Bullish sentiment cools down aluminium prices under pressure

From a macro perspective, overseas risk aversion sentiment pulled back, while domestic macro sentiment improved. By region, overseas, friction between the US and Europe over Greenland escalated, raising concerns about a US-Europe split. Subsequently, US President Trump announced that a framework agreement on the Greenland issue had been reached with NATO Secretary General Rutte, and stated that the tariff measures originally scheduled to take effect on February 1 would not be implemented, leading to a de-escalation of US-Europe tensions and a pullback in market risk aversion sentiment.

Domestically, a relevant official from the National Development and Reform Commission (NDRC) stated that 2026 macro policies should focus the driving force on strengthening the domestic circulation and comprehensively expanding domestic demand. This includes optimising the support scope and subsidy standards for the program of large-scale equipment upgrades and consumer goods trade-ins and comprehensively addressing "involutionary" competition.

Fundamentals side, Supply side, domestic and Indonesian aluminium projects steadily ramped up production, with daily average production continuing to increase; production is expected to maintain its rising trend in the short term. Demand side, recent aluminium price fluctuations narrowed, and the market gradually entered a stabilising phase.

Supported by downstream orders on hand, the operating rate of processing enterprises saw a slight rebound compared to the previous period. Warehouse withdrawals of aluminium ingots in major consumption areas this week were up year-over-year, and the pace of inventory buildup moderated. Social inventory saw a slight buildup of 2,000 tonne compared to last Thursday, up y-o-y. This week's SMM weekly proportion of liquid aluminium was recorded at 74.9 per cent, down 0.44 percentage points W-o-W.

Overall, bullish sentiment in nonferrous metals cooled down, coupled with fundamental risks from high inventory, aluminium prices were in the doldrums during the week. Affected by the downward shift in the price centre, the SMM A00 aluminium premiums and discounts this Thursday were -RMB 150 per tonne, narrowing by about RMB 30 per tonne y-o-y. The easing of macro risk sentiment provided phased bottom support for aluminium prices, but upside was limited due to pressure from high inventory.

SHFE aluminium is expected to be in the doldrums next week, trading within a range of RMB 23,600-24,200 per tonne. As of this Wednesday, LME aluminium ingot registered warrants reached 480,000 tonne, an increase of about 36,000 tonne  y-o-y; LME aluminium encountered resistance to rising and is expected to trade within a range of USD 3,080-USD 3,180 per tonne.

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.