Recent Trends in SME Aluminum Prices

According to recent market dynamics and industry analysis, aluminum prices have recently shown the following trends and influencing factors:

I. Price fluctuations and short-term trends

1). Recent downward pressure London aluminum futures fell to a near one-week low on April 6, mainly due to concerns about oversupply caused by the resumption of work at Chinese refineries and the strengthening of the US dollar. The main contract of Shanghai Aluminum fluctuated downward in the early trading of April 8, the spot market transaction was weak, and downstream purchases were cautious. The average spot price of the Yangtze River was 20,550 yuan/ton, with a discount of 40 yuan.

2). Seasonal demand and inventory changes The current aluminum market has entered the traditional "golden March and silver April" consumption peak season, the operating rate of downstream processing enterprises has rebounded (such as aluminum profiles reaching 60%), and terminal demand such as automobiles, photovoltaics, and power grid orders have increased significantly. Global inventories continue to decline, LME inventories have dropped to 460,000 tons (annual low), domestic social inventories have been destocked for four consecutive weeks, and aluminum bar inventories have been accelerated.

2. Fundamental support and negative factors

1). Supply and demand pattern Supply side: Domestic production capacity is close to the ceiling, and new production capacity is limited. Only Guangxi and Sichuan have resumed production in small quantities; if Rusal is sanctioned, it may increase domestic import pressure. Demand side: The growth rate of photovoltaic installation has slowed down (expected to increase by 17% year-on-year), but the production schedule of components is still expected to contribute to the increase; the increase in UHV investment is the same as last year (about 700,000 tons); export demand may decrease due to tariffs, but insufficient overseas production capacity may partially offset the negative impact.

2). Cost and profit The decline in alumina prices has weakened the cost support of electrolytic aluminum and improved smelting profits, but weakened the bottom support of aluminum prices.

3. Policy and macro impact

1). Tariff impact The 25% tariff imposed by the United States on aluminum has limited impact on domestic direct exports (exports account for only 1%), but if it is further expanded to the automotive sector (accounting for 27% of aluminum demand), it may trigger expectations of a global economic recession, and in extreme cases, it may reduce demand by 1-1.5 million tons. At present, the market believes that the probability of a comprehensive counterattack is low, and aluminum prices are relatively resilient.

2). Federal Reserve Policy and US Dollar Trend The strengthening of the US dollar suppresses metal prices, and if the Fed's interest rate cut expectations are realized, it may ease concerns about economic recession and support demand for industrial metals.

4. Outlook and Strategy for the Future Price Rhythm

The center of gravity of aluminum prices is expected to move up throughout the year, but the first half of the year may show a "first down and then up" pattern. In the short term, affected by macro negatives (tariffs, US dollars) and supply recovery, it may drop to 19,000-19,500 yuan/ton; peak season demand and low inventory in the second half of the year may drive a rebound.

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