This week, the macro front was relatively bullish. China's November manufacturing PMI recorded 50.3%, operating above the 50 mark, with a slight acceleration in manufacturing expansion. During the week, US Fed officials, the ECB president, and the BoE governor successively indicated that interest rate cuts are expected to continue over the next year. Global liquidity remained abundant. There were signs of a potential ceasefire in the Middle East and the Russia-Ukraine conflict, but subsequently, Israel and Lebanon accused each other of violating the ceasefire agreement and engaged in small-scale attacks. Trump is expected to impose tariffs on Canada, Mexico, and China, reigniting market concerns over a global tariff and trade war.
Fundamentals: Domestic aluminum operating capacity remained largely stable, with new capacity in Xinjiang and Ningxia steadily ramping up, while some capacity reductions and technological transformations occurred at certain aluminum smelters in Sichuan, Chongqing, and Guangxi. Cost side: This week, domestic spot alumina prices continued to rise, and domestic aluminum costs fluctuated at highs. As of this Thursday, the immediate full average cost of domestic aluminum was approximately 21,298 yuan/mt, up 106 yuan/mt WoW. The domestic spot aluminum market operated steadily during the week, with the industry still in a loss-making state. As of this Thursday, the average loss for domestic aluminum was about 748 yuan/mt, with industry profits up 45 yuan/mt WoW. Demand side: This week, the support from domestic export rush orders faded. However, considering that not all export orders have been delivered and the year-end domestic order delivery demand, along with the stabilization of the impact of aluminum semis export tax rebate cancellation on processing enterprises, domestic downstream aluminum operating rates, although not significantly retreating, inevitably declined. Entering December, orders for some construction aluminum extrusion enterprises gradually weakened, and some enterprises slowed production due to lower-than-expected demand at year-end. Processing fees faced significant pressure, further compressing profit margins, and operating rates pulled back. The subsequent impact of domestic aluminum semis export policies on enterprise operations remains to be observed.
Technical side: The model predicts that the SMM A00 aluminum average price will range between [20,010, 20,990] yuan/mt from this Friday to next Thursday (2024-12-05), with a price center of 20,480 yuan/mt. The extreme price range is [19,620, 21,380], the normal price range is [19,880, 21,120], and the conservative price range is [20,140, 20,860]. Next week's price trend is expected to fluctuate rangebound or fluctuate downward. The support range is [19,880, 20,140], and the resistance range is [20,860, 21,120]. The model also predicts that the closing price of the aluminum most-traded contract will range between [19,765, 20,985] yuan/mt from this Friday to next Thursday (2024-12-05), with a price center of 20,360 yuan/mt. The extreme price range is [19,370, 21,390], the normal price range is [19,630, 21,120], and the conservative price range is [19,900, 20,850]. Next week's price trend is expected to fluctuate rangebound or fluctuate downward. The support range is [19,630, 19,900], and the resistance range is [20,850, 21,120].
In summary, on the macro front, political disputes in France and South Korea intensified, while the Middle East and Russia-Ukraine situations remained uncertain. The potential for tariff and trade wars added to market uncertainty, sustaining risk-averse sentiment. US Fed officials remained open to a December interest rate cut, leading to a slight rebound in non-ferrous metals. Domestically, the direction of promoting consumption and supporting real estate remained unchanged, creating a bullish macro atmosphere. On the fundamentals, high aluminum costs raised concerns over production cuts at high-cost enterprises. This week, the pace of shipment for stranded cargoes in Xinjiang eased somewhat, and domestic inventory showed fluctuations. Coupled with downstream demand not experiencing significant retreats and just-in-time procurement dominating, spot transactions remained stable. With the cost side continuing to provide strong support, market sentiment eased. SMM expects the most-traded SHFE aluminum contract to fluctuate between 20,000-20,950 yuan/mt next week, while LME 3M aluminum is expected to range between $2,550-2,700/mt. Continued attention should be paid to domestic consumption trends and changes in international macro sentiment.
Data source: SMM
