On-demand Purchasing in Terminals as Aluminum Prices Fluctuate

Strategy Summary
Aluminum: China's electrolytic aluminum supply remains stable, with only sporadic expectations of increased production resumptions in Guizhou and Sichuan. Downstream consumption is expected to improve with the arrival of traditional peak seasons and the impetus of China's economic stimulus policies. China's aluminum social inventory may enter a de-stocking cycle. Keep an eye on changes in actual demand and macroeconomic sentiment. In the short term, aluminum prices are expected to fluctuate and consolidate, and it is advisable to hold off on making decisions for now.

Alumina: Recent fluctuations in futures prices have been driven by macroeconomic factors and capital flows. Overseas spot transactions have been frequent, while domestic production remains stable. However, downstream electrolytic aluminum industry capacity increments are limited. Keep an eye on the resumption progress of alumina enterprises and the stability of ore supply. It is advisable to hold off on making decisions for now.

Core View
Market Analysis
Aluminum Spot Market: According to SMM data, the price of A00 aluminum was recorded at 19,800 yuan/ton yesterday, an increase of 60 yuan/ton from the previous trading day. The spot premium of A00 aluminum remained unchanged at -100 yuan/ton compared to the previous trading day. The Zhongyuan A00 aluminum price was recorded at 19,700 yuan/ton, an increase of 60 yuan/ton from the previous trading day, with the spot premium remaining unchanged at -200 yuan/ton. The Foshan A00 aluminum price was recorded at 19,710 yuan/ton, an increase of 60 yuan/ton from the previous trading day, with the spot premium falling 5 yuan/ton to -190 yuan/ton.

Aluminum Futures Market: On August 28, the main contract of Shanghai Aluminum opened at 19,950 yuan/ton and closed at 19,905 yuan/ton, an increase of 5 yuan/ton or 0.03% from the previous trading day's closing price. The highest price reached 20,045 yuan/ton, and the lowest price reached 19,895 yuan/ton. Trading volume for the day totaled 140,178 contracts, an increase of 12,818 contracts from the previous trading day. Open interest for the day was 188,340 contracts, an increase of 5,217 contracts from the previous trading day. In the overnight session, the main contract of Shanghai Aluminum opened at 19,845 yuan/ton and closed at 19,860 yuan/ton, down 45 yuan/ton from the previous day's afternoon close.

Recently, the aluminum market has seen on-demand purchasing from terminals, with ample market supply. Fundamentally, domestic electrolytic aluminum production capacity remains stable overall, with no large-scale production cuts or resumptions. Attention should be paid to the impact of high temperatures on power usage by enterprises in Sichuan. On the demand side, downstream industries are mainly engaged in rigid demand inventory replenishment, with a slight improvement in new orders from industrial materials and sheet and strip enterprises. The main source of increment comes from automotive materials and 3C products. As the peak consumption season of "Golden September and Silver October" approaches, market confidence is gradually increasing, and downstream demand is showing signs of recovery, with purchasing intentions strengthening.

In terms of inventory, as of August 26, SMM statistics showed that domestic electrolytic aluminum ingot social inventory was 807,000 tons, unchanged from the same period last week. As of August 28, LME aluminum inventory was 860,200 tons, a decrease of 7,000 tons from the previous trading day and 17,700 tons from the same period last week.

Alumina Spot Price: On August 28, the SMM alumina index price was recorded at 3,921 yuan/ton, an increase of 5 yuan/ton from the previous trading day. The FOB price of Australian alumina was recorded at $521 per ton, unchanged from the previous trading day.

Alumina Futures Market: On August 28, the main contract of alumina opened at 3,973 yuan/ton and closed at 3,937 yuan/ton, a decrease of 36 yuan/ton or 0.91% from the previous trading day's closing price. The highest price reached 4,013 yuan/ton, and the lowest price reached 3,912 yuan/ton. Trading volume for the day totaled 347,457 contracts, a decrease of 55,464 contracts from the previous trading day. Open interest for the day was 98,097 contracts, a decrease of 16,566 contracts from the previous trading day. In the overnight session, the main contract of alumina opened at 3,926 yuan/ton and closed at 3,945 yuan/ton, an increase of 8 yuan/ton from the previous day's afternoon close.

China's alumina spot prices have remained stable with a slight increase, and spot circulation has tightened. From a fundamental perspective, although high profits have boosted alumina plant production enthusiasm, factors such as ore blending adjustments, red mud disposal, and production line maintenance frequently limit alumina production output. Additionally, as bauxite mines in Shanxi and Henan have not yet resumed large-scale production, bauxite supply remains tight, which may restrict significant increases in alumina production in these two regions. In September, it is expected that the progress of new investments and resumptions in alumina production will slow down significantly, while downstream electrolytic aluminum production capacity will remain stable, with ongoing demand for inventory replenishment. Coupled with low inventory levels, the tight spot supply situation for alumina is expected to continue in the short term.