July 15 SMM Aluminum Morning Meeting Minutes
Futures: The most-traded SHFE aluminum 2608 contract settled at 23,165 yuan/mt, down 45 yuan, or 0.19%, from yesterday's settlement price. It opened at 23,350 yuan/mt and fluctuated within a range of 23,165–23,380 yuan/mt. Prices traded above the MA5 (23,107.00) and MA10 (22,967.50) but below the MA30 (23,493.83) and MA60 (24,101.25) moving averages. The short- and medium-term moving averages are in a bearish alignment and gradually pressing lower. Overall, the structure is clearly one of consolidation on a subdued note, with moving averages of various periods overhead forming layers of resistance. On the MACD indicator, the DIF (-256.1830) is above the DEA (-340.0955), and the MACD histogram stands at 167.8250, indicating that bearish momentum has weakened. The suggested core trading range for SHFE aluminum is 22,800–23,400 yuan/mt. The LME aluminum 3M contract settled at $3,177.00/mt, up 0.32%. Prices traded above the MA5 (3,171.20) and MA10 (3,144.40) but below the MA30 (3,294.12) and MA60 (3,446.86) moving averages. The short- and medium-term moving averages are in a bearish alignment and gradually pressing lower. Overall, the structure is clearly one of consolidation on a subdued note, with the moving averages overhead imposing notable resistance. On the MACD indicator, the DIF (-77.4920) is above the DEA (-95.2152), and the MACD histogram is 35.4463, indicating that bearish momentum has weakened and the downtrend has slowed. The suggested core trading range for LME aluminum is $3,100–$3,200/mt.
Macro: On July 14, US forces continued strikes on multiple locations in Iran, while Iran continued to strike US military bases. US President Trump stated that trade and investment agreements reached between Gulf countries and the US would replace the 20% fee on cargo transiting the Strait of Hormuz. The US will impose a "total blockade" on Iran, while the Strait of Hormuz remains open to all vessels except Iranian ones. The Iranian military stated that it would not make any concessions on the Strait of Hormuz issue. The Iranian parliament proposed a bill concerning the security of the Strait of Hormuz. The US Central Command said that as of 16:00 Eastern Time on July 14, US forces had resumed the maritime blockade of vessels entering and exiting Iranian ports and coastal areas. US June inflation pulled back more than expected. Data from the Bureau of Labor Statistics showed that US CPI rose 3.5% YoY in June, and core CPI rose 2.6%, markedly pulling back from the previous reading and below market expectations. The US CPI declined 0.4% MoM in June, the first monthly decline in six years, with the drop far exceeding the market expectation of a 0.1% fall. Following the data release, traders pushed back their bets on a Fed rate hike to October. Kevin Warsh made his first appearance before Congress for the semiannual testimony since taking office as Fed Chairman. Warsh took a hardline hawkish stance, stating that he had "zero tolerance" for the five-year streak of high inflation, and explicitly rejected market views that the 0.4% MoM decline in June CPI meant the battle against inflation was "mission accomplished."Facing pressure from the Trump administration to cut interest rates, Warsh refused to provide forward guidance, stressing that the US Fed will adhere to independent decision-making based on economic data.
Fundamentals: In markets outside China, geopolitical tensions continued to escalate, the Strait of Hormuz management issue remained unresolved, and cargo navigation was unlikely to fully recover in the short term, with geopolitical risk premiums still present. The US June CPI fell 0.4% MoM, the first MoM decline in six years, and the drop was far larger than market expectations of 0.1%. The US Fed’s interest rate hike was delayed, but its hawkish stance remained firm, and it is expected to maintain its tightening trend. In the Chinese market, exports of unwrought aluminum and aluminum extrusion remained strong in June, reaching 711,000 mt, breaking the 700,000 mt threshold for the first time, up 12.5% MoM from 632,000 mt in June and up 45.4% YoY from 489,000 mt.
Primary aluminum market: In early trading, the SHFE aluminum 2606 contract held a higher center than the same period of the previous trading day. Affected by higher aluminum prices, buying sentiment was weak today, dominated by just-in-time procurement. Transactions were done at discounts of 10-20 yuan/mt against the SHFE aluminum 2608 contract. In east China, the shipment sentiment index was 3.08, flat MoM; the purchase sentiment index was 3.16, flat MoM.
Amid the July off-season and high temperatures, downstream processing enterprises in central China operated at low rates, and buying sentiment remained subdued. However, as premiums/discounts were large, hedging sentiment among traders encouraged them to push wider discounts to profit from the spread; their buying sentiment was relatively high, and suppliers’ willingness to hold prices firm and sell was notable, driving market discounts to widen. Ultimately, actual transaction prices in central China ranged from discounts of 130-170 yuan/mt against the SHFE aluminum 2608 contract. The shipment sentiment index in central China was 2.81, down 0.02 MoM; the purchase sentiment index was 2.23, up 0.01 MoM.
Secondary aluminum materials: SMM A00 spot aluminum closed at 23,270 yuan/mt, up 270 yuan/mt from the previous trading day, and the aluminum scrap market broadly followed the increase by 150-200 yuan/mt. Supply-side constraints continued to intensify, with the impact of the reverse invoicing policy deepening further. In Shandong, the suspension of reverse invoicing effective July was reported, and production cuts and shutdowns among small and medium scrap utilization enterprises in Anhui, Jiangxi, Hubei, and other regions spread, further heightening the scarcity of compliant, invoiced aluminum scrap. On imports, the lack of high-quality overseas scrap resulting from the earlier inverted price spread between Chinese and overseas markets, coupled with a 1-3-month shipment lag, kept June-August port arrivals at low levels. Meanwhile, the UAE’s aluminum scrap export ban and the EU’s tariff hikes further tightened overseas scrap supply.
This week, the aluminum scrap market is expected to continue moving sideways within a narrow range, with demand pressure and cost support, and the mainstream trading range for shredded aluminum tense scrap (priced based on aluminum content) is around 19,900-20,500 yuan/mt. The retreat in primary aluminum spot prices caused the price difference between A00 aluminum and aluminum scrap to narrow again only slightly, keeping the economic advantage of aluminum scrap over primary aluminum intact in the short term, while demand-side price support for aluminum scrap persisted. If aluminum prices continued to decline further, the substitution effect of primary aluminum for aluminum scrap would accelerate.
Secondary aluminum alloy: Spot market: Today, adjustment intentions in the ADC12 market diverged: the cost side increase led some enterprises to attempt to follow the rise, while others still chose to keep prices stable for now. The traditional consumption off-season atmosphere is deepening, downstream orders and transactions remain weak, and price increases encounter some resistance. Against the backdrop of insufficient demand support, enterprises mainly focused on observing the market and maintaining stable prices for shipments. In the short term, ADC12 spot prices are expected to continue to show a pattern of coexisting cost support and demand pressure, mainly moving sideways.
Overall outlook: The risk of repeated Middle East geopolitical conflicts and a risk premium persist, and combined with US CPI declining MoM in June, expectations for US Fed interest rate hikes being delayed supported aluminum prices holding up well. However, the continuous commissioning of aluminum capacity outside China will continue to suppress the upside room for aluminum prices, and there is significant pressure on the upside space. Overall, it is expected that in the short term aluminum prices will maintain a pattern of consolidating on a strong note while encountering resistance.
[The information provided is for reference only. This document does not constitute direct investment research or decision-making advice. Clients should make decisions prudently and not substitute this for their independent judgment. Any decisions made by clients are not related to SMM.]
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