Domestic and International Aluminum Prices Pulled Back Simultaneously, Weak Macro Outlook Combined with China Inventory Buildup Dragged Down the Market [SMM Aluminum Morning Meeting Minutes]

4.30 SMM Morning Meeting Minutes

Futures:SHFE aluminum 2606 contract closed at 24,335 yuan/mt in the night session on April 29, down 1.14% from the previous close. Prices pulled back below MA5, MA10, MA20, MA40, and MA60, with short-term moving averages continuing to press downward, and mid-term support levels breached. Technically, the MACD indicator DIFF crossed below DEA forming a death cross, with histogram bars continuing to expand as green bars. Combined with bulls actively reducing positions, this indicates continuously weakening bullish momentum. On April 29, LME aluminum closed at $3,492/mt, down 1.33%, showing an overall weakening trend from high levels. Prices fell below MA5, MA10, and MA20; MACD indicator DIFF (52.31) and DEA (67.55) formed a death cross at high levels, with histogram bars continuing as green and further expanding (-30.48), indicating weak short-term upward momentum.

Macro front:The US Fed maintained interest rates unchanged as expected, but four dissenting votes emerged this time, constituting the most divided policy meeting since 1992. Meanwhile, the Fed's statement wording saw important adjustments, explicitly noting for the first time that "the Middle East situation is contributing to heightened uncertainty in the economic outlook." Powell sent hawkish signals at the press conference, stating that "oil-related inflation impacts are still ahead," and noting that the impact of energy price shocks on real economic growth "typically takes 3 to 4 months to show up in some consumer spending data." Money markets nearly abandoned bets on interest rate cuts this year and began pricing in the possibility of rate hikes in 2027.

Fundamentals:In April, China's aluminum processing composite PMI came in at 53.9%, still above the 50 mark but pulling back notably from the March high. Overall industry prosperity weakened at the margin, shifting from broad-based recovery to structural divergence. New energy and packaging demand remained supportive, while real estate, automotive, and some export-linked sectors recovered below expectations, with high aluminum prices also suppressing procurement and order release. Overall, the "Silver April" effect continued but with weakening momentum, and industry operations trended toward a rational correction. Inventory side, on Thursday this week, aluminum ingot inventory in China's major consumption regions was 1.432 million mt, down 33,000 mt WoW from Monday and down 33,000 mt WoW from Thursday.

Primary aluminum market:Yesterday morning, SHFE aluminum 2605 fluctuated upward, with overall aluminum prices still running within the recent low range. Influenced by pre-holiday restocking, reduced liquidity due to invoice shortages, and recent low aluminum prices, overall buyer procurement sentiment was strong. Mainstream transactions for cargoes with invoices dated this month were concentrated around SMM A00 aluminum average price to +10 yuan/mt. Yesterday, east China market shipments sentiment index was 2.91, down 0.1 MoM; purchase sentiment index was 3.64, up 0.06 MoM. Yesterday, central China market downstream processing enterprises showed improved stockpiling sentiment ahead of Labour Day holiday, driving a slight recovery in overall market transaction atmosphere. However, insufficient invoice quotas continued to suppress next-month invoice transactions among traders, with more inclination to rush-sell current-month invoices, keeping prices high. Ultimately, central China market actual transaction price range hovered between a 10 yuan premium and a 10 yuan discount to the central China price. Yesterday, central China market shipments sentiment index was 2.83, up 0.01 MoM; purchase sentiment index was 2.41, up 0.08 MoM.

Aluminum scrap:Yesterday, spot primary aluminum fluctuated slightly upward by 10 yuan/mt from the previous trading day, while aluminum scrap market prices remained generally stable with minor adjustments in some categories. Supply side, tightening supervision on reverse invoicing and cancellation of tax rebates led to tight compliant invoiced supply. Import traders became increasingly cautious due to continuously rising LME prices, and imports are expected to pull back going forward. Demand side, the "Golden March, Silver April" peak season saw divergent production starts — aluminum tense scrap segment purchased as needed with low inventory operations, transactions were dominated by rigid demand with strong wait-and-see sentiment, while wrought aluminum alloy scrap segment had peak-season stockpiling support but with limited strength. Overall, supply-side policy constraints are unlikely to ease in the short term, tight compliant supply combined with yards holding back from selling provided support, and increasing probability of import pullback will further intensify tight supply. Demand side, the divergence between aluminum tense scrap and wrought aluminum alloy scrap downstream remained unchanged, with aluminum price fluctuations and lack of orders still suppressing purchase willingness. In the short term, with uncertain US-Iran conflict prospects, tight compliant supply and expected pullback in aluminum scrap imports will support aluminum scrap prices to hold up well.

Secondary aluminum alloy:Spot cargo side, yesterday ADC12 market overall operated steadily, with SMM ADC12 price unchanged from the previous trading day at 23,900 yuan/mt. Current market quotes remained generally stable, with enterprises showing insufficient willingness and motivation to adjust prices. As Labour Day holiday approaches, downstream enterprises are gradually entering holiday pace, pre-holiday stockpiling demand was subdued. Combined with the industry gradually entering the seasonal off-season, end-user procurement pace slowed down notably, with insufficient upward momentum for prices. The market is expected to remain in the doldrums before the holiday.

Aluminum market summary:Affected by ongoing Middle East geopolitical conflicts, navigation through the Strait of Hormuz was restricted, regional aluminum capacity cut production, global aluminum market supply deficit intensified, and the ex-China aluminum supply-demand gap became prominent. LME aluminum premiums recovered and rose, with inventory continuing to pull back to low levels, providing solid bottom support for LME aluminum. In contrast, in China, downstream processing enterprises showed weak recovery in operating rates, high aluminum prices continued to suppress end-user purchase willingness, and China social inventory stayed high. Overall, geopolitical risks outside China persisted and the supply landscape tightened, providing fundamental resilience for LME, but a stronger US dollar and cooling interest rate cut expectations weighed on commodity sentiment. LME aluminum saw profit-taking at high levels, while SHFE aluminum fell in tandem, dragged by high inventory and weak demand, with the LME-outperforms-SHFE divergence continuing to converge.

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