SMM Aluminium Market Morning Comment (Feb 22)

Overnight, the most-traded SHFE 2404 aluminium contract opened at 18,960 yuan/mt, with high and low at 18,975 yuan/t and 18,805 yuan/mt before closing at 18,825 yuan/mt, down 0.34%. LME aluminium opened at $2,227/mt on Wednesday, with its low and high at $2,216/mt and $2,269/mt respectively before closing at $2,220.5/mt, up 1.23%.

Summary: From a macro perspective, the United States will announce a "major sanctions package" against Russia on Friday. Domestic favorable policies were frequently introduced. LPR dropped significantly. 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. With work and production continuing to resume after CNY holiday, the demand is expected to pick up. Low inventory and weak inventory growth will support the aluminium prices.