Aluminium Prices Hold Steady Amid Supply Surplus and Cautious Demand

Key Highlights

• Price Trends: LME, SHFE, and MCX aluminium prices remain largely stable, with minor fluctuations.
• Demand & Supply: End-users are cautious, leading to slower inventory movement and increased stockpiles.
• Global Factors: US budget bill developments and upcoming tariff deadlines may influence market sentiment.
• Market Outlook: Suppliers are holding back inventory, expecting potential price shifts in the coming months.
• Key Watchpoints: Macroeconomic trends, including inflation and interest rates, will impact future aluminium pricing and demand.

Aluminium Price:

• As of last day, LME opened at $2643 /mt & closed at $2628 /mt. Today, LME opened at $ 2626.2/mt.
• As of last day, SHFE opened at 20,650 Yuan/MT and closed at 20,560 Yuan/MT. As of today, SHFE opened at 20,605 Yuan/MT.
• As of last day, MCX closed at Rs 258.10/Kg. Today, the market opened at Rs 258.05/Kg.

Aluminium Demand & Supply

• Supply-side dynamics have remained relatively stable, with minor fluctuations. Interestingly, the demand side is showing some hesitation, with aluminium prices trending upward but end-user enterprises adopting a more cautious stance. This wait-and-see approach is reflective of the uncertainty around price movements and broader market conditions, especially as downstream aluminum semi-finished products show no significant improvement.
• Raw material inventories are facing rising turnover days, indicating slower movement. Procurement decisions appear largely driven by essential needs rather than proactive buying. Additionally, the increase in domestic aluminium ingot and aluminium billet inventories, which have surpassed the key 1.1 million mt and 1.2 million mt thresholds, signals that there is more material in the market than immediate demand is absorbing.

Aluminium News

• The US dollar, which has been under pressure due to weak consumer confidence data, found some support following the news that the House passed a budget blueprint bill. Although the bill doesn't outline specific spending or revenue changes, it is seen as paving the way for approximately $4 trillion in tax cuts, funded by a $2 trillion reduction in Medicaid spending. The bill also aims to raise the debt ceiling by $4 trillion, avoiding an immediate government shutdown risk. In response, US 10-year Treasury yields rose slightly, and USD/JPY found support below 149.
• The focus on tax cuts is providing temporary support for the dollar, but attention will soon shift back to trade issues, especially as the March 4 deadline for tariffs on Canada and Mexico approaches. This deadline relates to tariffs over border security, separate from the upcoming steel and aluminium tariffs expected on March 12 or reciprocal tariffs potentially coming in April.

Expert Opinion

The overall sentiment in the aluminium spot market appears cautious but hopeful. While there is an anticipation of potential price fluctuations and adjustments, the current trend of holding back cargoes suggests that suppliers are positioning themselves for a more favorable market environment in the months to come. The key factor to watch will be how the broader macroeconomic trends, including interest rates and inflation, continue to play out, as they will likely influence both aluminium prices and consumption patterns moving forward.