Middle East ceasefire eases geopolitical risks; short-term bearish factors dominate, with aluminum prices in the doldrums

On the macro front, the ceasefire between Israel and Iran has alleviated geopolitical risks, reducing the demand for capital flight, which is short-term bearish for aluminium prices. US Fed Chair Powell's neutral stance, coupled with potential expectations for US Fed interest rate cuts and pressure from Trump, may boost the economy, providing support for aluminium prices.

The People's Bank of China (PBOC) and five other departments jointly issued a document to stimulate consumption, which is bullish for end-user aluminium demand. On the fundamental front, the operating capacity of domestic electrolytic aluminium remains stable, with the proportion of liquid aluminium maintaining a high level, and the market supply of casting ingots remains tight.

Demand side, overall, most downstream sectors are in the traditional off-season, with significant production cuts feedback from downstream industries in central China. Local spot transactions have weakened, and the market transaction price has shown a continuous large discount. The weakening off-season demand in the PV and home appliance sectors cannot be ignored, with a significant pullback in the operating rates of related sectors. The wire and cable sector has experienced a decline in operating rates due to the completion of the previous delivery period and high aluminium prices.

On the inventory front, the pace of destocking has slowed, and low inventory still provides support to the futures market. Inventory buildup occurred on Monday this week, and it is necessary to observe whether the destocking inflection point has officially formed. However, spot premiums/discounts have gradually pulled back. Overall, short-term aluminium prices are suppressed by inventory accumulation and geopolitical easing, but medium-term macro policies (such as domestic consumption stimulus and expectations for US Fed interest rate cuts) may boost demand. It is expected that short-term aluminium prices will be in the doldrums, and subsequent focus should be on changes in inventory and 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.