News and Events

The aluminium ingot social inventories across China’s eight major markets stood at 1.11 million mt as of March 27. The figure, albeit up 55,000 mt from the same period last year, fell 18,000 mt from last Thursday March 23 and 161,000 mt from early March. The weekly decline has slowed down. Wuxi and south China reported bigger inventory drop than in Gongyi. High aluminium prices suppressed trades in the second half of last week and traders were cautious about buying after delivery of long-term orders, causing weekly shipments out of warehouses in major markets to drop 11,300 mt week-to-week to around 150,000 mt last week. With downstream operating rates continuing to recover, the destocking should be extended. In terms of fundamentals, aluminium smelters in Guizhou and Sichuan continued to resume their production. The operating aluminium capacity in China has recovered to 40.2 million mt, an increase of more than 300,000 mt compared with the beginning of March. However, the daily average output so far this month has not exceeded the level in February. Customs data showed that China’s net imports of primary aluminium reached 146,000 mt in January-February this year. Roughly 50,000-60,000 mt of primary aluminium from Russia is expected to flow into China per month. With imports showing an upward trend, there could be risk of supply shock in the long run. According to SMM survey, the average operating rate of major aluminium processing enterprises rose 0.2 percentage point on a weekly basis to 64.4% last week, which was driven by improving orders in extrusion and cable sectors. Aluminium ingot social inventories declined 85,000 mt on a weekly basis to 1.126 million mt thanks to the recovery of downstream consumption, boosting market confidence. The machine learning indicates that the most-traded SHFE aluminium contract will fluctuate upwards or show an inverted V-shaped pattern this week. The random forest & time series model predicts that the price range of the most-traded SHFE aluminium contract will be [18,180, 18,950], and the extreme price range will be [18,090, 19,230]. The LSTM & time series model predicts that the range of SMM A00 aluminium average price will be [18,130, 18,930], and the extreme range will be [18,080, 19,210]. According to the SMM weekly fundamentals forecast model, the range of SMM A00 aluminium average price will be [18,140, 19,000]. The futures technical indicators suggest that the most-traded SHFE aluminium contract will go up this week. Based on the 4-hour K-line, SMM observed a total of 43 technical indicators, of which 16 were neutral, 21 were bullish, and 6 were bearish. Most of the oscillating indicators, trend indicators, as well as momentum indicators, were bullish. Bullish signals outnumbered bearish ones. The bearish signals suggest that the market is now in an overbought territory, putting prices at risk of downward corrections.