Outside China, the US Fed raised interest rates by 25 basis points to 3.75per cent-4.00per cent as expected, the first hike since July 2023, with a unanimous FOMC vote. The dot plot showed one more possible rate hike in 2026, extending the period of high interest rates. As a result, US Treasuries saw heavy selling, the US dollar and real yields rose, directly weighing on the valuation of dollar-denominated nonferrous metals.
Geopolitically, tensions in the Strait of Hormuz persisted, with Iran claiming the strait was under its “smart control,” and a regional shipping security meeting originally scheduled in Oman was forced to be postponed, raising energy transport and risk premiums. Overall, macro sentiment was mixed.
Supply side, this week, China’s weekly aluminium production remained stable, while some downstream sectors saw certain production cuts, reducing liquid aluminium purchases and lowering the proportion of liquid aluminium by 0.02 percentage points. Outside China, according to foreign media reports, Alba’s operating capacity recovered to around 1.3 million tonnes, further lifting ex-China operating capacity.
Demand side, with the upcoming holiday, downstream stockpiling sentiment improved slightly. Inventory side, aluminium ingot shipments from Xinjiang were disrupted, and combined with downstream stockpiling, aluminium ingot destocking expanded this week. As of Thursday this week, China’s aluminium ingot social inventory fell by 63,000 tonnes W-o-W and by 43,000 tonnes from Monday; aluminium billet inventory edged lower mid-week, down 500 tonnes W-o-W. In the short term, the aluminium destocking trend is expected to continue. Attention should be paid to operating rates in certain sectors.