Futures market: Before the holiday, the most-traded SHFE aluminium 2506 contract opened at RMB 20,035 per tonne, with a high of RMB 20,035 per tonne, a low of RMB 19,900 per tonne, and closed at RMB 19,910 per tonne, down 0.65 per cent. Trading volume was 73,500 lots, and open interest was 184,000 lots.
Image source: Itaforte
LME aluminium opened at USD 2,444 per tonne before the holiday, with a high of USD 2,450 per tonne, a low of USD 2,440 per tonne, and closed at USD 2,442.5 per tonne, up USD 11 per tonne, or 0.45per cent.
Macro: (1) Chinese Ambassador to the US Xie Feng pointed out that China-US economic and trade cooperation is generally balanced and mutually beneficial. Indiscriminate tariffs harm both sides, disrupt normal business operations and people's consumption, trigger severe fluctuations in global financial markets, and undermine long-term stable growth of the world economy. (Neutral★)
(2) Russian Presidential Press Secretary Peskov stated at a briefing that Russia has repeatedly noted reports of a meeting between Russian and US leaders, and from various considerations, Russia believes such a meeting is necessary. (Bullish★)
Fundamentals: (1) On April 30, SMM statistics showed that aluminium inventory in the Shanghai Bonded Zone was 89,800 tonnes, and in the Guangdong Bonded Zone was 19,700 tonnes, totalling 109,500 tonnes, an increase of 4,000 tonnes WoW. (Bearish★)
(2) According to SMM statistics, on May 6, domestic mainstream consumption areas' aluminium ingot inventory was 636,000 tonnes, an increase of 22,000 tonnes from before the holiday. (Bearish★)
Primary aluminium market: Before the holiday, the SHFE aluminium centre fell to around RMB 20,050 per tonne in the early session, fluctuating rangebound. In the spot market, spot supply in east China was relatively ample, and downstream restocking sentiment slowed slightly due to rising aluminium prices.
With most enterprises' orders on hand starting to weaken and restocking completed, purchasing was weak ahead of the upcoming holiday. The market saw a discount of RMB 10 per tonne against SMM transactions.
SMM A00 aluminium was quoted at RMB 20,060 per tonne, up RMB 40 per tonne before the holiday, at a discount of RMB 10 per tonne against the 05 contract, down RMB 10 per tonne before the holiday.
In central China, with several days of stockpiling, inventory in the region continued to decline, and spot supply tightened intraday. Suppliers took the opportunity to raise premiums for sales, but most downstream enterprises had completed stockpiling, and intraday transaction prices in central China fell.
Secondary aluminium raw materials: Spot primary aluminium rose RMB 40 per tonne before the holiday, with SMM A00 spot closing at RMB 20,060 per tonne. Overall aluminium scrap prices followed primary aluminium higher.
As the traditional "golden March and silver April" peak season neared its end, new orders from end-users were weak, and downstream processing enterprises' risk aversion sentiment intensified, maintaining raw material purchasing as needed.
On April 30, baled UBC aluminium scrap was quoted at RMB 15,050-15,650 per tonne (excluding tax), and shredded aluminium tense scrap was quoted at RMB 15,850-17,350 per tonne (excluding tax).
By product, supply of bare bright aluminium wire and shredded wrought aluminium alloy scrap remained tight, with price adjustments of RMB 50-100 per tonne. Shredded aluminium tense scrap prices generally rose RMB 100-200 per tonne due to pre-holiday stockpiling by downstream scrap utilisation enterprises.
In terms of price differences, the price difference between A00 aluminium and mechanical casting aluminium scrap in Shanghai narrowed by RMB 14 to RMB 1,832 per tonne before the holiday, and the price difference between A00 aluminium and mixed aluminium extrusion scrap free of paint in Foshan narrowed significantly by RMB 70 to RMB 1,589 per tonne.
In the short term, the aluminium scrap market is likely to hover at highs, but if primary aluminium experiences strong fluctuations due to macro factors (such as US Fed policy or geopolitical conflicts) or domestic secondary aluminium enterprises collectively cut production, aluminium scrap prices may face periodic pressure.
Secondary aluminium alloy: Before the holiday, aluminium prices rose slightly by RMB 40 per tonne to RMB 20,060 per tonne, while domestic SMM ADC12 prices remained in the range of RMB 20,400-20,600 per tonne. In the import market, overseas ADC12 quotations were maintained at USD 2,430-2,450 per tonne, with immediate losses for imported ADC12 at around RMB 700 per tonne.
On the last trading day before the Labour Day holiday, market transactions continued to be sluggish due to downstream enterprises' 2-5 day holiday arrangements and weak pre-holiday stockpiling intentions. Current market expectations for May demand are generally weak, and ADC12 prices are expected to remain in a weak consolidation pattern in the short term.
Summary: From a macro perspective, a series of relevant policies introduced domestically have played a positive role in stabilising the real estate market, and the domestic macro bullish atmosphere remains unchanged.
In overseas markets, Trump's policy stance has been unpredictable, and there are still many variables from attitude to policy implementation. The shadow of the tariff war continues to loom over the capital markets, and the huge uncertainty continues to have a negative impact on market trends.
On the fundamentals, the cost side of the aluminium industry remains stable, and the demand side is at an important juncture of alternating off-peak and peak seasons. However, except for the aluminium wire and cable sector, which bucked the trend and increased operating rates, downstream sectors performed poorly in the week before the holiday.
Entering May, downstream aluminium orders are expected to continue to decline. Mainly driven by pre-holiday restocking demand, domestic aluminium ingot destocking accelerated again at the end of April, approaching the 600,000 tonnes mark, providing some support for pre-holiday aluminium price increases.
However, this year's Labour Day holiday may see higher domestic aluminium product arrivals than the same period last year, and attention should be paid to the risk of periodic inventory buildup due to concentrated arrivals after the holiday. Coupled with an overall bearish macro-outlook, domestic aluminium prices are expected to fluctuate weakly after the holiday.
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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