Futures: Last night, the SHFE aluminium 2505 contract opened at RMB 19,780 per tonne, with a high of RMB 19,810 per tonne and a low of RMB 19,670 per tonne, closing at RMB 19,725 per tonne, up RMB 110 per tonne, a 0.56 per cent increase. Last night, LME aluminium opened at USD 2,366 per tonne, with a high of USD 2,376 per tonne and a low of USD 2,366 per tonne, closing at USD 2,373 per tonne, up USD 3 per tonne, a 0.15 per cent increase.
Macro: (1) Trump: The first agreement on tariffs is very close to being reached. Tariffs may bring "transitional issues," but the US is in a very good state. White House trade advisor Navarro said the market decline on the 10th was no big deal. (Bullish★)
(2) The US March unadjusted CPI YoY was 2.4 per cent, hitting a six-month low, below the market expectation of 2.6 per cent. The market has almost fully priced in a US Fed interest rate cut in June. Trump said that inflation has declined. (Bullish★)
(3) Ministry of Commerce: Recently organised a symposium to study helping foreign trade enterprises expand domestic sales channels. The current bonded policies in special customs supervision areas within the pilot free trade zones remain unchanged. (Bullish★)
Fundamentals: (1) On April 10, SMM statistics showed that the aluminium inventory in the Shanghai Bonded Zone was 75,500 tonnes, and the Guangdong Bonded Zone inventory was 19,700 tonnes, totalling 95,200 tonnes, an increase of 3,000 tonnes W-o-W. (Bearish★)
(2) According to SMM statistics, on April 10, the inventory of aluminium ingots in mainstream domestic consumption areas was 744,000 tonnes, down 30,000 tonnes from Monday this week and down 21,000 tonnes W-o-W from last Thursday. SMM believes that although there was a slight inventory buildup on the first day after the Qingming Festival, the overall destocking trend in the first half of April has not changed. Coupled with the rapid decline in aluminium prices earlier this week, which stimulated some purchasing demand in the market, domestic aluminium ingot inventory fell rapidly by 30,000 tonnes mid-week, successfully pulling back below 750,000 tonnes, once again strengthening fundamental support for the aluminium market and effectively boosting market confidence. (Bullish★)
Primary aluminium market: Yesterday, SHFE aluminium rebounded sharply in the early session due to fundamental destocking support, with downstream buyers actively purchasing on the bullish outlook. However, as suppliers actively shipped due to favourable structures, spot premiums narrowed, and the market sold at a discount to SMM. Specifically, the east China spot market traded at SMM-10, -20; in the central China market, spot arbitrage opportunities opened up, with suppliers shipping more, and spot traded at SMM central China average price to -10.
Secondary aluminium raw materials: Yesterday, spot primary aluminium rose RMB 350 per tonne from the previous trading day, with SMM A00 spot closing at RMB 19,880 per tonne. The aluminium scrap market followed the rebound in primary aluminium, but downstream demand did not show a clear peak season trend, maintaining purchasing as needed. Yesterday, baled UBC aluminium scrap was quoted at RMB 14,850-15,450 per tonne (excluding tax), and shredded aluminium tense scrap was quoted at RMB 15,850-17,350 per tonne (excluding tax). By region, except for Hunan and Hubei, where aluminium tense scrap prices remained flat compared to the previous day, other regions such as Shanghai, Foshan, Jiangsu, Henan, and Anhui saw prices follow A00 in a pullback. In the short term, domestic aluminium scrap supply is unlikely to increase, and demand shows a weakening trend. Downstream producers remain cautious, maintaining purchasing as needed. The aluminium scrap market may remain in the doldrums, with the price difference between A00 aluminium and aluminium scrap narrowing slightly, but long-term structural support remains. Attention should be paid to marginal changes in supply and demand and macro policy direction.
Secondary aluminium alloy: Yesterday, aluminium prices ended a three-day decline, with SMM A00 aluminium prices rising RMB 350 per tonne to RMB 19,880 per tonne. Domestic SMM ADC12 prices were adjusted up RMB 100 per tonne to the range of RMB 20,600-20,800 per tonne. In the import market, overseas ADC12 was quoted at USD 2,460-2,490 per tonne, with import spot prices steady at RMB 19,600-19,800 per tonne, and the immediate loss on imported ADC12 narrowed slightly. Yesterday, aluminium prices recovered some losses, but the secondary aluminium market followed weakly, with most quotes flat or slightly up RMB 100 per tonne. Due to the recent large fluctuations in aluminium prices, downstream buyers remain cautious, with purchasing enthusiasm still low. It is expected that secondary aluminium alloy prices will continue to be in the doldrums in the short term.
Summary: On the macro front, the US said a tariff agreement is close to being reached, and international trade frictions are easing in the short term, with improved trade conditions potentially boosting global industrial metal demand expectations.
In addition, China will actively promote the shift from foreign trade to domestic sales and maintain bonded policies, aiming to buffer the pressure of weak external demand, stabilise orders for aluminium processing enterprises, and broaden domestic demand channels, which is expected to alleviate domestic supply surplus pressure. Macro sentiment has eased, with risk sentiment released as the US temporarily suspends tariffs on countries that do not take retaliatory measures for 90 days, leading to a comprehensive rebound in non-ferrous metals. At the same time, continued aluminium destocking has also provided support for aluminium prices.
Subsequent attention should focus on aluminium semis and terminal exports. Currently, China's direct aluminium semis exports to the US account for a limited share, and in the short term, some enterprises may take advantage of the temporary tariff suspension policy to conduct re-export trade operations. However, enterprises' supply chain restructuring and the establishment of tariff cost-sharing mechanisms will take a long time, which will still impact domestic exports. Fundamental destocking and policy expectations form the core support for aluminium prices, but the risk of escalating trade frictions on the macro front creates pressure.
In the tug-of-war between longs and shorts, aluminium prices may hold up well, but attention should be paid to potential transitional issues that may cause periodic disturbances.
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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