SMM Aluminum Market Morning Comment (May 15)

Overnight, the most-traded SHFE 2407 aluminum contract opened at 20,490 yuan/mt, with the highest and lowest prices at 20,525 yuan/mt and 20,420 yuan/mt before closing at 20,455 yuan/mt, down 180 yuan/mt or 0.87%. LME aluminum opened at $2,548/mt in the previous trading day, with its low and high at $2519/mt and $2,559/mt respectively before closing at $2,549/mt, up 0.28%.

Summary: On the macro front, the MoM growth rate of US PPI exceeded expectations, and the market reduced its bets on the Fed's September rate cut, and the probability of a rate cut weakened again; the domestic Ministry of Finance issued ultra-long special treasury bonds, and market funds are expected to be introduced into real enterprises to support the real economy. From a fundamental perspective, LME aluminum inventories surged again by 130,000 mt, putting pressure on aluminum prices. Domestic inventories of aluminum ingots and billets continued to drop after the holiday, but the inventory of aluminum ingots only decreased by 10,000 mt YoY. Domestic supply and demand contradictions may gradually emerge. Combined with domestic and overseas macro sentiment, aluminum prices are expected to move rangbound supported by the resilience of domestic downstream consumption. However, as overseas aluminum inventories were under pressure again, we need to pay attention to adjustment risk.