recovery expectations, while remaining alert to potential pullbacks after rapid rises.
Secondary aluminum alloy: Spot side, the ADC12 market showed modest follow-through gains yesterday. Driven by the significant rise in primary aluminum prices, cost support has notably strengthened, with most enterprises choosing to raise prices by around 100 yuan/mt to pass on cost pressure, while individual companies increased prices by up to 200 yuan/mt. However, demand-side feedback indicates limited downstream acceptance of high prices, resulting in mediocre transaction performance. Some enterprises lacked the momentum to raise prices and opted to maintain stable prices for observation. Overall, yesterday's market remained primarily cost-driven, while demand-side factors imposed certain constraints on price increases. In the short term, ADC12 prices may continue to move sideways, but upside room still depends on downstream follow-up and transaction improvement.
Aluminum Market Summary:Supply side, the previously caused substantial damage has become irreversible. The Middle East's aluminum capacity suffered direct military strikes, with UAE's EGA and Bahrain's Alba successively attacked, damaging production facilities. Global aluminum supply gap expectations have significantly widened, and ex-China supply concerns continue to intensify. Meanwhile, China has entered the traditional peak consumption season, with the proportion of liquid aluminum rebounding sharply to 73.7%, and downstream operating rates steadily rising, indicating solid demand-side support. Overall, Middle East negotiations remain fraught with twists and turns, but the ex-China supply gap and continuous LME inventory drawdowns support a well-held LME price. Domestic aluminum ingot inventories remain high, requiring attention to whether the inventory inflection point will arrive smoothly.
[The provided information is for reference only. This article does not constitute direct investment research advice. Clients should make decisions prudently and not use this to replace independent judgment. Any decisions made by clients are unrelated to SMM.]
