SMM Morning Meeting Minutes for 2.26
Futures:During the night session on February 25, the most-traded SHFE aluminum 2604 contract opened at 23,845 yuan/mt, hit a high of 24,000 yuan/mt, touched a low of 23,785 yuan/mt, and finally closed at 23,980 yuan/mt, up 145 yuan/mt or 0.61% from the previous close. Technically, the MA lines showed a divergent arrangement, with SMA5 (23,786.47) > SMA10 (23,697.59) < SMA20 (23,744.29) < SMA40 (23,833.00). The MACD 4-hour candlestick turned to red bars (DIFF: -100.09, DEA: -148.92). In terms of open interest, the night session open interest was about 257,000 lots, an increase of 8,746 lots from the daytime session. LME aluminum opened at $3,106.0/mt, reached a high of $3,175.0/mt, touched a low of $3,102.0/mt, and closed at $3,174.5/mt, up 2.06% from the previous day. Trading volume was 20,907 lots, up 2,949 lots, and open interest was 676,000 lots, up 875 lots.
Macro Front:US Fed's Schmid stated that the focus of the debate on the Fed's balance sheet is the scale of reserves, expressing concerns about the duration of the Fed's balance sheet. He also mentioned that the Fed's mortgage holdings have lowered yields in that sector, and it will take years to gradually reduce the scale of its mortgage bond holdings. (Bearish ★) According to CCTV News, on February 25, US Trade Representative Jamison Greer said that the US "global import tariff" rate on certain countries, recently implemented at 10%, would rise to 15% or higher, but he did not disclose any specific trading partners or other details. (Bullish ★) On the afternoon of February 25, President Xi Jinping met with German Chancellor Merz, who was on an official visit to China, in Beijing. Xi put forward three suggestions for the next phase of China-Germany relations: first, to be reliable partners supporting each other; second, to be open and mutually beneficial innovation partners; third, to be people-to-people partners who understand and cherish each other. (Bullish ★)
Fundamentals:Inventory side, on February 25, aluminum ingot inventories in mainstream consumption areas increased by 24,000 mt MoM, affected by downstream Chinese New Year breaks, with all three regions showing inventory buildup. In the short term, high aluminum prices may continue to suppress end-use demand, coupled with the impact of downstream Chinese New Year breaks, aluminum ingots still face inventory buildup risks, and spot premiums/discounts are expected to remain under pressure. This Thursday, SMM social inventories of aluminum ingots increased by 49,000 mt WoW compared to this Tuesday.
Primary Aluminum Market:In the early session, SHFE aluminum 2602 fluctuated upward, with the price center slightly lower than the previous trading day. Influenced by the spot-futures price spread and price spreads between futures contracts, some traders entered the market to build positions, and spot premiums/discounts narrowed somewhat. Mainstream quotations concentrated around the average to 20 yuan/mt. On Wednesday, the shipment sentiment index in east China was 2.66, up 0.32 MoM; the purchasing sentiment index was 2.62, up 0.31 MoM. SMM A00 aluminum closed at 23,380 yuan/mt, down 10 yuan/mt from the previous trading day, at a discount of 200 yuan/mt against the 2603 contract, up 10 yuan/mt from the previous trading day. On Wednesday, the trading sentiment in central China slightly recovered. After the end of the Chinese New Year holiday, traders and downstream processing enterprises gradually resumed operations, with the market trading atmosphere warming up but still relatively sluggish. Downstream enterprises tended to restock at lower prices, but holding traders were firm on their prices. The actual transaction price in central China fluctuated between a premium of 10 yuan/mt and a discount of 20 yuan/mt against the central China price, with prices remaining relatively firm. On Wednesday, the shipment sentiment index in central China was 2.54, up 0.02 MoM; the purchasing sentiment index was 2.16, up 0.02 MoM. SMM central China closed at 23,300 yuan/mt, down 10 yuan/mt from the previous trading day, at a discount of 280 yuan/mt against the 2603 contract, up 10 yuan/mt from the previous trading day. The price spread between Henan and Shanghai was -80 yuan/mt, unchanged from the previous trading day.
Aluminum scrap:On Wednesday, the spot primary aluminum price fluctuated narrowly compared to the previous day, with SMM A00 spot closing at 23,380 yuan/mt. The aluminum scrap market prices remained stable on Wednesday. Baled UBC scrap aluminum prices were concentrated between 16,800-17,250 yuan/mt (excluding tax), while shredded aluminum tense scrap (priced based on aluminum content) prices were concentrated between 19,100-19,800 yuan/mt (excluding tax). In terms of the price difference, on February 25, the price difference between A00 aluminum and mixed aluminum extrusion scrap free of paint in Foshan was 3,455 yuan/mt, and the price difference between A00 aluminum and shredded aluminum tense scrap in Foshan was 2,649 yuan/mt. High aluminum prices suppressed downstream demand, with downstream aluminum processing enterprises showing low willingness to stockpile, and the stockpiling volume significantly decreased compared to previous years. Additionally, the Chinese New Year holiday period was longer than in 2025. It is expected that the aluminum scrap market will hover at highs this week, with downstream demand struggling to recover. The mainstream operating range for shredded aluminum tense scrap (priced based on aluminum content) will remain between 19,000-19,800 yuan/mt (excluding tax). Scrap yards and some scrap utilization enterprises have not yet resumed operations, constraining the supply of new scrap, leading to tight availability. Coupled with high aluminum prices, this provides bottom support for aluminum scrap prices. Moreover, downstream demand declined MoM from January, and it is expected that market transactions will remain sluggish, with a continued weak supply-demand balance. Transactions will mainly be driven by just-in-time restocking. Close attention should be paid to the resumption pace of downstream processing enterprises after the holiday, as expectations of post-holiday resumption may rekindle market sentiment, potentially pushing up aluminum prices and keeping the aluminum scrap market trading atmosphere cold.
Secondary aluminum alloy:In futures, the most-traded 2604 aluminum alloy contract opened at its lowest point of 22,275 yuan/mt on Wednesday, with the futures steadily rising. The upward trend accelerated around noon, reaching a high of 22,740 yuan/mt during the session. In the afternoon, prices pulled back from their highs, but the overall decline was limited, with prices consistently trading above the moving average. By the close, prices had rebounded to the 22,660 yuan/mt level, settling in a relatively high range, with an intraday gain of about 1.3%. Spot side, the A00 aluminum price edged down 10 yuan/mt from the previous trading day to 23,380 yuan/mt, while the SMM ADC12 price held steady at 23,750 yuan/mt. The futures market generally consolidated narrowly, and secondary aluminum market quotations were mostly stable. During the week, downstream inquiries and actual transactions showed some recovery, but the overall trading atmosphere remained relatively cautious, with market sentiment mediocre. From a fundamental perspective, the pace of production resumptions at enterprises was slow in the first week after the holiday, with limited incremental supply releases, providing some support to prices. However, demand recovery is more likely to be gradual; before terminal orders see a significant increase, downstream procurement will mainly focus on restocking for rigid demand, making it difficult to sustain substantial volume growth. Cost side, continued attention is needed on price fluctuations of aluminum scrap and auxiliary materials such as copper and silicon, while the trend of primary aluminum will continue to dominate market sentiment and the price center. Overall, ADC12 prices are likely to continue their pre-holiday sideways movement in the initial post-holiday period. The subsequent direction will depend on the supply-demand matching after full production resumptions and the performance of primary aluminum. If phased restocking demand is released alongside a strong primary aluminum market, there is some room for price recovery. Conversely, if demand recovery falls short of expectations, prices may face slight pressure but will generally remain range-bound. Import side, overseas ADC12 offers rose by $20/mt to $2,870-2,930/mt, but supported by the recent strengthening of the yuan against the US dollar, import arbitrage margins remain profitable.
Aluminum Market Summary:Overall, from a macro perspective, rising short-term expectations for US Fed interest rates have boosted the US dollar, while US-Iran geopolitical tensions and tariff policies have heightened risk aversion. Coupled with a slowdown in US economic resilience and weak recovery in the eurozone, the global macro environment exhibits a fragile balance with high volatility. Fundamental seasonal weakening pressure is becoming more pronounced. On the supply side, new aluminum projects domestically and overseas are steadily ramping up production. On the demand side, attention is needed on the pace of downstream enterprise restarts after the holiday. Currently, under the influence of seasonal supply exceeding demand, the market widely expects post-holiday inventory peaks to reach 1.3 million mt, hitting a five-year high, which will be a core factor suppressing prices. Overall, short-term aluminum prices are expected to continue moving sideways.
[The information provided is for reference only. This article does not constitute direct investment research or decision-making advice. Clients should make decisions cautiously and not use this as a substitute for independent judgment. Any decisions made by clients are unrelated to SMM.]
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