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SHFE Aluminum Edged Up Amid Tariff Disturbances, Alumina Continued to Bottom Out [SMM Aluminum Futures Brief]

  • Apr 02, 2025, at 8:17 am
【SMM Aluminum Futures Review: SHFE Aluminum Edges Up Amid Tariff Disturbances, Alumina Continues to Bottom Out】On April 2, the most-traded SHFE aluminum 2505 contract edged up 0.1% to close at 20,435 yuan/mt, with an intraday fluctuation of 130 yuan. The open interest of 185,000 lots indicated an intensified tug-of-war between longs and shorts. On the macro front, market risk aversion sentiment heated up due to the US tariff hike policy. However, fundamental support remained: NEV demand remained stable, downstream restocking started before the peak season, and the social inventory of aluminum in three regions continued to drop by 8,200 mt to 654,200 mt, while LME inventory also slightly declined, jointly building a price bottom support. In the short term, aluminum prices may maintain a fluctuating trend, and attention should be paid to the pace of tariff policy implementation and the strength of peak season demand realization. The most-traded alumina 2505 contract, however, plunged 1.77% to close at 2,890 yuan/mt, hitting an intraday low of 2,877 yuan. The trading volume of 203,000 lots reflected a bear-dominated market. The fundamentals continued the "weak supply and demand + high inventory" pattern: on the supply side, metallurgical capacity dropped to 87.3 million mt/year, but the daily surge of 4,192 mt in Xinjiang warrants pushed the total inventory above 300,000 mt; on the demand side, the alumina demand converted from aluminum remained at 84.47 million mt/year, still lower than supply. Aluminum plants continued to destock, and regional price spreads widened to 107 yuan/mt, reinforcing bearish expectations. Coupled with the sharp drop in imported bauxite prices transmitting cost pressure and intensified competition for overseas resources, alumina's short-term weakness is hard to reverse, and attention should be paid to import price spreads and the resumption of aluminum production in Yunnan.

View SMM Aluminum Product Quotes, Data, and Market Analysis

SMM, April 2:

Today, the most-traded SHFE aluminum 2505 contract opened at 20,410 yuan/mt, with a high of 20,520 yuan/mt, a low of 20,390 yuan/mt, and closed at 20,435 yuan/mt, up 0.1%. The trading volume was 69,000 lots, and the open interest was 185,000 lots.

SMM Comment: Macro-wise, in recent weeks, concerns about a US economic recession have intensified due to Trump's escalating and unpredictable tariff policies. Fundamentals side, the aluminum industry chain remains bullish, with steady growth in end-use consumption such as NEVs and a recovery in downstream restocking demand. As the peak consumption season approaches, order volumes and operating rates in most sectors have rebounded, coupled with continued destocking of aluminum ingot social inventory, providing bottom support for aluminum prices. According to SMM statistics, on April 2, the aluminum ingot inventory in Guangdong, Wuxi, and Gongyi totaled 654,200 mt, down 8,200 mt, while LME aluminum inventory decreased by 75 mt, down 0.02%. However, the short-term market remains somewhat suppressed by external bearish factors, with cautious sentiment prevailing ahead of the full implementation of US tariff policies. Aluminum prices are expected to maintain a fluctuating trend in the short term. Continued close attention should be paid to changes in macro sentiment and the actual release of downstream demand.

Today, the most-traded alumina 2505 contract opened at 2,942 yuan/mt, with a high of 2,975 yuan/mt, a low of 2,877 yuan/mt, and closed at 2,890 yuan/mt, down 1.77%. The trading volume was 203,000 lots, and the open interest was 210,000 lots.

SMM Comment: The alumina market recently showed weak supply and demand. Supply side, last week, the national total operating capacity of metallurgical alumina fell by 700,000 mt/year MoM to 87.3 million mt/year, with the weekly operating rate continuing to decline. However, on April 2, the total alumina warrant volume exceeded 300,000 mt, with a daily increase of 4,192 mt in Xinjiang to 200,900 mt, indicating continued accumulation of spot inventory pressure. Demand side, according to SMM data, as of last Thursday, the total operating capacity of domestic aluminum was 43.88 million mt/year, translating to a theoretical alumina demand of about 84.47 million mt/year, which, despite a slight increase, remains below actual supply capability. Currently, aluminum plants mainly execute long-term contract purchases, with some plants initiating active destocking plans. SMM statistics show that raw material inventory at aluminum plants fell by 44,000 mt MoM, coupled with regional divergences in ex-factory prices for spot transactions in Guangxi dropping to 3,038 yuan/mt and delivery-to-factory prices for tenders in northwest China at 3,145 yuan/mt, reflecting bearish market expectations for price trends. The bauxite market shows structural loosening. Domestic ore maintains low supply, but imported ore prices remain under pressure: on April 2, the SMM imported bauxite index reported $90.83/mt, down 2.27% daily, with Guinea ore prices down $1 to $90/mt and Australian ore prices stable. Imported ore continues to fill the gap in domestic ore, with overall supply and demand looser than before, and significant short-term downward price pressure. Overseas markets exert dual pressure on the domestic market, with the import window still closed but narrowing price spreads requiring vigilance. The export side remains uncompetitive due to high domestic costs of $440/mt. Notably, India's aluminum production in the first 11 months of FY 2024-2025 increased slightly by 0.9% YoY to 3.836 million mt, coupled with developed economies strengthening strategic protection of aluminum resources, potentially intensifying overseas resource competition. The short-term loose supply pattern of alumina remains unchanged, with a spot-futures price spread premium of 96 yuan/mt indicating cautious sentiment in the futures market, coupled with downward pressure from imported ore costs, prices may continue to fluctuate downward. Continued attention should be paid to changes in alumina operating capacity.

[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 as a substitute for independent judgment. Any decisions made by clients are unrelated to SMM.]

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