The macro atmosphere is warm, and the demand is improving, this week's Shanghai aluminum main company as a whole is range-bound, as of Friday's daytime closing weekly increase of 1.65%, the weekly line four consecutive rises. London aluminum showed an upward trend this week, with a weekly increase of 2.45% as of 16:24 on Friday, and the weekly line stopped falling three times on a weekly basis.
Changes in the trend of Shanghai Aluminum Main Company and London Aluminum:
spot market
This week, the average spot price of SMM A00 aluminum fluctuated, with a weekly increase of 0.88%. Recently, aluminum prices have been consolidating at a high level, and the proportion of molten aluminum in the industry is high, but the demand side is flat, and the high price of aluminum inhibits the destocking, and the spot discount is under pressure, and the spot short-term or maintain the discount market.
SMM A00 aluminum spot average price change trend:
Macroscopic
During the week, the People's Bank of China released the report on the implementation of China's monetary policy for the first quarter of 2024, which coordinated the study of policy measures to digest the stock of real estate and optimize the incremental housing. Subsequently, many places intensively introduced policies to digest the stock of real estate.
Overseas, the core CPI in the United States fell to the lowest value in nearly three years, and the Fed's interest rate cut expectations rose again. This week, the U.S. dollar index fluctuated weakly, with a weekly decline of 0.71% as of 14:39 on Friday.
Changes in the U.S. Dollar Index:
In summary, the US core consumer price index (CPI) in April showed the first cooling in six months, a sign that led traders to increase bets on future rate cuts by the Federal Reserve; The Ministry of Finance of China issued ultra-long special treasury bonds, superimposed on the new policy guidance of real estate and new energy vehicles, which is expected to drive the recovery and development of the real economy. Good for commodity prices.
Fundamentals
Supply side: The domestic aluminum supply side maintained a main increase during the week, Yunnan had a small amount of troughing during the week, and some enterprises gradually completed the resumption of production, with a domestic electrolytic aluminum operating capacity of about 42.65 million tons, and no new production capacity in Inner Mongolia and Guizhou has been put into operation. Guangxi's aluminum rod factories that reduced production in the early stage heard that there was a resumption of production, but Qinghai recently saw the news of rod factory production reductions, and it is expected that the proportion of molten aluminum in the industry may be adjusted compared with April.
As of May 16, SMM statistics showed that the total social inventory of electrolytic aluminum ingots was 747,000 tons, and the domestic tradable electrolytic aluminum inventory was 621,000 tons, compared with 31,000 tons last Thursday and 31,000 tons compared with this Monday, but the low level in the same period in the past seven years is no longer, and the inventory on Thursday is 7,000 tons higher than the total inventory of 740,000 tons in the same period last year. In terms of regions, the mid-week aluminum ingot depot was mainly due to Gongyi and Wuxi, both of which went to the depot more than 10,000 tons compared with Monday, and other consumption places also generally showed a small depot. The inventory on May 16 has decreased by 14.17% compared with March 25.
Recently, the arrival of aluminum ingots is relatively small, but the supply of goods in transit may increase slightly, and we should pay attention to whether there will be centralized arrival of aluminum ingots on weekends. Due to the continuous large losses in primary aluminum imports, it is difficult to turn losses into profits in the short term, and it is temporarily difficult for imported goods to flow into the market on a large scale, and the domestic aluminum ingot inventory may maintain a stable and small decline trend in the short term. In the future, it is necessary to pay close attention to the fluctuations of the supply side and the downstream consumption performance.
As of May 16, it has accumulated 127.84% from the low point in May, and has reached a new high of 1.0933 million tons since October 2021, of which the inventory in Port Klang increased by 60,000 tons and the inventory in Guangyang decreased by 175 tons.
Changes in the total inventory of the Aluminum Corporation and the total inventory of Aluminum in China by region:
Demand side: this week, the domestic downstream market started to be stable as a whole, large and medium-sized enterprises are scheduling well, small enterprises are still worried, aluminum prices continue to be strong, end customers are not willing to pick up goods, aluminum processing enterprises finished product inventory has increased compared with the previous period, and the financial pressure is greater. The United States and Mexico have successively imposed tariffs on China's aluminum exports, which has interfered with the orders of domestic aluminum export enterprises to a certain extent. During the week, the aluminum spot market first fell and then rose, and the downstream replenished the warehouse at a low price, and the domestic inventory increased compared with last week.
SMM outlook
On the whole, on the fundamental supply side, the domestic electrolytic aluminum operating capacity maintained an increasing trend, but the impact of imported primary aluminum decreased, and the spot inventory of aluminum ingots maintained a relatively safe threshold to support aluminum prices. On the demand side, the expansion of the production capacity of the aluminum processing industry has made the industry show fierce competition and the processing fee has declined, but the total demand for aluminum in the industry has maintained growth, and the domestic real estate and automobile have good policy orientation, and the market has a good expectation of future aluminum demand.
In the context of the overall positive macro sentiment, superimposed on the resilience support of domestic downstream consumption, it is expected that aluminum prices may remain high next week. Follow-up pay attention to the domestic and foreign price difference and the domestic downstream start-up.