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March 18 SMM Aluminum Morning Meeting Notes
Futures Market: Overnight, the most-traded SHFE aluminum 2505 contract opened at 20,900 yuan/mt, reached a high of 20,920 yuan/mt, a low of 20,855 yuan/mt, and closed at 20,905 yuan/mt, down 20 yuan/mt or 0.10%. Yesterday, LME aluminum opened at $2,690/mt, hit a high of $2,705/mt, a low of $2,678/mt, and closed at $2,691/mt, up $2.5/mt or 0.09%.
Macro: Overseas trade protection and slowing growth exerted bearish pressure, while domestic "data recovery + policy support" provided dual support, continuing the divergence between domestic and overseas markets: (1) The European Commission will announce an investigation into the aluminum market on Wednesday to verify the sudden surge in imports. The investigation targets all trading partners and will also tighten loopholes in the steel import tariff system. (Bearish ★) (2) US February retail sales MoM recorded 0.2%, below the expected growth of 0.6%. The previous value was revised down from -0.9% to -1.2%, marking the largest decline since July 2021. (Bearish ★) (3) On March 17, the OECD released its interim economic outlook report, lowering the 2025 global economic growth forecast from 3.3% to 3.1% and the 2026 forecast from 3.3% to 3%, down by 0.2 and 0.3 percentage points, respectively, compared to the December forecast. The report noted that the aggressive trade policies of the Trump administration are pushing the global economy into a trajectory of slowing growth and rising inflation. If trade tensions escalate, the economic outlook could deteriorate further. Current trade barriers and rising market uncertainty are already pressuring major economies, leading to reduced business investment and weakened consumer spending momentum. (Bearish ★) (4) Domestic: The January-February national economic "report card" was released: total retail sales of consumer goods reached 8,373.1 billion yuan, up 4.0% YoY; industrial output above designated size increased by 5.9% YoY; the average surveyed urban unemployment rate nationwide was 5.3%. (Bullish ★) (5) Minister of Commerce Wang Wentao surveyed foreign trade enterprises on expanding domestic sales, emphasizing the need to accelerate the integration of domestic and foreign trade, better leverage the advantages of the large domestic market, and help enterprises cope with external shocks. (Bullish ★)
Fundamentals: (1) As of March 17, 2025, SMM statistics showed domestic aluminum ingot social inventory at 862,000 mt, with available inventory at 736,000 mt, unchanged from last Thursday and down 6,000 mt WoW from last Monday. (Bullish ★) (2) Regarding aluminum billet inventory, SMM's latest data showed domestic aluminum billet social inventory at 298,000 mt as of March 17, 2025, down 5,400 mt WoW from last Monday. (Bullish ★) (3) According to LME inventory data released on March 17, aluminum inventory decreased by 4,525 mt, with the largest decline at Port Klang, down 2,500 mt, accounting for 55% of the total decrease. Gwangyang warehouse inventory fell by 1,525 mt, and Singapore warehouse inventory dropped by 500 mt. (Bullish ★) (4) Novelis, a global leader in rolled aluminum products and the largest aluminum recycler, recently announced the successful development of the world's first aluminum coil made entirely from 100% recycled automotive materials. This material is suitable for auto body panels, marking significant progress in increasing the recycled aluminum content of products and advancing the automotive industry's circularity and sustainability. (Bullish ★)
Primary Aluminum Market: Yesterday morning, the SHFE front-month aluminum contract jumped initially and then pulled back, with the center shifting downward to around 20,800 yuan/mt. In the spot market, the absolute price center in east China moved downward, and market transactions showed no significant improvement. Transactions were concentrated around SMM A00 at a discount of 0-10 yuan/mt, with downstream maintaining just-in-time procurement. SMM A00 aluminum ingot was recorded at 20,820 yuan/mt, down 90 yuan/mt from the previous trading day. In central China, aluminum prices remained high recently, with downstream processing enterprises accumulating finished product inventories and cautiously restocking raw materials. Spot premiums were under pressure, showing no significant improvement. Yesterday, SMM Central China A00 aluminum ingot was recorded at 20,690 yuan/mt, down 90 yuan/mt from the previous trading day, with a Henan-Shanghai price spread of -130 yuan/mt. Actual market transactions were around SMM Central China prices at a discount of 10 yuan/mt. As aluminum prices trended lower, intraday transactions slightly improved. Attention should be paid to downstream restocking after delivery, as premium centers are expected to recover.
Recycled Aluminum Raw Materials: Yesterday, primary aluminum spot prices fell by 90 yuan/mt from the previous trading day, with SMM A00 spot closing at 20,820 yuan/mt. The aluminum scrap market slightly followed the decline, with downstream maintaining purchasing as needed. Yesterday, baled UBC aluminum scrap was quoted at 15,250-16,150 yuan/mt (excluding tax), and shredded aluminum tense scrap was quoted at 16,450-17,950 yuan/mt (excluding tax). In the short term, the domestic aluminum scrap supply-demand pattern is unlikely to see significant improvement, coupled with high prices of primary and aluminum scrap. Downstream is expected to maintain purchasing as needed, and aluminum scrap prices may fluctuate rangebound following primary aluminum.
Secondary Aluminum Alloy: Yesterday, aluminum prices shifted downward, with SMM A00 aluminum prices down 90 yuan/mt from the previous trading day to 20,820 yuan/mt, while secondary aluminum prices remained stable. Domestic SMM ADC12 prices were unchanged from last Friday, staying in the range of 21,200-21,400 yuan/mt. In the import market, overseas ADC12 prices remained firm at around $2,500/mt, with immediate import losses widening to around 300 yuan/mt. Yesterday's weak aluminum price correction led to slight divergence in secondary aluminum market quotations. Some enterprises held firm on prices, observing market sentiment, while others followed aluminum prices down by 100 yuan/mt. Currently, downstream demand recovery is moderate, with abundant low-priced supply in the market suppressing the upside room for ADC12 prices. However, cost-side support provides some price stability. If demand shows no significant improvement, ADC12 prices may face downward pressure due to subsequent cost easing and the impact of low-priced supply.
Summary: Macro side, the EU's investigation into aluminum imports and tightening of steel tariffs, combined with weak US February retail data and the OECD's downgrade of global growth forecasts, added multiple bearish factors to market pressure. Domestically, the January-February recovery in consumption/industrial data and the Ministry of Commerce's promotion of domestic and foreign trade integration highlighted economic resilience to counter external risks. Fundamentals side, although the traditional peak season effect of "Golden March and Silver April" continues to manifest, the strong performance of domestic aluminum destocking in early March has been partially offset by aluminum prices' persistent challenge of the 21,000 yuan/mt threshold, impacting the supply-demand pattern in the aluminum industry chain. High outflows from warehouses fell back from highs, coupled with increased arrivals over the weekend, making it difficult for domestic aluminum inventory to maintain its previous strong performance in the new week. However, as destocking continues, the overall trend of inventory changes is expected to remain unchanged for now. According to SMM statistics, as of March 17, 2025, the total social inventory of aluminum ingots and billets decreased by 9,000 mt WoW to 1.162 million mt, with the sixth week of post-holiday destocking at a medium level compared to the same period in the past seven years. The cumulative inventory increase over 10 weeks before and after the Chinese New Year reached 523,000 mt, an 84.7% increase, showing mediocre performance. However, SMM emphasizes that as the peak season deepens, the marginal strengthening logic of end-user restocking momentum still exists.
[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.]
