Aluminum Market Overview

During the overnight session, aluminum prices on the Shanghai Futures Exchange (SHFE) opened high before fluctuating. The main 2408 contract closed at 20,550 RMB/ton, marking a slight increase of 0.17%. Similarly, on the London Metal Exchange (LME), aluminum prices also showed volatility, closing down 0.27% at $2,560/ton. This tug-of-war reflects the market's cautious sentiment amid macroeconomic factors and supply-demand dynamics.

Core Factors Influencing Prices

Low Inventory Levels: One of the strongest supporting factors for current aluminum prices is the historically low inventory levels in both domestic and LME markets. Recent data indicates that the social inventory of aluminum ingots in China continues to decline slightly, signaling that supply remains tight.

Downstream Demand: The traditional peak consumption season is showing signs of weakening. Downstream processing enterprises, the primary consumers of products like aluminum coils and aluminum plates, are tending to purchase cautiously based on immediate needs. Activity in key sectors such as construction and real estate has not yet strongly recovered, putting pressure on overall demand.

Macro Sentiment: Uncertainty from global economic data and monetary policies is making market sentiment sensitive, leading to sharp price fluctuations.

Developments in the European Market

The European market is closely watching potential sanctions on Russian-origin aluminum. Although no final decision has been made, this uncertainty has put pressure on the supply chain. Notably, aluminum inventories in LME-approved warehouses have increased, largely consisting of Russian aluminum. This temporarily eases concerns about an immediate supply shortage but creates a price disparity between different origins of aluminum.

Outlook and Strategy

In the short term, aluminum prices are expected to continue trading sideways within a narrow range. The balance between support from low inventories and high production costs versus pressure from weak demand will shape the price trend. Investors should monitor inventory changes, demand developments, and macroeconomic news closely. In this context, specialized products such as checkered aluminum plates for industrial flooring or solid aluminum round bars for precision machining may maintain stable demand due to their specific applications.

Source: Based on analysis from cnal.com