The most-traded SHFE 2206 aluminium contract opened at 20,150 yuan/mt, with the highest price at 20,405 yuan/mt before closing at 20,370 yuan/mt, up 350 yuan/mt or 1.75%. Three-month LME aluminium rose 0.42% or $11.5/mt to end at $2,781.5/mt on May 12.
Macro: (1) US CPI rose 8.3% year-on-year in April, with an expected rise of 8.1%. US President Joe Biden said that inflation remains unacceptably high and that reducing it is his top economic priority, which he believes the Federal Reserve will take into account. (bullish★) (2) The State-owned Assets Supervision and Administration Commission: Through the reduction, it has further deepened the structural reform on the supply side and promoted the optimal allocation of state-owned capital. State-owned enterprises left a number of non-dominant enterprises, and the proportion of state-owned enterprises engaged in their main business increased from 87% to 93%. (Neutral)
Fundamentals: (1) According to SMM statistics in April, the operating rates of secondary aluminium fell significantly, down by 12.4% to 33.10% from March.(Neutral) （2）Finished product inventory/output ratio of aluminium plate/sheet, strip and foil stood at 33.3% in April, down 8% on the year, according to SMM statistics. (Bullish★)
Spot market: As more enterprises resumed production and work after the pandemic, the market transactions were boosted. Bears further reduced positions. SHFE aluminium pulled up to 20,000 yuan/mt as many longs entered the market and the spot discount narrowed to 30-10 yuan/mt.
Summary: Aluminium enterprises maintained normal resumption of production. As the impact of the pandemic subsided, more enterprises resumed work, which boosted the market trading confidence. As the long funds entered the market, prices of SHFE aluminium rose. SMM believes that the market trading was active, while the downstream purchased actively. Aluminium prices will move rangebound in the short term.
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