US Dollar Index Nears 13-Month High, Aluminum Market Sentiment Under Pressure [SMM Aluminum Morning Brief Nov 25]

Last Friday night, the most-traded SHFE aluminum 2501 contract opened at 20,360 yuan/mt, reached a high of 20,560 yuan/mt, a low of 20,355 yuan/mt, and closed at 20,490 yuan/mt, down 60 yuan/mt from the previous day, a decline of 0.29%. Last Friday, LME aluminum opened at $2,632.5/mt, hit a high of $2,643/mt, a low of $2,610/mt, and closed at $2,630/mt, down $1.5/mt, a decline of 0.06%.

Summary: On the macro front, the market generally believes that Trump's rise to power will boost the US dollar, while expectations for the US Fed's interest rate cut next year have weakened. On Friday, the US dollar index hit a new high for the year, suppressing the performance of non-ferrous metals. The uncertainty of the Russia-Ukraine conflict has intensified, raising market risk aversion sentiment. Domestically, Li Qiang chaired a State Council executive meeting to discuss promoting the healthy development of the platform economy. On the fundamentals side, aluminum costs fluctuate at highs, sparking concerns about production cuts at high-cost enterprises. Downstream demand has slightly rebounded in the short term, stimulated by a rush to export. Although aluminum social inventory returned to a destocking state last week, feedback indicates that shipments from Xinjiang have continuously improved, releasing short-term backlog pressure. The off-season inventory turning point is expected to appear in the next two weeks, and the tight spot market condition may ease, gradually weakening the support of low inventory for aluminum prices. In the short term, the support logic of high costs and low inventory for domestic aluminum remains, but the support for aluminum prices has weakened. Coupled with the negative impact of the cancellation of export tax rebates for aluminum semis on medium and long-term aluminum demand, market sentiment is suppressed. Aluminum prices are expected to mainly fluctuate and consolidate in the short term.