2.27 SMM Morning Meeting Minutes
Futures: During the night session on February 26, the most-traded SHFE aluminum 2604 contract opened at 23,705 yuan/mt, reached a high of 23,830 yuan/mt, hit a low of 23,630 yuan/mt, and finally closed at 23,780 yuan/mt, down 65 yuan/mt or 0.27% from the previous close. From a technical perspective, the MA moving averages showed a divergent pattern: SMA5 (23,797.93) > SMA10 (23,737.66) < SMA20 (23,756.92) < SMA40 (23,830.94). On the 4-hour candlestick chart, the MACD red bars continued (DIFF: -70.04, DEA: -122.26). In terms of open interest, the night session open interest was approximately 252,000 lots, down 411 lots from the daytime session. LME aluminum opened at $3,167.0/mt, reached a high of $3,173.5/mt, hit a low of $3,113.5/mt, and closed at $3,141.5/mt, down 1.04% from the previous day. Trading volume was 21,131 lots, up 224 lots, while open interest stood at 683,000 lots, up 7,117 lots.
Macro Front: The Ministry of Commerce held a regular press conference on February 26. Spokesperson He Yongqian responded to questions regarding the upcoming sixth round of China-US economic and trade consultations, stating that both sides maintain communication at various levels through the China-US economic and trade consultation mechanism. (Bullish ★) According to CME's "FedWatch Tool", the probability of the US Fed cutting interest rates by 25 basis points in March is 4.0%, while the probability of keeping rates unchanged is 96.0%. By April, the probability of a cumulative 25-basis-point rate cut is 17.3%, the probability of unchanged rates is 82.1%, and the probability of a cumulative 50-basis-point cut is 0.6%. By June, the probability of a cumulative 25-basis-point rate cut is 43%. (Bearish ★)
Fundamentals: Post-holiday, the operating rates of downstream processing extrusions showed a steady recovery pace. Extrusion enterprises gradually entered the phase of resuming production, with operating rates significantly rebounding by 11.5 percentage points from pre-holiday levels to 37%. The recovery accelerated, with construction extrusion remaining weak while PV extrusion maintained high operating rates; further recovery is expected next week. Except for the primary aluminum alloy sector, all other downstream sectors concentrated on resuming production after the holiday, with operating rates rebounding to varying degrees. However, the overall progress was relatively slow, and end-user orders were not fully released. Entering March, as the industry chain's production resumptions deepen, the sector's operating rate is expected to recover to normal pre-holiday levels, showing a steady rebound trend in the short term.
Primary Aluminum Market: In the morning session, the most-traded SHFE aluminum 2602 contract fluctuated downward, with the price center higher than the previous trading day. Influenced by the spot-futures price spread and the price spread between futures contracts, some traders entered the market to build positions. Spot aluminum quotations continued to rise from the opening. Mainstream quotations were concentrated at the average price to 30 yuan/mt. On Thursday, the shipment sentiment index in the east China market was 2.81, up 0.15 WoW, while the purchase sentiment index stood at 2.70, up 0.08 WoW. SMM A00 aluminum closed at 23,520 yuan/mt, up 140 yuan/mt from the previous trading day, at a discount of 180 yuan/mt against the 2603 contract, up 20 yuan/mt from the previous trading day. SHFE aluminum prices rose on Thursday. In the central China market, holders showed a clear willingness to sell on highs. However, in the initial post-holiday resumption period, downstream processing enterprises still had inventory on hand and were deterred by high aluminum prices, resulting in weak restocking demand. Overall market trading was sluggish, with trading volume declining compared to the previous two days. The actual transaction price in the central China market fell from a premium of 10 yuan/mt to the central China price before opening to a discount of 40 yuan/mt. On Thursday, the shipment sentiment index in the central China market was 2.60, up 0.06 WoW, while the purchase sentiment index was 2.13, down 0.03 WoW. SMM central China aluminum closed at 23,410 yuan/mt, up 110 yuan/mt from the previous trading day, at a discount of 290 yuan/mt against the 2603 contract, down 10 yuan/mt from the previous trading day. The price spread between Henan and Shanghai was -110 yuan/mt, widening 30 yuan/mt from the previous trading day.
Aluminum Scrap:On Thursday, spot primary aluminum prices rose from the previous day. SMM A00 aluminum closed at 23,520 yuan/mt, and aluminum scrap prices followed the increase. Baled UBC was mainly offered at 17,000-17,500 yuan/mt (ex-tax), while shredded aluminum tense scrap (priced based on aluminum content) was mainly offered at 19,200-19,900 yuan/mt (ex-tax). In terms of the price difference between A00 aluminum and aluminum scrap, the price difference between A00 aluminum and mixed aluminum extrusion scrap free of paint in Foshan was 3,448 yuan/mt on February 26, and the price difference between A00 aluminum and shredded aluminum tense scrap was 2,661 yuan/mt. After the Chinese New Year holiday, most domestic scrap yards resumed operations and shipments between the 8th and 10th day of the lunar new year. Although raw material inventories at downstream aluminum processing enterprises dropped to low levels during the holiday, creating restocking demand, the 2026 Chinese New Year holiday was longer than in previous years, leading to a lag in large-scale restocking activities. This week, aluminum scrap shipments showed no clear signs of recovery. Aluminum scrap prices are expected to hover at highs next week, with shredded aluminum tense scrap (priced based on aluminum content) mainly fluctuating in the range of 19,000-19,600 yuan/mt (ex-tax). Supply side, scrap yards are gradually resuming full operations, and supply release will increase, but recycling policies continue to constrain liquidity. Demand side, downstream enterprises are accelerating their pace of resumption, and restocking demand is expected to be released slowly. The overall tug-of-war between sellers and buyers will persist. Market trading activity will gradually recover but remain sluggish. Close attention should be paid to the progress of downstream resumption, primary aluminum price trends, and changes in recycling policies, while remaining vigilant against price fluctuation risks.
Secondary Aluminum Alloy:Futures side, the most-traded 2604 secondary aluminum alloy contract initially fell then rose on Thursday. It opened higher in the morning session but fluctuated downward to 22,600 yuan, then stabilized and rebounded in the afternoon, finally closing at 22,710 yuan/mt, up 60 yuan/mt or 0.26% from the previous close.
Aluminum Market Summary: Overall, from a macro perspective, rising short-term expectations for US Fed interest rate hikes are boosting the US dollar, while geopolitical tensions with Iran and tariff policies are heightening risk aversion. Coupled with a slowdown in US economic resilience and a weak recovery in the eurozone, the global macro environment exhibits a fragile balance with high volatility. Seasonal pressures on the fundamentals remain prominent. On the supply side, new aluminum projects in the domestic market are steadily ramping up production, while the proportion of liquid aluminum conversion remains relatively low. On the demand side, post-holiday operating rates of downstream processing materials are recovering steadily. However, due to seasonal oversupply and some cargo backlog at railway stations, domestic aluminum ingot inventory is expected to peak at over 1.35 million mt after the holiday, hitting a five-year high, which will be a major factor suppressing price increases. Overall, SHFE aluminum is likely to continue moving sideways in the short term.
[The information provided is for reference only. This article does not constitute direct investment advice. Clients should make decisions cautiously and not use this to replace independent judgment. Any decisions made by clients are unrelated to SMM.]
