Macro and fundamental bullish-bearish factors interweave, aluminium prices expected to consolidate in the short term

Macro front:

Ex-China, the US Fed kept rates unchanged at 3.75 per cent-4 per cent at its October meeting, and the US dollar index dipped sharply, though two votes still favoured a hike. US CPI and PPI both rose in August and September, with energy prices still elevated, so inflation pressure persists. CME data shows the probability of a 25 bp hike in December has risen to about 78 per cent, extending tightening expectations and weighing on dollar-denominated nonferrous metals valuations. Meanwhile, the US consumer confidence index edged down to 48.0 in October, near a historical low, and Middle East conflicts are pushing up prices, darkening the economic outlook.

Fundamentals:

Supply side, replacement projects released a small amount of idle capacity, and China's weekly aluminium production continued to edge up this week. Ex-China, aluminium supply continued its recovery trend. Demand side, aluminium prices rebounded overall W-o-W this week, weakening downstream purchasing interest. Aluminium ingot inventory on Thursday fell 4,000 tonnes from Monday, with destocking speed slowing mid-week. Some regions reported weakening downstream processing demand, and the proportion of liquid aluminium slipped 0.44 percentage points W-o-W this week.

Overall, macro sentiment is mixed. On fundamentals, inventory keeps destocking, but the destocking speed slowed mid-week, and some voices in the market are already noting weakening downstream demand, so fundamentals are also mixed. Aluminium prices are expected to mainly consolidate and adjust in the near term. Next week, SHFE aluminium front-month contract is expected to trade at RMB 22,900-23,800 per tonne, and LME aluminium at USD 2,980-3,100 per tonne. Going forward, focus on China's aluminium semis exports and inventory performance.

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.