SMM Aluminum Market Morning Comment (Apr 17)

Overnight, the most-traded SHFE 2406 aluminum contract opened at 20,185 yuan/mt, with high and low at 20,390 yuan/mt and 20,165 yuan/mt before closing at 20,325 yuan/mt, down 90 yuan/mt or 0.44%. LME aluminum opened at $2,555/mt in the previous trading day, with its high and low at $2,569/mt and $2,517/mt respectively before closing at $2,559.5/mt, up $11/mt or 0.43%.

Summary: On the macro level, the recent strong employment data and high inflation data further delayed the Fed's interest rate cut expectations, the economic growth got off to a good start in the first quarter, and favourable policies such as "trade in" in China have been introduced. Consumption is optimistic. However, the situation in Middle East intensified on weekends. UK and the US imposed greater sanctions on Russian aluminum, triggering turbulence in global metals market. Fundamentally, the supply pressure is limited due to Yunnan's electricity supply and the continued closure of the import window. On the demand, high aluminum price suppressed downstream purchasing enthusiasm and operating rate. The spot discounts sustained, but driven by the destocking expectation of aluminum ingots, the discounts may narrow. Overall, aluminum prices were more influenced by growing expectations of macroeconomic recovery and positive fundamentals, and may swing on a strong note. We need to pay attention to the risk of falling back from highs. High prices on downstream procurement and changes in domestic inventory deserved attention.