SMM Aluminum Market Morning Comment (May 27)

On last Friday night, the most-traded SHFE 2407 aluminum contract opened at 20,975 yuan/mt, reaching a high of 21,085 yuan/mt and a low of 20,930 yuan/mt, and closed at 21,015 yuan/mt, up 125 yuan/mt or 0.6%. The previous trading day, LME aluminum opened at $2,608.5/mt, reached a high of $2,675/mt and a low of $2,603/mt, and closed at $2,658/mt, up $36.5/mt or 1.39%.

Summary: On the macro front, the final consumer confidence index for May improved compared to the initial value but still significantly declined from April, hitting a six-month low. With the latest statement from US Fed Governor Waller, hopes for a rate cut have diminished again. The China-Japan-South Korea leaders' meeting resumed after four and a half years, and many provinces and cities in China implemented new real estate policies, boosting expectations for a recovery in the property market. On the fundamentals, the operating capacity of domestic aluminium continued to rise during the week, with good progress in production resumption in Yunnan, which may be completed in June, gradually highlighting supply pressure. Social inventory of aluminum ingot increased last week, with high aluminium prices inhibiting inventory consumption, and LME aluminium inventory also maintained an overall upward trend. Alumina spot prices continued to rise during the week, with domestic aluminium costs continuing to climb, and the import window remained closed, potentially providing some support for aluminium prices. However, from the demand, aluminium prices hit a new high for the year last week, with strong volatility inhibiting downstream procurement enthusiasm, leading to a decrease in orders and operating rates for aluminium processing enterprises. Additionally, as it is currently the transition period between peak and off-peak seasons, many sectors are seeing slight declines in orders, and the overall operating rate is expected to weaken steadily. SMM expects aluminium prices to hover around the current level.