Futures market: Overnight, the most-traded SHFE aluminium 2505 contract opened at RMB 20,455 per tonne, with a high of RMB 20,520 per tonne, a low of RMB 20,430 per tonne, and closed at RMB 20,520 per tonne, up RMB 80 per tonne, or 0.39 per cent. Yesterday, LME aluminium opened at USD 2,509 per tonne , with a high of USD 2,510 per tonne , a low of USD 2,485 per tonne , and closed at USD 2,489.5 per tonne , down USD 15 per tonne , or 0.60 per cent.
Macro: (1) On April 2, Eastern Time, Trump announced that the US will set a 10 per cent ‘minimum benchmark tariff’ for all trading partners and impose higher tariffs on several trading partners. Among them, China, the EU, and Japan will be subject to additional tariffs of 34 per cent, 20 per cent, and 24 per cent, respectively; Indonesia, Thailand, Vietnam, and Cambodia will be subject to additional tariffs of 32 per cent, 36 per cent, 46 per cent, and 49 per cent, respectively. Previously, several trading partners have stated that they will take countermeasures in response. (Bearish ★★) (2) Trump stated that the 25 per cent tariff on automobiles will take effect on April 3. (Bearish ★)
Fundamentals: (1) According to SMM statistics, in terms of domestic aluminium billet inventory in two regions, Guangdong aluminium billet inventory was 154,500 tonnes, Wuxi aluminium billet inventory was 41,000 tonnes, totalling 195,500 tonnes, a decrease of 4,700 tonnes MoM. (Bullish ★); (2) On April 2, LME aluminium inventory recorded 458,800 tonnes, a decrease of 75 tonnes from the previous day, a decrease of 0.02 per cent; over the past week, LME aluminium inventory decreased by 14,300 tonnes, a decrease of 3.02 per cent; over the past month, LME aluminium inventory decreased by 58,300 tonnes, a decrease of 11.28 per cent. (Bullish ★)
Primary aluminium market: On Wednesday morning, aluminium prices fluctuated rangebound around RMB 20,450 per tonne and returned to around RMB 20,550 per tonne in the second session. In the spot market, some downstream enterprises in east China began pre-holiday restocking, but the market was still impacted by low-priced cargoes and hedging warrants, with SMM A00 trading mainly at parity to a slight discount. SMM A00 was at a premium of RMB 10 per tonne against the SHFE aluminium 2504 contract, up RMB 10 per tonne from the previous trading day, and SMM A00 aluminium ingot recorded RMB 20,560 per tonne, flat from the previous trading day. In the central China market, after a significant decline in aluminium prices, downstream restocking volume increased, and SHFE aluminium shifted to a backwardation structure.
With the widening of the spot-futures price spread, suppliers were more active in selling, and the market dropped from a premium of RMB 20 per tonne against central China to near parity. Overall, trading in the central China market improved slightly, but attention should be paid to downstream restocking on the last trading day before the holiday. SMM central China A00 recorded RMB 20,490 per tonne against the SHFE aluminium 2504 contract, flat from the previous trading day, with the Henan-Shanghai price spread at RMB -70 per tonne. Actual market transactions were at parity to a premium of RMB 10 per tonne against SMM central China prices and at RMB -60 per tonne against the 2504 contract.
Secondary aluminium raw materials: On Wednesday, spot primary aluminium was flat at RMB 20,560 per tonne from the previous trading day, and aluminium scrap prices were largely flat with aluminium prices. On Tuesday, baled UBC scrap aluminium was flat at RMB 15,300-15,850 per tonne (excluding tax), and shredded aluminium tense scrap was quoted at RMB 16,250-17,100 per tonne (excluding tax).
On Tuesday, aluminium scrap prices were largely flat, downstream demand remained sluggish, and scrap utilisation enterprises mainly made just-in-time procurement, with overall market transactions being average. In the short term, aluminium scrap prices may follow primary aluminium in fluctuating rangebound.
Secondary aluminium alloy: On Wednesday, SMM A00 aluminium prices were flat at RMB 20,560 per tonne from the previous trading day, and domestic SMM ADC12 prices were flat in the range of RMB 20,900-21,100 per tonne. Currently, end-use consumption momentum is insufficient, and the downward pressure on aluminium prices is being transmitted, with downstream enterprises generally maintaining just-in-time procurement. Due to insufficient orders, production losses, or financial pressure, some enterprises have begun to reduce operating rates. Considering the balance between cost support and weak demand, it is expected that aluminium alloy prices will maintain a rangebound fluctuation pattern in the short term.
Summary: On the macro front, Trump's latest actions undoubtedly added fuel to the already tense global trade situation. His related measures further intensified trade frictions, significantly reducing market risk appetite, and the entire commodity market was shrouded in uncertainty. On the fundamentals side, the aluminium industry chain remains mainly bullish, with the "golden March and silver April" seasonal destocking trend becoming more evident and aluminium ingot inventory continuing to decline to around 800,000 tonnes; end-use consumption such as NEVs is steadily growing, and downstream restocking demand has also warmed up.
As the peak consumption season approaches, order volumes and operating rates in most sectors have rebounded, coupled with the continued destocking of social aluminium ingot inventory, providing bottom support for aluminium prices. However, it cannot be ignored that the market is facing severe external pressure in the short term. The US is wielding the tariff stick at will, once again disrupting market order and bringing heavy downward pressure on aluminium prices. In the current context of high macro uncertainty and rising trade protectionism, aluminium price trends have fallen into a dilemma of fluctuating downward in the short term. Continued close attention should be paid to changes in macro sentiment and the actual release of downstream demand.
Note: This article has been issued by SMM and has been published by AL Circle with its original information without any modifications or edits to the core subject/data.
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