Overnight, the most-traded SHFE aluminum 2502 contract opened at 20,170 yuan/mt, reached a high of 20,205 yuan/mt, a low of 20,115 yuan/mt, and closed at 20,140 yuan/mt, down 75 yuan/mt or 0.37% from the previous day. On Monday, LME aluminum opened at $2,614/mt, hit a high of $2,615.5/mt, a low of $2,559.5/mt, and closed at $2,564.5/mt, down $50.5/mt or 1.93%.
Summary: On the macro front, according to CME's FedWatch tool, the market estimated a nearly 97% probability that the US Fed would cut interest rates by a quarter percentage point at the conclusion of its policy meeting on Wednesday. The yield on the benchmark US 10-year Treasury note fell by 0.8 basis points to 4.391%. Key data to be released this week include US GDP and inflation figures, which may further influence market sentiment. Domestically, positive signals continued to emerge. On December 16, the central bank announced plans for timely RRR cuts and interest rate cuts to support the stabilization of the real estate market. The Central Financial Office also responded with specific measures to boost consumption.
On the fundamentals side, high aluminum production costs have triggered production cuts in some capacities. On the demand side, domestic downstream aluminum demand has entered a deeper off-season. Additionally, the rush to export has led to early demand exhaustion, which may result in a significant decline in aluminum semis exports in December. Weakening domestic and overseas demand has dragged down the operating rate of downstream processing enterprises. According to SMM statistics, as of Monday, aluminum ingot inventory in major domestic consumption areas decreased by 6,000 mt WoW to 551,000 mt. The easing of shipment pace in Xinjiang caused fluctuations in aluminum ingot inventory, but the backlog in Xinjiang is expected to continue to ease. Caution is advised against the risk of concentrated arrivals. The turning point for aluminum ingot inventory is anticipated in late December, with low inventory providing weaker support for aluminum prices. In the short term, aluminum prices are expected to fluctuate amid mixed factors. Attention should be paid to changes in the macro environment and trends in aluminum production costs.
