SMM Aluminum Morning Meeting Minutes for July 23
Futures: SHFE aluminum settled at 23,260 yuan/mt, up 0.35%, with the price above the MA5 (23,162) and MA10 (23,165), but below the MA30 (23,303.17) and MA60 (23,932.08), indicating effective short-term moving average support but resistance from medium-term moving averages. The MACD indicator showed DIF at -145.53 and DEA at -221.46, maintaining a golden cross, with the histogram bars expanding to 151.86 (previous day 145.48), signaling continued strengthening of bullish momentum. Trading volume slightly expanded to 51,100 lots but remained at a low level. The recommended reference core operating range for SHFE aluminum was 23,000-23,500. LME aluminum settled at $3,181.5/mt, down 0.34%, fluctuating between $3,180.5 and $3,191 during the day. The price was above the MA5 (3,167.6) and MA10 (3,163.65), but below the MA30 (3,212.72) and MA60 (3,405.81), providing short-term support but facing notable medium-term resistance. The MACD indicator showed DIF at -48.58 and DEA at -68.08, maintaining a golden cross, with the histogram bars expanding to 38.99 (previous day 35.65), signaling continued strengthening of bullish momentum. The recommended reference core operating range for LME aluminum was 3,150-3,220.
Macro Front: Ali Larijani, Speaker of the Islamic Consultative Assembly of Iran, stated that the situation in the Strait of Hormuz would not return to its pre-war state. The Khatam al-Anbiya Central Headquarters of the Iranian Armed Forces issued a statement saying the US once again threatened to strike Iran’s national infrastructure. The Strait of Hormuz remained closed. If vessels need to pass through the strait, they must follow previously designated routes and procedures. The statement warned that if the US acts on its threats, the Iranian Armed Forces would not allow a single drop of oil to be exported from the region, and the area’s oil, natural gas, electricity, and economic infrastructure would all become targets.
Fundamentals: Supply side, the proportion of liquid aluminum in China’s aluminum production rose 0.37 percentage points WoW last week, mainly driven by strong aluminum billet processing fees, which increased the share of direct liquid aluminum supply and further reduced aluminum ingot casting volumes. Outside China, aluminum supply was expected to continue rising as production ramp-ups and production resumptions progressed. Overall, however, the short-term global destocking trend for aluminum ingots was seen as hard to reverse. Demand side, the downstream processing industry entered the traditional consumption off-season, with sector performance diverging but mostly under pressure. The operating rate of aluminum downstream industry leaders recorded 61.3%, pulling back 0.6 percentage points MoM. The SHFE/LME price ratio recovered, narrowing downstream export profits. As orders on hand are digested, the support from exports for demand was expected to weaken. Inventory side, China’s aluminum social inventory continued its destocking trend this week. As of this Thursday, China's social inventory of aluminum ingot destocked by 16,000 mt from Monday to 1.006 million mt, and by 18,000 mt from last Thursday.
Primary Aluminum Market: In morning trading yesterday, the SHFE aluminum 2606 contract's trading center was higher than the same period of the previous trading day. Affected by the off-season, market purchasing sentiment remained relatively weak. Coupled with still ample market circulation supply, market price acceptance did not rise. Mainstream transaction prices were at a discount of 10 yuan/mt to 20 yuan/mt against the SHFE aluminum August contract. In east China, the selling sentiment index was 3.1, up 0.02 WoW; the purchasing sentiment index was 2.9, flat WoW. As the off-season deepened, overall trading sentiment in the central China market was mainly sluggish. Downstream processing enterprises showed low purchase willingness. Only a few large plants, constrained by long-term contract volumes, made small just-in-time procurements. Suppliers had high willingness to sell, and some traders refrained from purchasing at high premiums due to credit limit constraints, prompting major players to hold prices firm. Ultimately, actual transaction prices in central China were centered around a discount of 110-140 yuan/mt against the SHFE aluminum August contract. In central China, the selling sentiment index was 3.07, up 0.02 WoW; the purchasing sentiment index was 2.91, down 0.1 WoW.
Aluminum Scrap: Yesterday, SMM A00 spot aluminum prices closed at 23,170 yuan/mt, up slightly by 90 yuan/mt on the previous trading day. The aluminum scrap market remained stable overall. Regarding the price difference between primary aluminum and aluminum scrap, on July 22, the price difference between A00 aluminum and mixed aluminum extrusion scrap free of paint in Foshan was 2,171 yuan/mt, and the price difference between A00 aluminum and shredded aluminum tense scrap was 857 yuan/mt, both still at extremely low levels. Supply-side constraints continued to intensify, with the impact of the reverse invoicing policy further deepening. The scarcity of compliant aluminum scrap with invoices continued to rise. On the import front, China's aluminum scrap imports in June 2026 were around 133,000 mt, down 16.9% YoY and 12.5% MoM, marking the third consecutive month of decline. Cumulative imports from January to June 2026 were 982,000 mt. As overseas aluminum scrap quotations continued to pull back, orders for aluminum scrap imported from Southeast Asia in the Guangdong region increased compared to earlier periods, and the import window improved further from previous levels. However, new transactions remained concentrated mainly in some low-priced resources and long-term cooperation clients. Spot market trading activity remained relatively limited. The aluminum scrap market is expected to continue to move sideways at high levels. Supply side, constraints from the reverse invoicing policy are unlikely to reverse in the short term, and the tightness in aluminum scrap with invoices will persist. Import side, the combined effect of multiple bearish factors will gradually become apparent in the coming months, keeping the supply of high-quality scrap from outside China low. Demand side, as the off-season deepens, downstream operating rates will remain low, with end-user orders unlikely to see material improvement. Scrap utilization enterprises will continue to purchase as needed, making a significant improvement in the purchasing atmosphere unlikely. Secondary Aluminum Alloy: Quotations for the ADC12 market continued to hold steady overall yesterday. Cost side, driven by a slight firming of primary aluminum prices, some aluminum scrap prices followed the rise, providing strengthened cost support for secondary aluminum alloys. However, demand-side improvement remains limited, with end-user orders persistently weak, downstream purchases mainly for restocking essential needs, and modest enterprise transactions. Under the dual influence of cost-based support and sluggish demand, wait-and-see sentiment in the market has further intensified, with most producers maintaining stable prices for shipments and showing little willingness to adjust prices. Short-term ADC12 prices are expected to continue moving sideways, and future trends will still depend on changes in aluminum scrap costs and the recovery of end-user orders.
Overall Outlook: The Middle East situation remains volatile, concerns over interest rate hikes persist, supply continues to recover, but the destocking pattern is hard to reverse in the short term. Amid the tug-of-war between longs and shorts, aluminum prices are expected to consolidate in the near term. Future attention should focus on the progress of production resumptions in the Middle East, the trajectory of geopolitical conflicts, changes in LME aluminum ingot inventory, and domestic downstream processing orders. [The information provided is for reference only. This article does not constitute direct investment research or decision-making advice. Clients should make decisions prudently and not substitute this for independent judgment. Any decisions made by clients are not related to SMM.]
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