The market awaited macro inflation data and consumption improvement, leaving aluminum prices drifting sideways

On the macro front, real GDP of US in the fourth quarter was revised down from 3.3% to 3.2%, but PCE price index was revised up from 1.7% to 1.8%. Fed Williams said three interest rate cuts during the year are reasonable options for officials to discuss; Collins also said it is too early to say whether the Fed may cut interest rates in May. Expectations of short-term interest rate cuts fell again, and the US dollar index fluctuated. The US imposed sanctioned on a number of Chinese entities over Russia-related factors. Ministry of Commerce stated that China will take necessary measures to resolutely safeguard the legitimate rights and interests of Chinese enterprises.

Fundamentals: Domestic operating aluminum production capacity fluctuated slightly in the week, mainly as an aluminum smelter in Inner Mongolia suffered power outrage on February 26. The smelter resumed some of its production. The incident had little impact on industry output, and market concerns fell back after the early trading on February 27. There has been no increase in power in Yunnan during the week, and local aluminum companies maintained stable production. As there are no clear notice on power supply and production resumption, SMM expects it is unlikely that Yunnan will resume production in March. Overseas: Since early February 2024, the US new round of sanctions against Russia has become the focus of media. However, latest reports indicate that the US has decided to exclude Russian aluminum from the latest round of sanctions. Due to frequent Europen and the US sanctions on Russian aluminum metal, the overseas aluminum supply has been tight. The premiums and discounts of primary aluminum at ports such as Japan rose sharply recently. Two market participants involved in quarterly pricing negotiations said that the premium offered by global aluminum producers to Japanese buyers for shipments in the second quarter was $145-155 per mt, up 61%-72% QoQ. Demand: Operating rates of domestic aluminum processing companies maintained an upward trend, and downstream stocking increased. However, the new orders at construction aluminum extrusion companies were still small, and there are still some finished product inventory to be digested. The industrial aluminum extrusion industry resumed work quickly. As domestic aluminum ingots and billets continued to arrive in the week, ingot social inventories rose significantly and will extend the growth.

From a technical perspective, the model predicts that the price range of the closing price of most-traded SHFE aluminum contract will be [18,575, 19,525], the price center will be 18,990, the unit is yuan/mt, the extreme price range will be [18,040, 20,050], the normal price range will be [18,400, 19,700], and the conservative price range will be [18,750, 19,350]. The prices are expected to move sideways or go down. The support range will be [18,400, 18,750], and the resistance range will be [19,350, 19,700]. The model predicts that the range of the average price of SMM A00 aluminum will be [18,325, 19,210], with the price center of 18,780, and the unit is yuan/mt. The extreme price range will be [17,970, 19,750], the normal price range will be [18,210, 19,390], and the conservative price range will be [18,440, 19,030]. The prices are expected to move sideways or go down. The support range will be [18,210, 18,440], and the resistance range will be [19,030, 19,390].

On the macro front, the Fed officials have frequently issued hawkish remarks recently, and we still need to pay attention to the guidance of US PCE price data and inflation data. In terms of fundamentals, the aluminum market still drifted sideways in the first week after CNY holiday, with prices supported by news from the mines and changes in production capacity of some smelters. In the short term, the domestic aluminum supply is generally stable, and concerns about the overseas mining have also come to an end. Downstream demand waited for a recovery. As aluminum social inventories continue to grow, aluminum prices may be rougebound. SMM predicts that it SHFE aluminum will fluctuate between 18,400-19,390 yuan/mt, and LME aluminum may fluctuate between $2,170-2,300/mt this week. We will continue to pay attention to domestic inventory changes as well as domestic and overseas monetary policies.