Overnight, the most-traded SHFE 2403 aluminum contract opened at 19,000 yuan/mt, with high and low at 19,030 yuan/mt and 18,960 yuan/mt before closing at 18,980 yuan/mt, down 25 yuan/mt or 0.13%. LME aluminum opened at $2,239/mt last Friday, with high and low at $2,245/mt and $2,206/mt respectively before closing at $2,215.5/mt, a drop of $19.5/mt or 0.87%.
On the macro front, the US PPI data unexpectedly fell over the weekend, the US dollar index plunged sharply, intensifying market expectations for interest rate cuts. At the same time, the resurgence of the Red Sea incident is pushing up global shipping prices. In terms of fundamentals, the disturbance in the alumina supply re-emerged, domestic aluminium smelters maintained stable operation, the amount of aluminium ingot produced was expected to increase MoM in January, and imported aluminum ingots may increase. In addition, the aluminium market may enter a traditional inventory accumulation amid low-season, but the total inventory may be difficult to exceed level in the same period of 2023. The support for aluminium prices from the supply and demand fell sharply, but the recent strong performance of alumina market drove aluminium prices. SMM predicts that most-traded SHFE aluminium are likely to remain volatile, and we need to pay close attention to the pace of the Federal Reserve's interest rate cuts, domestic consumption and inventory changes.
