Overnight, the most-traded SHFE 2406 aluminum contract opened at 20,405 yuan/mt, with its lowest and highest at 20,360 yuan/mt and 20,495 yuan/mt before closing at 20,375 yuan/mt, up 75 yuan/mt or 0.37%. LME aluminum opened at $2,550/mt in the previous trading day, with its high and low at $2,597/mt and $2,549/mt respectively before closing at $2,570/mt, up $10.5/mt or 0.41%.
Summary: On the macro level, the recent strong employment data and high inflation data further delayed the Fed's interest rate cut expectations, 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.
