SMM Comments: The macro environment recently presented a mixed picture. North American trade frictions continued to escalate, with Trump announcing reciprocal countermeasures against retaliatory tariffs from Canada and Mexico, while the US Secretary of Commerce sent conflicting signals by suggesting fentanyl control in exchange for tariff relief.
The policy volatility heightened market risk aversion sentiment. Domestically, the Two Sessions set a 2024 economic growth target of 5 per cent and outlined plans to advance the "Three Major Projects," aiming to support real estate demand through urban village redevelopment and easing purchase restrictions. Fundamentals side, cost support showed signs of stabilisation. Coupled with the seasonal demand boost from the "golden March and silver April," the operating rate of downstream processing enterprises increased by 4-5 percentage points W-o-W.
Attention should focus on the sustained realisation of March end-use consumption demand. Inventory-wise, as of Monday, domestic aluminium ingot and aluminium billet inventory saw an inventory buildup of only 6,500 tonnes, indicating a slowdown in the buildup pace. The inventory turning point is approaching, and supply-side pressure is expected to gradually ease.
SMM analysis pointed out that driven by macro sentiment and trading expectations, SHFE aluminium remains more likely to rise than fall. However, concerns over intensified overseas trade frictions warrant close attention to policy expectations from the Two Sessions. In the short term, aluminium prices are expected to fluctuate upward at high levels.
Aluminium prices diverge as LME gains, SHFE declines amid rising inventories
