SMM Aluminium Market Comment And Forecast (May 8)

SHANGHAI, May 8 (SMM) –  At last Friday’s night session, the most-traded SHFE 2306 aluminium contract opened at 18,345 yuan/mt, with the highest and lowest prices at 18,500 yuan/mt and 18,315 yuan/mt before closing at 18,480 yuan/mt, up 35 yuan/mt or 0.19%.

LME aluminium opened at $2297/mt last Friday, with its low and high at $2,277.5/mt and $2,324/mt respectively before closing at $2,321/mt, an increase of $25.5/mt or 1.11%.

Recently, from a macro point of view, concerns about US debt default have intensified, and rumours of interest rate hikes have resurfaced. The banking crisis has not yet been resolved, and the risk aversion sentiment in the market is still strong, which puts great downward pressure on the aluminium market. On fundamentals, the downstream operating rates will be in downward trend, and the demand performance is not satisfactory. The domestic aluminium supply maintained a slight growth trend, and the cost of the industry has dropped significantly. An increasing amount of molten aluminium has been made into billets rather than ingots. If the end demand is still lower than expected in the future, aluminium billet inventory may grow, which will drive smelters to produce more ingots instead of billets. As it takes time for weak consumption to be reflected in inventory, aluminium ingot inventory may remain low and continue to drop in May, thus giving some support to aluminium prices. To sum up, SMM predicts that aluminium prices will come under downward pressure, but low inventory may limit the downside room. Factors to watch: macro front and supply in Yunnan.