SHFE Cast Aluminum Alloy Warrants Down 510 mt to 22,727 mt on July 8

[SMM Aluminum Alloy Flash] This week, China's social inventory of secondary aluminum alloy ingots fell by 9,000 mt WoW to 35,300 mt, marking the sixth consecutive week of destocking. Constrained by tax invoices, the industry's operating rate remained low, with limited new warehouse inflows; meanwhile, favorable spot-futures price spreads prompted increased sales of spot and futures aluminum, further accelerating the destocking of social inventory.

SHFE aluminum prices corrected slightly in early trading today. Downstream processing enterprises in the central China market were constrained by weak end-user orders and high finished product inventories, leading to subdued buying sentiment. However, amid the widening discount trend, trading firms engaging in both spot and futures market maintained strong buying sentiment, tending to purchase at deep discounts, while suppliers showed notable willingness to hold prices firm. Ultimately, the actual transaction price range in the central China market was centered around a discount of 120-140 yuan/mt against the SHFE aluminum July contract.

[Macro Sentiment Hedging Suppresses Rise, Domestic Destocking Acceleration Supports Aluminum Price Bottom] On the domestic front, positives are increasingly prominent, with the share of liquid aluminum continuing to rise. In the past week, aluminum ingot warehouse withdrawals have hit a four-year high, and the pace of inventory destocking has significantly accelerated, providing support for the bottom of SHFE aluminum. Amid intertwined bullish and bearish factors, US dollar bullish factors abroad are offsetting supply-side and geopolitical bearish factors. After previous overselling, LME aluminum's downward momentum is slowing, and in the near term, it will mainly consolidate at lows for a recovery. Supported by rapid destocking, the likelihood of the domestic market underperforming LME aluminum is low. SHFE and LME may see slight divergence, and a persistently one-sided weak trend is unlikely.