Macro Sentiment Eases to Hold Quotes Firm, Inventory Buildup Expectations Suppress Aluminum Price Rise [SMM Aluminum Morning Meeting Minutes]

SMM Feb 24 Aluminum Morning Meeting Minutes:

Futures side:During the night session on Feb 23, SHFE aluminum was closed. LME aluminum opened at $3,103/mt, hit a high of $3,116/mt, a low of $3,081/mt, and finally closed at $3,091/mt, down 0.47% from the previous day. Trading volume was 13,100 lots, down 5,459 lots, while open interest was 669,000 lots, up 1,223 lots.

Macro front:The US Supreme Court announced the ruling on the tariff lawsuit, determining that the US government's imposition of reciprocal tariffs and fentanyl-related tariffs on relevant trading partners under the International Emergency Economic Powers Act was illegal. (Bullish ★) US Customs and Border Protection announced that it will stop collecting tariffs levied under the International Emergency Economic Powers Act starting from 00:00 Eastern Time on Feb 24. (Bullish ★)

Fundamentals:Domestic market aluminum projects steadily ramped up production, but affected by fewer natural days in February, overall February production decreased MoM compared to January. Inventory side, aluminum ingot inventory is expected to continue building up, with SMM statistics showing social inventory after the Chinese New Year (Feb 24) increased by 216,000 mt compared to before the Chinese New Year (Feb 12).

Primary aluminum market:On the morning of Feb 13, SHFE aluminum 2602 fluctuated downward, with the price center lower than the previous trading day. Some enterprises were already on holiday, overall trading sentiment was weak, and mainstream quotations were concentrated at the average price to a premium of 50 yuan/mt. On Feb 13, the east China market shipment sentiment index was 2, down 0.21 WoW; the purchase sentiment index was 2.07, down 0.27 WoW. SMM A00 aluminum was quoted at 23,160 yuan/mt, down 190 yuan/mt from the previous trading day, at a discount of 120 yuan/mt against the 2602 contract, up 40 yuan/mt from the previous trading day; at a discount of 190 yuan/mt against the 2603 contract. On Feb 13, the central China market maintained sluggish transactions. On the last trading day before the Chinese New Year, pre-holiday stockpiling by downstream processing enterprises was basically completed, with only a small amount of just-in-time procurement. Most holding traders had already entered the Chinese New Year holiday, market circulating supply was scarce, with only a few traders buying the dip for stockpiling. Ultimately, the actual transaction prices in the central China market ranged between a premium of 400 yuan to a premium of 60 yuan against the central China price. On Feb 13, the central China market shipment sentiment index was 2.25, down 0.18 WoW; the purchase sentiment index was 1.9, down 0.19 WoW. SMM central China closed at 23,080 yuan/mt, down 180 yuan/mt from the previous trading day, at a discount of 200 yuan/mt against the 2602 contract, up 50 yuan/mt from the previous trading day. SMM central China closed at 23,080 yuan/mt, down 180 yuan/mt from the previous trading day, at a discount of 200 yuan/mt against the 2602 contract, up 50 yuan/mt from the previous trading day.

Aluminum Scrap: On February 13, the spot aluminum price fell compared to the previous trading day, with SMM A00 spot closing at 23,160 yuan/mt. The market price of aluminum scrap also declined overall today. Baled UBC prices were concentrated at 16,750-17,200 yuan/mt (excluding tax), and shredded aluminum tense scrap (priced based on aluminum content) was quoted at 18,900-19,600 yuan/mt (excluding tax). High aluminum prices suppressed downstream demand, leading to a lower willingness for downstream aluminum processing enterprises to stockpile, with stockpiling volumes significantly lower than in previous years. Additionally, the Chinese New Year holiday period was longer than in 2025. This week, scrap yards and scrap utilization enterprises entered the Chinese New Year holiday, halting shipment activities, with only a small amount of delayed arrivals slightly entering inventory, making the market transactions sluggish.

Secondary Aluminum Alloy: After the end of the Chinese New Year holiday, the secondary aluminum alloy market will gradually shift from the pre-holiday state of "weak supply and demand, stable prices" to a phase where the pace of production resumptions and demand recovery compete. As the shutdown cycle for this year's secondary aluminum plants was slightly longer than last year, most enterprises are expected to resume operations between the eighth and fifteenth days of the first lunar month. The release pace of supply in the first week after the holiday is expected to be slow, providing temporary support to prices; however, the recovery on the demand side is likely to be more gradual, with downstream purchases remaining cautious and need-based until terminal orders show significant growth. The cost side needs to continuously monitor fluctuations in the prices of aluminum scrap, copper, silicon, and other auxiliary materials, as the trend of primary aluminum remains a key variable influencing market sentiment and the price center. Overall, it is highly probable that the ADC12 price will continue the pre-holiday sideways movement pattern in the early post-holiday period. Subsequent direction will depend on the match between supply and demand after full production resumption and the performance of primary aluminum prices. If there is a phased restocking combined with strong primary aluminum performance, there is room for price recovery; otherwise, prices may face slight pressure but will still mainly move sideways.

Summary of Aluminum Market Trends: In summary, from a macro perspective, a call between Chinese and US leaders released positive and mild signals, temporarily easing market tensions over trade frictions and repairing risk appetite. The steady progress of economic recovery in the Eurozone has to some extent offset the pressure from a temporary weakening of the US economy, presenting a generally neutral-to-bullish global macro environment, which provides a relatively stable external setting for the commodity market. Seasonal weakening pressures on the fundamentals have become more pronounced. On the supply side, new electrolysis aluminum projects both domestically and overseas are steadily ramping up production, while on the demand side, attention should be paid to the post-holiday resumption pace of downstream enterprises. Under the current seasonal condition of supply > demand, the market generally expects the post-holiday inventory peak to reach 1.3 million mt, a five-year high, which will be the core factor suppressing prices. Overall, the aluminum price is expected to follow a pattern of initial decline followed by a rebound after the holiday, with SHFE aluminum likely to maintain a fluctuating trend in the short term.

[The information provided is for reference only. This article does not constitute direct advice for investment research decisions. Clients should make decisions cautiously and not use it to replace their own independent judgment. Any decisions made by clients are unrelated to SMM.]