SMM Aluminum Morning Meeting Summary on May 22
Futures Market: Overnight, the most-traded SHFE aluminum 2507 contract opened at 20,155 yuan/mt, with a high of 20,175 yuan/mt, a low of 20,100 yuan/mt, and closed at 20,135 yuan/mt, down 55 yuan/mt or 0.27% from the previous close. On Wednesday, LME aluminum opened at $2,481.5/mt, with a high of $2,497.5/mt, a low of $2,464/mt, and closed at $2,475.5/mt, down $5.5/mt or 0.22%.
Macro: (1) On May 20, the Special Meeting of China-ASEAN Economic and Trade Ministers was held online, where the economic and trade ministers of both sides jointly announced the full conclusion of negotiations for Version 3.0 of the China-ASEAN Free Trade Area. The Version 3.0 negotiations, launched in November 2022, concluded substantively in October 2024 after nearly two years and nine rounds of formal negotiations. With the full coordination and joint promotion of economic and trade ministers from various countries, both sides have fully completed the negotiations, taking a crucial step towards the goal of signing an upgraded protocol. (Bullish ★) (2) Demand for the 20-year U.S. Treasury bond auction was weak, with yields on both 20-year and 30-year U.S. Treasury bonds rising above 5%. (Bearish ★) (3) The General Office of the Shanghai Municipal People's Government issued the "Special Action Plan for Boosting Consumption in Shanghai" to promote automobile consumption, introduce new subsidies for purchasing digital products such as mobile phones, tablets, smartwatches (bracelets), and increase support for green home appliance, furniture, and home decoration consumption. (Bullish ★)
Fundamentals: (1) According to SMM statistics, as of May 21, aluminum ingot inventory in Guangdong was 234,000 mt; in Wuxi, it was 157,000 mt; and in Gongyi, it was 56,000 mt. The total inventory across the three locations was 447,000 mt, a decrease of 10,500 mt from the previous trading day. SMM expects that despite the relatively low arrivals in China during mid-May, which have allowed domestic aluminum ingot inventory to maintain a destocking trend in the short term and may continue to decline in the near future, under normal circumstances, due to the overall smooth domestic transportation in May and the expected weakening of outflows during the off-season, the circulation of aluminum in major domestic consumption areas may gradually ease from late May to early June. (Bullish ★) (2) According to SMM, starting from May 21, a large alumina refinery in Shandong adjusted the purchase price for 32% ionic membrane liquid caustic soda, increasing it by 20 yuan/mt from the previous 780 yuan/mt. The ex-factory price under the two-invoice system will be 800 yuan/mt (approximately 2,500 yuan/mt converted to 100% concentration). (Bullish ★) (3) According to the latest customs data, domestic aluminum scrap imports in April 2025 were approximately 190,400 mt, up 5.4% YoY; imports of unwrought aluminum alloy in April were 86,800 mt, down 30.6% YoY. (Neutral)
Primary Aluminum Market: On Wednesday, the SHFE aluminum market fluctuated in the morning session, with the price center moving higher. In the spot market, the destocking of social inventory provided support for local spot premiums, and downstream buyers purchased as needed amid high aluminum prices. Specifically, trading activity in east China was moderate yesterday, with limited arrivals providing strong support to prices. Overall, purchases were made as needed, and market transactions were concluded at a premium of +10 yuan/mt against the SMM average price. On Wednesday, the SMM A00 aluminum price was reported at 20,310 yuan/mt, up 100 yuan/mt from the previous trading day, with a premium of 70 yuan/mt against the 06 contract, unchanged from the previous trading day. In the central China market, transactions were concentrated on shipments at the SMM central China average price yesterday. The SMM central China A00 aluminum price against the SHFE aluminum 2506 contract was recorded at 20,240 yuan/mt, up 100 yuan/mt from the previous trading day. The price spread between Henan and Shanghai was 70 yuan/mt, unchanged from the previous trading day, and the price was on par with the 2506 contract. In the short term, limited arrivals in east China are conducive to an increase in premiums and discounts, and subsequent attention should be paid to changes in demand.
Secondary aluminum raw materials: On Wednesday, the concentrated quoted prices for baled UBC aluminum scrap ranged from 15,250 to 15,850 yuan/mt (tax not included), while the quoted prices for shredded aluminum tense scrap ranged from 15,800 to 17,300 yuan/mt (tax not included). Regionally, prices remained stable in multiple regions such as Hubei, Guizhou, and Anhui, with no overall price adjustments. Other regions, including Shanghai, Jiangsu, Henan, and Shandong, closely tracked aluminum prices, with price adjustments ranging from 50 to 100 yuan/mt. In Jiangxi, after an overall increase in aluminum scrap prices on Tuesday, quoted prices on Wednesday remained stable without following the changes in primary aluminum. Regarding the price difference between A00 aluminum and aluminum scrap, the price difference between A00 aluminum and mechanical casting aluminum scrap in Shanghai narrowed by 8 yuan/mt from yesterday to 1,838 yuan/mt. In Foshan, the price difference between A00 aluminum and aluminum extrusion scrap increased by 110 yuan/mt from yesterday to 1,493 yuan/mt. In the short term, the aluminum scrap market is expected to continue fluctuating at highs. The tight supply situation for aluminum tense scrap products is unlikely to change, providing strong price support. Wrought aluminum alloy scrap products will still be dominated by fluctuations in primary aluminum prices, with narrow adjustments expected.
Secondary aluminum alloy: Aluminum prices stopped falling and rebounded yesterday, but due to the deepening off-season in end-use demand, secondary aluminum smelters lacked the momentum to follow the price increase. Domestic SMM ADC12 prices remained in the range of 20,300 to 20,500 yuan/mt. After May, production cuts and shutdowns have occurred frequently in the industry, and it is expected that ADC12 prices will continue to fluctuate rangebound in the short term. In overseas markets, the CIF quoted prices for imported ADC12 mostly ranged from $2,400 to $2,410/mt, while the tax-not-included quoted price for local ADC12 in Thailand was approximately 83 Thai baht/kg.
Summary: On the macro side, the US dollar index extended its decline from the previous two trading days overnight, weighed down by controversies over US tax cuts and spending bills, as well as weak demand for the 20-year US Treasury bond auction. Market concerns about the increase in US debt and a weakening economic outlook intensified, leading to a rise in market risk aversion. On the fundamentals side, there were relatively small changes in the short-term supply side. On the cost side, the specific impact of the Guinea incident on local bauxite supply remains to be assessed, and it may provide short-term sentiment-based support to the alumina cost side. The demand side is facing dual pressures from domestic seasonal weakness and trade uncertainties, and the operating rate of aluminum processing enterprises is expected to decline under pressure in the short term. Overall, the current low inventory provides support for aluminum prices, but macro headwinds and off-season pressure on the demand side limit the upside room. In the short term, aluminum prices are expected to remain volatile, with attention to be paid to the performance of domestic and overseas demand as well as the supply of bauxite.
[The information provided is for reference only. This article does not constitute direct advice for investment research and decision-making. Clients should make decisions cautiously and should not rely on this information to replace their own independent judgment. Any decisions made by clients are not related to SMM.]
》Click to view the SMM Aluminum Industry Chain Database
》Subscribe to view the historical spot prices of SMM metals
