Macro front, US retail sales data for November showed strong performance, coupled with a rebound in inflation data in recent months, weakening expectations for US Fed interest rate cuts. The dot plot indicates that the forecast for interest rate cuts next year has been adjusted from four times to two times. Powell stated that future rate adjustments could be approached more cautiously. Although the US Fed cut interest rates by 25 basis points again, it was in line with market expectations and did not provide significant support to prices. Domestically, favorable policies continued to be released. The People's Bank of China emphasized at its meeting that a moderately loose monetary policy will be implemented next year, with timely RRR cuts and interest rate cuts. Efforts will continue to resolve debt risks of financing platforms with financial support and stabilize the real estate market. A relevant official from the Central Financial Office stated that the issuance scale of ultra-long-term special government bonds will be further expanded next year, with increased support for the "two new" and "two heavy" policies.
Fundamentals side, domestic aluminum operating capacity slightly declined. Last week, news emerged from Sichuan of production cuts by enterprises due to technological transformation or losses, and SMM learned that the planned production cuts have already led to capacity shutdowns. Additionally, an aluminum smelter in Guangxi also reduced production by 100,000 mt/year due to technological transformation. On the cost side, there was a slight easing during the week. As of this Thursday, the immediate full average cost of domestic aluminum was approximately 21,486 yuan/mt, down 24 yuan/mt WoW. However, due to the implementation of autumn and winter control measures for alumina enterprises in Lvliang, Shanxi for 2024-2025, some alumina enterprises may face production cuts in the future, and alumina prices are expected to remain high. Demand side, overall demand continued to decline during the off-season this week, coupled with the resurgence of environmental protection inspections in Henan, leading many aluminum plate/sheet and strip enterprises to further lower their operating rates. The aluminum extrusion sector also experienced a strong off-season atmosphere, with operating rates fluctuating downward. On the inventory side, coal supply guarantees in Xinjiang led to a decrease in domestic in-transit volumes, accelerating destocking during the week. However, with slight cost easing, weak demand expectations, and export uncertainties, aluminum prices fell below the 20,000 yuan/mt mark during the week.
Technical side, the model forecasts that the SMMA00 aluminum average price will range between [19,365, 20,275] yuan/mt from this Friday to next Thursday (2024-12-26), with a price center of 19,800 yuan/mt. The extreme price range is [18,660, 20,980], the normal price range is [19,130, 20,510], and the conservative price range is [19,600, 20,040]. Next week's price trend is expected to fluctuate rangebound or fluctuate downward. The support range is [19,130, 19,600], and the resistance range is [20,040, 20,510]. The model also forecasts that the closing price of the aluminum most-traded contract will range between [19,385, 20,560] yuan/mt from this Friday to next Thursday (2024-12-26), with a price center of 19,940 yuan/mt. The extreme price range is [18,710, 21,230], the normal price range is [19,160, 20,780], and the conservative price range is [19,610, 20,340]. Next week's price trend is expected to fluctuate rangebound or fluctuate downward. The support range is [19,160, 19,610], and the resistance range is [20,340, 20,780].
In summary, on the macro front, the US Fed announced a 25-basis-point interest rate cut to the 4.25%-4.50% range, marking the third consecutive cut, in line with expectations. Following the Fed's decision and its indication of cautious future rate cuts, the US dollar index rose over 1% to a two-year high, putting pressure on the non-ferrous market. On the fundamentals side, overall supply changes remain relatively small. On the demand side, affected by the off-season, the cancellation of export tax rebates, and regional environmental protection-driven production restrictions, downstream enterprises' operating rates continued to decline. Overall, the macro front is influenced by the Fed's hawkish remarks, while the fundamentals face risks of off-season consumption and aluminum ingot inventory buildup. Market sentiment has turned pessimistic, and short-term aluminum prices are expected to fluctuate downward. Next week, the most-traded SHFE aluminum contract is expected to operate around 19,400-20,300 yuan/mt, while LME aluminum is expected to operate around $2,400-2,550/mt.
Data source: SMM
