SHANGHAI, Apr 25 (SMM) - Considering that the domestic downstream demand will recover after the pandemic improves and overseas aluminium smelters are unlikely to resume their production amid high energy prices, the short-term aluminium prices will fluctuate at highs. The most-traded SHFE aluminium contract and LME aluminium are likely to move between 21,500-22,500 yuan/mt and $3,200-3,600/mt respectively this week.

Macro front: The International Monetary Fund (IMF) lowered its global economic growth forecast last week. The US Federal Reserve Chairman Powell said last Thursday that raising interest rates by 50 basis points at the Fed's May meeting would be "one of the options", weighing on commodities. The People's Bank of China promised to increase financial support to companies and individuals affected by COVID-19, and called for city-specific policies to reasonably determine the minimum down payment ratio and minimum mortgage rate requirements for commercial individual housing loans, and support the reasonable financing needs of real estate developers and construction companies.

Fundamentals: After the intensive resumption of production in the first quarter, the growth rate of domestic aluminium output has slowed down in the second quarter. However, the domestic aluminium output is expected to increase significantly in April due to the concentrated release of capacity. As the pandemic continued to disrupt the transportation of aluminium ingot in major producing areas such as Qinghai and Shanxi, the arrivals of goods in major consumption areas were limited. Downstream producers in south China, Henan and other regions stocked up actively, leading to a sharp decline in the social inventories and supporting aluminium prices. The overall operating rates of domestic downstream processing enterprises declined slightly last week mainly because aluminium plate/sheet, strip, foil, and extrusion enterprises in Shanghai’s neighbouring areas were forced to reduce their output due to shortages of orders and raw materials. In contrast, downstream producers in south and central China reported an increase in their operating rates and stockpiled actively.

For queries, please contact Frank LIU at liuxiaolei@smm.cn

For more information on how to access our research reports, please email service.en@smm.cn