Futures Market: Overnight, the most-traded SHFE aluminium 2505 contract opened at RMB 20,875 per tonne, reached a high of RMB 20,895 per tonne, and a low of RMB 20,780 per tonne, closing at RMB 20,840 per tonne, down RMB 55 per tonne, or 0.26 per cent. LME aluminium opened at USD 2,674 per tonne, reached a high of USD 2,691 per tonne, and a low of USD 2,653per tonne, closing at USD 2,657 per tonne, down USD 16 per tonne, or 0.60 per cent.
Macro: Overseas, global trade dynamics - ①Trump urged the US Fed to cut interest rates, stating that US tariffs are starting to impact the economy; (Bullish ★)
â‘¡ Mexico's Minister of Economy: Heading to Washington for trade talks on Thursday;
③ EU Trade Commissioner: Considering postponing the implementation of the first round of retaliatory tariffs against the US until mid-April; (Bullish ★)
â‘£ Trump: India will be subject to reciprocal tariffs from April 2 (Neutral).
The March LPR was announced: 1-year at 3.1 per cent, and over 5 years at 3.6 per cent, unchanged for five consecutive months, in line with market expectations. (Neutral)
As existing and incremental policy measures take effect, the development space for private investment continues to expand, and the innovation capabilities of the private economy continue to strengthen, with related indicators showing positive improvement. For example, the SME Development Index hit its highest value in nearly four years, and YoY private investment growth in January-February ended five consecutive months of negative growth, with manufacturing private investment growing by 10.2 per cent and infrastructure private investment growing by 8.0 per cent. (Bullish ★)
Fundamentals: (1) According to SMM, on March 20, the domestic mainstream consumption area electrolytic aluminium ingot inventory was 839,000 tonnes, down 28,000 tonnes W-o-W. (Bullish ★)
(2) On March 20, LME aluminium inventory was 487,525 tonnes, down 1,525 tonnes, a decrease of 0.33 per cent. (Bullish ★)
Primary aluminium market: In the early session yesterday, the centre of the front-month SHFE aluminium contract almost continuously moved upward, rebounding above RMB 20,800 per tonne. In the spot market, the absolute price centre in East China shifted downward, with improved downstream trading and increased outflows from warehouses. Although the aluminium price rebounded to a high level, destocking still boosted market confidence, and spot premiums remained firm.
The market traded SMMA00 at parity to RMB 10 per tonne. SMM A00 was at a discount of RMB 40 per tonne against the SHFE aluminium 2504 contract, up RMB 10 per tonne from the previous trading day, with SMM A00 aluminium ingot recorded at RMB 20,810 per tonne, up RMB 220 per tonne from the previous trading day. In the central China market, due to the previous decline in aluminium prices, downstream restocking increased, and destocking in the central China market grew, boosting supplier confidence. Most suppliers were holding back, expecting higher prices, and premiums remained firm during the day.
However, as prices rebounded to a high level, downstream willingness to trade decreased, and trading activity significantly declined. SMM central China A00 was recorded at 20,700 yuan/mt against the SHFE aluminium 2504 contract, up RMB 220 per tonne from the previous trading day, with the price spread between central China and Shanghai at RMB -110 per tonne. Actual market transactions were at parity to a premium of RMB 10 per tonne against the SMM central China price. Under the peak season expectation of ‘Golden March, Silver April’, high aluminium prices will gradually be absorbed by the downstream, but in the short term, as aluminium prices rebound to a high level, the spot market premiums face some resistance.
Secondary aluminium raw materials: Yesterday, the primary aluminium spot price rose RMB 220 per tonne, with the SMM A00 spot closing at RMB 20,810 per tonne. The scrap aluminium market followed the rise, but due to lacklustre terminal orders, downstream buyers maintained purchasing as needed. Yesterday, baled UBC scrap aluminium was concentrated at RMB 15,250-16,100 per tonne (excluding tax), and shredded aluminium tense scrap was concentrated at RMB 16,450-17,950 per tonne (excluding tax). In the short term, the weak supply and demand situation in the domestic scrap aluminium market is unlikely to improve significantly, and with both primary and scrap aluminium prices fluctuating at highs, the downstream will only maintain purchasing as needed, and scrap aluminium prices may follow primary aluminium and fluctuate rangebound.
Secondary aluminium alloy: Yesterday, the aluminium price quickly rebounded, with SMM A00 aluminium rising RMB 220 per tonne to RMB 20,810 per tonne. Secondary aluminium prices mainly held steady or slightly increased. Domestic SMM ADC12 prices remained in the RMB 21,100-21,300 per tonne range; in the import market, overseas ADC12 prices remained firm above USD 2,500 per tonne, with immediate import losses expanding to RMB 300-500 per tonne. Yesterday, the aluminium price recovered the previous day's losses, but the secondary aluminium market lacked momentum to follow. Currently, downstream demand is relatively weak, and orders remain sluggish, maintaining a more likely-to-fall-than-rise pattern in the short term.
Summary: From a macro perspective, in the short term, aluminium prices benefit from the sentiment boost of monetary policy easing expectations and trade friction easing, providing a clearer upward drive; however, one must be cautious of the regional supply surplus risk brought by Indian export shifts and the potential pressure of trade negotiation outcomes falling short of expectations.
Domestically, the pressure to stabilise the exchange rate has eased and the market interest rate centre has clearly risen, with phased monetary policy goals gradually being achieved. However, there is still significant uncertainty in overseas policies, and constraints remain. At the same time, the short-term stabilisation of the domestic economy and the long-term improvement in macro demand, along with double-digit growth in private manufacturing investment and continuous enhancement of the innovation capabilities of the private economy, means that although the expectation of monetary easing still exists, it is not urgent.
Fundamentally, the aluminium industry chain shows significant bullish signals: according to SMM, on March 20, domestic mainstream consumption area electrolytic aluminium ingot inventory was 839,000 tonnes, down 28,000 tonnes W-o-W; LME aluminium inventory also decreased by 1,525 tonnes, a 0.33 per cent drop, indicating a clear destocking trend and the ongoing effect of the peak consumption season. If expectations for US Fed interest rate cuts increase or if trade relations between the US and Europe further ease, aluminium prices may continue to fluctuate upward in the short term. It is necessary to closely monitor changes in US tariff policies and the actual release of downstream demand.
Note:Â This article has been issued by SMM and has been published by AL Circle in its original form without any modifications or edits to the information.
Responses
