6.16 SMM Morning Meeting Minutes
Futures:The most-traded SHFE aluminum contract opened at 24,025 yuan/mt in the night session of June 15, hit a high of 24,025 yuan/mt, a low of 23,730 yuan/mt, and closed at 23,795 yuan/mt, down 1.55% from the previous close. During the session, prices fluctuated and pulled back before plunging sharply, forming a large bearish candlestick that fell below the 5-period MA of 24,021.00 and simultaneously traded below all medium and long-term moving averages—MA10 (24,075.37), MA20 (24,156.80), MA40 (24,286.94), and MA60 (24,372.72). The overall alignment of moving averages across all periods maintained a bearish downward orientation. Support at the previous low of 23,825 was directly breached, and short-term downward selling pressure was intensively released. Trading volume in this session was 127,000 lots, an increase of 30,071 lots from the prior session, and open interest was 239,000 lots, up 13,497 lots, showing a characteristic of increased bearish positions. From a technical perspective, on the 4-hour MACD indicator, DIFF (-107.76) was below DEA (-104.30), forming a dead cross, with the green STICK value at -6.92, indicating strengthened bearish momentum. On June 15, LME aluminum opened at $3,536.0/mt, hit a high of $3,560.0/mt, a low of $3,357.0/mt, and closed at $3,383.0/mt, down 4.52% from the previous close. That day, prices plunged sharply, forming an extremely long bearish candlestick that fell directly below MA5 (3,478.94) and traded below all-period moving averages—MA10 (3,539.21), MA20 (3,577.20), MA40 (3,561.49), and MA60 (3,515.54). The bearish alignment of all-period MAs further widened, and support from previous lows was entirely lost. Trading volume that day was 48,091 lots, up 24,198 lots from the prior session, and open interest was 643,394 lots, down 5,917 lots, showing a characteristic of reduced bullish positions. From a technical perspective, on the daily MACD indicator, DIFF (-20.54) was below DEA (11.43), with the dead cross structure continuing to deepen, and the green STICK value at -63.94, indicating notably strengthened bearish momentum.
Macro Front:US manufacturing output was flat in May on a MoM basis, marking the first stagnation this year and indicating that supply chain shocks and cost surges from the Iran war may be starting to weigh on manufacturing activity. The US and Iran signed an electronic Memorandum of Understanding, and President Trump stated that the specific text might be released sometime after Friday (June 19). In remarks to The New York Times on the 14th local time, Trump said that Iran will be allowed to conduct limited, low-level uranium enrichment and that the new US-Iran agreement will ensure that “Iran’s uranium enrichment will be used only for non-military purposes.”
Fundamentals:According to data from the China Motorcycle Chamber of Commerce, in May, motorcycle production and sales reached 2.218 million units and 2.1516 million units, down 2.67% MoM and 5.28% MoM, and up 18.09% YoY and 12.83% YoY, respectively. From January to May, motorcycle production and sales totaled 9.8208 million units and 9.8181 million units, with production and sales increasing 11.18% YoY and 11.04% YoY, respectively. In May, motorcycle industry production and sales increased YoY but pulled back MoM, while exports maintained high growth. Cumulative from January to May, exports continued to provide steady boost, domestic sales improved, and both production and sales rose steadily, with overall industry operations stable and improving. Inventory side, aluminum ingot inventory in major consuming regions fell 0.7 WoW this Monday, with destocking mainly driven by Guangdong and Wuxi.
Primary aluminum market: In early trading, the SHFE aluminum 2606 contract fluctuated, with aluminum prices staying at relatively high levels. However, affected by high aluminum prices, downstream purchasing sentiment weakened, pushing quotes and transaction prices lower. The mainstream spot transaction price was at a discount of 90~100 yuan/mt against the SHFE July contract. Yesterday in east China, the selling sentiment index was 2.96, flat from the previous day; the buying sentiment index was 2.76, down 0.06 from the previous day. In the night session, aluminum futures prices rose again. Before the opening, quotes in the central China market were already showing a weakening trend; after the opening, absolute prices pulled back. Downstream processing enterprises showed strong wait-and-see sentiment, with purchasing sentiment weak, and suppliers had weak willingness to hold prices firm, as quotes declined continuously. Eventually, actual transaction prices in the central China market hovered around a discount of 170-190 yuan/mt against the SHFE July contract. Yesterday in central China, the selling sentiment index was 2.92, up 0.01 from the previous day; the buying sentiment index was 2.20, down 0.01 from the previous day.
Aluminum scrap: Yesterday, SMM A00 price fell 10 yuan/mt from the previous trading day to 24,130 yuan/mt, while the aluminum scrap market held broadly steady. Regarding the price spread between primary and scrap aluminum, on June 15, the price difference between A00 aluminum and mixed aluminum extrusion scrap free of paint in Foshan was recorded at 2,640 yuan/mt, and the price difference between A00 aluminum and shredded aluminum tense scrap stood at 2,103 yuan/mt. The continuous narrowing of the spread reflects relatively strong underlying support for aluminum scrap. On the supply side, the regulatory enforcement of the "reverse invoicing" policy has continued to tighten. In some provinces, tax rebates were canceled and tax audits intensified, leading to higher costs for raw materials with invoices. Production cuts and shutdowns further spread across enterprises in Anhui, Jiangxi, Hubei, and other regions. Currently, compliance costs in the raw material collection segment remain high. Available supply of raw materials with invoices stayed tight, with the scarcity of invoices serving as a key support for aluminum scrap prices. Moreover, the price spread between Chinese and overseas markets remained inverted, making low-priced, high-quality imported supply scarce and further weakening the supplement to the domestic market. On the demand side, the off-season effect continued to deepen. Downstream scrap utilization enterprises saw their operating rates remain low, with end-user orders struggling to follow through. Enterprises maintained a strategy of purchasing as needed and keeping low inventories, with a cautious procurement atmosphere. Downstream die-casting enterprises' orders remained sluggish; their purchases were mainly based on rigid demand and small batches, with insufficient willingness to rush to buy amid price rises. Market trading activity stayed low. End-use consumption saw little substantial improvement, and the demand side continued to suppress the upside room for prices. Aluminum scrap prices are expected to continue fluctuating at highs with a bearish bias, but downside room is limited. The tightness of compliant invoiced cargo persists, and invoice scarcity provides bottom support for aluminum scrap prices. The lagging contraction effect of imported aluminum scrap has not yet fully materialized, and subsequent port arrivals will remain low. Meanwhile, as the off-season deepens, concerns grow over the sustainability of orders for downstream scrap utilization enterprises. These enterprises maintain strategies of purchasing as needed and low inventory, with little significant improvement in the purchasing atmosphere, resulting in an overall pattern of weak supply and demand.
Secondary Aluminum Alloy: Spot Market: Yesterday, ADC12 enterprise quotations generally rose, with upward adjustments mainly concentrated at around 100 yuan/mt. Currently, the supply of compliant aluminum scrap resources is tight, procurement difficulty is increasing, aluminum scrap prices stay high, and enterprise production costs have risen significantly. Meanwhile, some enterprises reported that tight raw material supply continues to affect normal production, and the risk of production cuts has increased again. With strengthening expectations of supply-side contraction, enterprises generally maintain a strong willingness to hold prices firm and actively pass through cost pressures to downstream by raising prices. However, demand-side performance remains relatively mediocre, with limited improvement in downstream orders, constraining sustained price increases to some extent. Overall, the ADC12 market remains in a pattern of "strong cost support and weak demand follow-through," and in the short term, the price center is expected to continue to hold up well.
Aluminum Market Summary: Macro front, the US and Iran have completed the signing of an electronic version of a memorandum of understanding. Expectations of geopolitical easing continue to materialize, market panic over Middle East geopolitical conflicts continues to subside, and commodity geopolitical risk premiums have weakened significantly. US May CPI rose 4.2% YoY, hitting a three-year high, while core CPI also strengthened. The market continues to game whether the US Fed will resume rate hikes this year, and expectations of liquidity tightening continue to suppress metal valuations. Fundamentals side, the Middle East conflicts have caused involuntary production cuts in aluminum capacity outside China, and expectations of a widening global supply gap, combined with rising energy cost expectations, provide strong bottom support for LME aluminum. Domestically, the inventory destocking trend has been established, and the destocking logic continues to materialize. The rebound in the proportion of liquid aluminum, export demand support, and supply standardization reducing aluminum ingot formation volume — these three fundamental factors jointly drive the continuation of destocking. SMM maintains its judgment that inventory will drop to around 1.28 million mt by late June, and is expected to further approach 1.2 million mt by late June to early July, providing certain support for aluminum prices. However, domestic high inventory pressure remains relatively noticeable, and with the bearish macro sentiment currently dominating the market, short-term domestic aluminum prices are primarily expected to fluctuate and adjust with a weak bias.
[The information provided is for reference only. This article does not constitute direct investment research advice. Clients should make cautious decisions and not use this as a substitute for independent judgment. Any decisions made by clients are not related to SMM.]
