SMM Morning Meeting Minutes, May 27:
Futures:SHFE aluminum closed at 24,560 yuan/mt in the night session on May 26, down 0.04% from the previous close. The price rebounded to near above MA5 (24,515.39), running near MA10 (24,497.17) and MA20 (24,524.02), still below MA40 (24,598.36) and MA60 (24,633.48). The moving average system overall still showed a bearish alignment, but the short-term downtrend eased somewhat. Technical side, the MACD 4-hour indicator DIFF (-52.02) crossed above DEA (-68.14) from below to form a golden cross, with the histogram turning from green to red bars (STICK: 32.25), indicating that bearish momentum was marginally slowing in its release, with bullish capital showing a phased recovery in its positioning strength. However, resistance from the moving averages above remained, and the trend had not fully reversed. LME aluminum closed at $3,674.5/mt on May 26, up 0.51%, continuing to strengthen at elevated levels. The price held firmly above MA5 (3,649.44), MA10 (3,623.09), MA20 (3,590.97), MA40 (3,529.42), and MA60 (3,465.02), with short-, medium-, and long-term moving averages in a standard bullish alignment and the trend structure remaining biased to the upside. The MACD indicator DIFF (41.72) crossed above DEA (37.14) to form and sustain a golden cross, with red histogram bars expanding further from the previous value. Short-term upward momentum was marginally strengthening, and combined with active bullish position building, the strong bias in futures was further confirmed.
Macro front:In May, US consumer confidence edged down. Consumers' views on current economic conditions pulled back, affected by rising prices triggered by the Iran war. The US Conference Board Consumer Confidence Index fell 0.7 points to 93.1 in May. According to the CME "Fed Watch": the probability of the US Fed keeping rates unchanged through June was 99.2%, with a 0.8% probability of a cumulative 25 basis point interest rate cut. The probability of the US Fed keeping rates unchanged through July was 88.6%, with an 11.3% probability of a cumulative 25 basis point rate hike and a 0% probability of a cumulative 25 basis point interest rate cut. ECB Chief Economist Lane hinted that there was no need to correct market speculation about a June rate hike, reinforcing the direction of further monetary policy tightening. Inflation still faces upward pressure. Inflation expectations may be raised in June.
Fundamentals:According to the latest market news: Rio Tinto's initial offer for Q3 2026 CIF MJP (Cost, Insurance and Freight to main ports in Japan for aluminum ingots) was $460/mt, valid until June 5, 2026. Inventory side, aluminum ingot inventory in mainstream consumption areas rose 500 mt WoW on Tuesday, with the inventory buildup mainly originating from Guangdong and Gongyi.
Primary aluminum market:On Tuesday morning, the SHFE aluminum 2606 contract fluctuated downward, with the overall price center moving lower compared to the previous trading day. Affected by the decline in aluminum prices, some sellers held prices firm. Combined with the recent low aluminum prices, buyer buying sentiment picked up somewhat, and overall market transaction activity improved. The mainstream spot cargo quotations in the market were around SMMA00 average price to +10 yuan/mt. On Tuesday, the east China market shipment sentiment index was 3.04, down 0.02 WoW; the procurement sentiment index was 3.17, up 0.01 WoW. Recently, the price spread between Henan and Shanghai was relatively small, higher than long-term contract prices. Downstream processing enterprises in the central China market had low buying sentiment, preferring long-term contract settlement, and overall market transactions were sluggish. Moreover, aluminum prices surged at the market opening, and suppliers offered lower prices with weak willingness to hold prices firm. Ultimately, the actual transaction price range in the central China market hovered between a premium of 20 yuan and a discount of 30 yuan to the central China price. On Tuesday, the central China market shipment sentiment index was 2.82, down 0.02 WoW; the procurement sentiment index was 2.25, down 0.01 WoW.
Aluminum scrap:Recently, primary aluminum prices declined for consecutive days. On Tuesday, the SMM A00 price fell 230 yuan/mt from the previous trading day, and the aluminum scrap market followed the decline overall. Regarding the price difference between A00 aluminum and aluminum scrap, on May 26, the price difference between A00 aluminum and mixed aluminum extrusion scrap free of paint in Foshan was recorded at 2,464 yuan/mt, and the price difference between A00 aluminum and shredded aluminum tense scrap was 2,088 yuan/mt. Operating rates of scrap utilization enterprises remained at low levels, end-user orders lacked follow-through, overall procurement pace turned conservative, and market transactions were sluggish. Aluminum scrap market was expected to continue holding up well at high levels this week, with the mainstream price range for shredded aluminum tense scrap (priced based on aluminum content) maintained at 20,500-21,100 yuan/mt (tax-exclusive). Policy side, "reverse invoicing" regulation continued, and the tight pattern of compliant supply sources was difficult to reverse in the short term; the lagging effect of imported aluminum scrap continued to emerge, with actual port arrivals contracting and expected to further aggravate the tight supply situation; geopolitical risks provided bottom support for aluminum prices, which in turn pushed up aluminum scrap prices. However, the peak season effect was fully winding down, and end-user orders weakened; wrought aluminum alloy scrap inventory in Henan and other regions remained high, suppressing procurement demand, and the secondary aluminum market was expected to continue the pattern of weak supply and demand.
Secondary aluminum alloy:On Tuesday, SMM ADC12 was quoted at 23,600 yuan/mt, down 100 yuan/mt. Driven by the pullback in aluminum prices, bearish sentiment in the market intensified, and most enterprises followed with slight price cuts. Cost side, compliant aluminum scrap invoice sources remained tight, procurement was difficult, constituting rigid cost support and limiting downside room. Demand side, end-use consumption recovery was slow, downstream purchasing was cautious, and overall market transactions were sluggish. Domestic trade profits were squeezed, and some enterprises prioritized export orders, selectively taking orders for low-priced domestic trade orders. Overall, the ADC12 market maintains a weak supply-demand pattern on both sides, and ADC12 prices are expected to move sideways in the short term.
Comprehensive Outlook:Macro front, US consumer confidence edged down, confirming growing anxiety among US consumers over high living costs. Although the labour market remains generally stable with few signs of large-scale layoffs, the recent surge in fuel prices poses particular challenges for low-income households, and bearish external sentiment indirectly weighs on aluminum prices. Fundamentals side, the ex-China supply gap and low inventory still provide bottom support, but elevated domestic inventory remains the core factor suppressing significant price rallies. Additionally, weak spot market transactions further limit upside room for aluminum prices. In the short term, aluminum prices are expected to continue moving sideways with LME outperforming SHFE.
[The information provided is for reference only. This article does not constitute direct advice for investment research decisions. Clients should make prudent decisions and not use this to replace independent judgment. Any decisions made by clients are not related to SMM.]
