SMM Aluminium Market Morning Comment (Feb 20)

Overnight, the most-traded SHFE 2403 aluminium contract opened at 18,755 yuan/mt, with high and low at 18,825 yuan/t and 18,715 yuan/mt before closing at 18,760 yuan/mt, down 0.48%. LME aluminium opened at $2,218/mt on Monday, with its high and low at $2,229.5/mt and $2,192/mt respectively before closing at $2,197.5/mt, down 0.92%.

Summary: During the CNY, on the macro front, the US economic data in January exceeded expectations, the Federal Reserve's interest rate cut expectations have not been implemented. LME aluminium inventory picked up, sending LME aluminium down. However, new domestic policies have been implemented amid loose financial market. The implementation of real estate financing projects has accelerated, boosting market confidence. In terms of fundamentals, upstream aluminium smelters continued to produce, pushing up aluminium ingot inventory accumulation after CNY. However, the accumulation of aluminium ingots during CNY was less than expected, with a significant YoY decrease and a historical low in the past six years. On the whole, overseas interest rate cuts have not been implemented, but favourable domestic macroeconomic policies boosted market confidence. Although the aluminium market entered a traditional inventory accumulation, the extent is not as large as in previous years. Downstream processing companies resumed production and demand gradually picked up, which may support aluminium prices after CNY.