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3.26 SMM Aluminum Morning Meeting Summary
Futures: Overnight, the most-traded SHFE aluminum 2505 contract opened at 20,705 yuan/mt, with a high of 20,730 yuan/mt, a low of 20,650 yuan/mt, and closed at 20,675 yuan/mt, up 10 yuan/mt, or 0.05%. Yesterday, LME aluminum opened at $2,614.5/mt, with a high of $2,630.5/mt, a low of $2,605/mt, and closed at $2,608/mt, down $6.5/mt, or 0.25%.
Macro: (1) US Fed Governor Kugler: Believes that current US Fed policy remains restrictive; judges that the policy is in good shape. (Bearish★) (2) According to the UK Financial Times: Trump is considering a "two-step" strategy for his new tariff policy. As traders bet on tariffs, US copper futures hit a record high. (Bullish★★) (3) Ministry of Commerce: Will work with relevant departments to introduce targeted measures for tax refunds upon departure, increasing the number of tax refund stores; local governments are accelerating the preparation of pilot work plans for automobile circulation and consumption reform. (Bullish★★)
Fundamentals: (1) According to SMM statistics, on March 25, Guangdong aluminum ingot inventory was 258,000 mt; Wuxi aluminum ingot inventory was 300,000 mt; Gongyi aluminum ingot inventory was 132,700 mt, with total inventory in the three regions at 690,700 mt, down 5,800 mt from the previous trading day. (Bullish★★) (2) According to SMM statistics, in terms of domestic aluminum billet inventory in two regions, Guangdong aluminum billet inventory was 166,900 mt, Wuxi aluminum billet inventory was 50,000 mt, totaling 216,900 mt, down 4,000 mt. (Bullish★) (3) On March 25, LME aluminum inventory recorded 476,625 mt, down 3,625 mt from the previous day, a decrease of 0.75%. (Bullish★)
Primary aluminum market: Yesterday, against a bearish macro backdrop, the futures market had limited upward momentum, with SHFE aluminum fluctuating downward. Absolute prices were relatively low, suppliers stood firm on quotes, downstream users stocked up at low prices, and market trading improved. Specifically, traders in east China stood firm on quotes, with the market offering SMM A00 at a premium of 10 yuan/mt. Yesterday, SMM A00 was at a discount of 20 yuan/mt against the SHFE aluminum 2504 contract, with SMM A00 aluminum ingot recording 20,660 yuan/mt, flat from the previous trading day. In central China, due to relatively low absolute prices, market trading improved, with transactions around a premium of 10. SMM Central China A00 recorded 20,570 yuan/mt against the SHFE aluminum 2504 contract, up 10 yuan/mt from the previous trading day, with the Henan-Shanghai price spread at -90 yuan/mt. In the short term, the peak season combined with the rush for PV installations is stimulating demand, and social inventory is expected to continue destocking. Additionally, arrivals in mainstream consumption areas like Wuxi are expected to be low, and spot market premiums and discounts may narrow.
Secondary aluminum raw materials: Yesterday, aluminum scrap prices were basically stable, with downstream users maintaining purchasing as needed. Yesterday, baled UBC scrap aluminum quotes were flat at 15,250-16,050 yuan/mt (excluding tax), and shredded aluminum tense scrap quotes were concentrated at 16,450-17,450 yuan/mt (excluding tax). Currently, aluminum scrap traders are relatively active in selling, but downstream orders remain insufficient, and with aluminum prices fluctuating at high levels, downstream users are mainly purchasing as needed, with low stocking sentiment. In the short term, aluminum scrap prices may follow primary aluminum in fluctuating rangebound.
Secondary aluminum alloy: Yesterday, secondary aluminum prices mostly remained stable. Domestic SMM ADC12 prices were flat in the range of 21,000-21,200 yuan/mt; in the import market, overseas ADC12 quotes remained above $2,500/mt, while domestic prices are under pressure recently, and with the RMB exchange rate continuing to decline, the immediate loss on imported ADC12 has expanded to over 500 yuan/mt. Yesterday, aluminum prices remained stable, and the secondary aluminum market had low sentiment for price adjustments. Insufficient demand combined with weakening costs means that secondary aluminum alloy prices are more likely to fall than rise in the short term.
Summary: On Tuesday, uncertainty over Trump's planned tariffs kept traders cautious, and the US dollar index turned lower after hitting a two-week high, eventually closing down 0.09% at 104.21, with SHFE aluminum fluctuating rangebound in the night session. External market sentiment slightly rebounded, and the domestic macro bullish tone remains unchanged. Finance Minister Lan Fo'an stated that fiscal policy in 2025 will be more proactive, with continuous and stronger efforts; the central bank's Q1 meeting suggested increasing the intensity of monetary policy regulation, with RRR cuts and interest rate cuts to be implemented as appropriate. The central government is putting up "real money" to vigorously promote consumption, increasing pensions and issuing childcare subsidies to enhance consumption capacity. Automobile circulation and consumption reform (especially the promotion of NEVs) will directly increase aluminum demand (lightweighting trend), and tax refunds upon departure may also indirectly boost industrial metal demand. Policy support clearly points to expanding domestic demand, providing strong support for aluminum prices. On the fundamentals side, the aluminum industry chain remains mainly bullish, with the "golden March and silver April" seasonal destocking trend becoming clearer, and end-use consumption such as NEVs steadily growing. SMM believes that this week's continued good destocking and domestic policy support will underpin short-term prices. If expectations for US Fed interest rate cuts heat up or US-EU trade relations further ease, aluminum prices may continue to fluctuate upward in the short term, but whether SHFE aluminum can return to the 21,000 yuan/mt mark still requires further upward momentum. Continued close attention to changes in macro sentiment and the actual release of downstream demand is needed.
【The information provided is for reference only. This article does not constitute direct advice for investment research decisions. Clients should make decisions cautiously and not use this to replace independent judgment. Any decisions made by clients are unrelated to SMM.】
