GF Futures: Aluminum prices fluctuate; market expects post-holiday inventory peak to hit a new high

This week’s aluminum prices fluctuated, with the core market trading logic still centered around macro expectations. Overseas, the conflict between the US and Iran suddenly escalated, with Israel launching a preemptive strike against Iran. Iran has closed its airspace and vowed retaliation. Tensions in the Middle East have increased market risk aversion and supply chain risk premiums. Federal Reserve Governor Waller stated that the March interest rate decision will be linked to the February non-farm payroll data. If employment remains strong, the Fed is inclined to pause rate cuts. Uncertainty about rate cut expectations continues to constrain risk appetite. Domestically, Chinese and U.S. leaders’ phone call sent a moderate signal, but after the U.S. Supreme Court ruled that the IEEPA tariffs were illegal, Trump immediately invoked Section 122 of the Trade Act to implement new global tariffs, raising the rate from 10% to 15%. Trade policy uncertainty remains. The fundamentals show a divergence between domestic and overseas markets. Overseas, LME aluminum inventories continue to decline, while domestic Shanghai aluminum faces seasonal inventory buildup pressure. As of February 26, domestic aluminum ingot social inventories rose to 1.157 million tons, a significant increase of over 300,000 tons compared to the same period last year. The market generally expects the post-holiday inventory peak to reach 1.35-1.40 million tons, a five-year high. In the short term, macro factors will be the key variable influencing next week’s market, likely amplifying price volatility. In the medium to long term, limited supply elasticity both domestically and internationally, along with a globally tight supply-demand balance, supports a bullish outlook for aluminum prices. The main Shanghai aluminum contract is expected to trade within 23,000-24,500 yuan/ton in the short term. It is recommended to closely monitor the inventory turning point after the holiday and the progress of downstream resumption of work. (GF Futures)