SMM Morning Comment For Aluminum Market On October 12

SHANGHAI, Oct 12(SMM) – Overnight, the most-traded SHFE 2311 aluminum contract opened at 19,055 yuan/mt, with its lowest and highest at 19,050 yuan/mt and 19,155 yuan/mt before closing at 19,155 yuan/mt, down 10 yuan/mt or 0.05% compared with the previous trading day. LME aluminum opened at $2,214.5/mt on Wednesday, with its high and low at $2,227/mt and $2,206/mt respectively before closing at $2,213.5/mt, a decrease of $0.5/mt or 0.02%.

Overall, external macro news disturbed market. The expectation on November’s interest rate hike cooled, and the US dollar index declined, which boosted market confidence. However, the latest economic data 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. In the later period, aluminum social inventory may start destocking after concentrated post-holiday downstream replenishment, and aluminum supply and demand were still in a tight balance. In the short term, accumulated inventory may suppress 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.