》View SMM Aluminum Product Prices, Data, and Market Analysis
SMM, February 21:
Today, the most-traded SHFE aluminum 2504 contract opened at 20,870 yuan/mt, with a high of 20,995 yuan/mt, a low of 20,790 yuan/mt, and closed at 20,825 yuan/mt, down 0.17%. Trading volume was 6.104 million lots, and open interest was 255,000 lots.
SMM Comments: US Fed's Bostic stated that two interest rate cuts are still expected this year, but there is significant uncertainty. Goolsbee mentioned that PCE data is unlikely to be as alarming as CPI data. If tariffs lead to higher inflation, the US Fed will take it into account. US Treasury Secretary Besant noted that the September interest rate cut by the US Fed was too large; there are no plans to reassess the gold reserves in the sovereign wealth fund; sanctions on Russia will be lifted if necessary. Domestically, the People's Bank of China proposed implementing a moderately loose monetary policy and detailed 25 measures to enhance financial support for the private economy. These include expanding private enterprise bond financing, strengthening risk-sharing for private enterprise bonds, and supporting the issuance of sci-tech innovation bonds, green bonds, and asset-backed securities by private enterprises. Recently, the aluminum market has been influenced by both bullish and bearish factors, presenting a "strong expectations, weak reality" pattern. On one hand, the current inventory buildup cycle has not ended, coupled with raw material price fluctuations weakening cost support, limiting upward price potential. On the other hand, expectations of macroeconomic easing continue to ferment, combined with seasonal recovery in domestic consumption, gradually strengthening market bottom support. In the short term, aluminum prices may continue to fluctuate within a range, but caution is needed regarding the potential spillover effects of global risk asset volatility triggered by unexpected shifts in European and US monetary policy. Fundamentals side, aluminum supply pressure from resumed production has re-emerged, with domestic aluminum operating capacity expected to rise slightly in February. The average spot price of alumina continues to weaken, driving aluminum costs further downward, reducing cost-side support. Despite both supply and demand showing growth and post-holiday demand recovery exceeding expectations, aluminum futures and spot prices remain strong even as cost support diminishes. Inventory-wise, current domestic aluminum ingot inventory buildup slightly exceeds expectations, with inventory likely to surpass last year's level by the end of February. Q1 inventory peak may be revised upward to the range of 900,000-950,000 mt, making it difficult to support further short-term aluminum price increases. Demand side, last week, operating rates of leading domestic downstream aluminum processing enterprises continued to recover, and this week, the upward trend persisted, albeit at a slower pace compared to the previous two weeks. Overall, downstream consumption remains in a recovery phase, with short-term attention needed on the pace of seasonal order fulfillment and the impact of aluminum prices on end-user purchase willingness. In the future, with increasing PV demand and full resumption of work and production by end-users, while supply-side increments remain limited, aluminum prices are expected to maintain high-level fluctuations in the short term.
Today, the most-traded alumina 2505 contract opened at 3,472 yuan/mt, with a high of 3,478 yuan/mt, a low of 3,410 yuan/mt, and closed at 3,428 yuan/mt, down 1.27%. Trading volume was 95,000 lots, and open interest was 160,000 lots.
SMM Comments: The alumina market is trending towards a supply surplus. Although some alumina refineries in north China have recently undergone maintenance, potentially causing short-term supply disruptions, the gradual release of new capacity domestically and internationally has further reinforced expectations of a supply surplus. On the demand side, aluminum enterprises in Sichuan and other regions are gradually resuming production, driving a recovery in alumina demand. Meanwhile, the opening of the alumina export window may redirect some domestic supply to international markets, alleviating supply pressure. Cost side, the sharp decline in alumina prices has weakened bauxite demand, leading to lower offers from holders and a simultaneous decline in imported ore prices, reducing production costs. Nevertheless, spot prices in north China remain below theoretical cost lines. Overall, current alumina prices may enter a phase of range-bound adjustments. The opening of the export window could help mitigate the price decline, but without substantial supply-side reductions, the rebound potential for alumina remains limited. If alumina prices continue to fluctuate downward, the scope of production cuts may expand, and future commissioning plans could be delayed.
[The information provided is for reference only. This article does not constitute direct investment research advice. Clients should make prudent decisions and not substitute this for independent judgment. Any decisions made by clients are unrelated to SMM.]
