SMM Aluminum Market Morning Comment (June 5)

Overnight, the most-traded SHFE 2407 aluminum contract opened at 21,295 yuan/mt, reaching a high of 21,345 yuan/mt and a low of 21,220 yuan/mt, and closed at 21,275 yuan/mt, down 20 yuan/mt, a decrease of 0.09%. The previous trading day, LME aluminum opened at $2,662/mt, reached a high of $2,686.5/mt and a low of $2,635/mt, and closed at $2,662/mt, down $2/mt, a decrease of 0.08%.

Summary: On the macro front, recent data shows that the US economy is gradually slowing down, with manufacturing and construction spending data weaker than expected, indicating that the US Fed is likely to start cutting interest rates later this year. The market is now looking forward to Wednesday's ADP employment report and Friday's US non-farm payrolls data. On the fundamentals, domestic aluminum operating capacity continues to rise, with Yunnan's resumption progressing well and expected to be completed in June, which may gradually highlight supply-side pressure. Aluminum ingot social inventory has been continuously accumulating. From the demand side, recent aluminum prices hit a record high for the year and have shown strong volatility, inhibiting downstream procurement enthusiasm, hurting orders and operating rates. Additionally, as we are currently in the transition phase between peak and off-peak seasons, many sector are showing slight declines in orders, and the overall operating rate is expected to weaken steadily. SMM expects aluminum prices to maintain a wide fluctuation range at a high level.