SMM, July 24:
The most-traded SHFE aluminum 2609 contract closed at 23,345 yuan/mt today, up 85 yuan/mt or 0.37% on the day. Trading volume increased notably from the previous session, reaching 208,200 lots intraday. Volume expanded during the bottom-out rebound, indicating buying support at low levels and heightened tug-of-war between longs and shorts. Current open interest was 296,300 lots, down 5,885 lots. The simultaneous pullback in open interest and price gains formed a rally-on-declining-open-interest structure, suggesting short-term bears actively covered and exited, rather than new bulls entering aggressively. The upward momentum was biased toward short covering, with limited new buying power.
SMM Commentary: Macro front, the U.S.-Iran conflict continued to escalate. U.S. forces carried out further airstrikes against Iran on July 17, while Iran launched large-scale attacks on U.S. military targets in Kuwait and Syria, and struck U.S. facilities in Bahrain. Amid repeated Middle East tensions, concerns over interest rate hikes persisted. Supply continued to recover, but the destocking trend was hard to reverse in the near term. Under the tug-of-war between longs and shorts, aluminum prices are expected to consolidate with adjustments in the short term. Later focus should be on the progress of production resumptions in the Middle East and geopolitical conflict trends, LME aluminum ingot inventory changes, and China’s downstream processing orders and aluminum semis export data.
The most-traded alumina 2609 contract closed at 23,225 yuan/mt today, down 55 yuan/mt or 0.24%. Trading volume was 157,800 lots, slightly expanded. During the sideways consolidation, volume expanded mildly, with the tug-of-war between longs and shorts continuing at current price levels, showing no signs of concentrated fund exodus or aggressive moves by either side. Open interest was 253,000 lots, down 5,166 lots. The slight price decline alongside falling open interest formed a retreat-on-declining-open-interest pattern, with some bulls actively taking profits and exiting, while bears did not add positions aggressively to push prices lower. Downside momentum was weak, suggesting a healthy pullback within the consolidation, not a trend reversal to weakness.
SMM Commentary: Total alumina inventory nationwide edged up MoM, with limited overall fluctuations. By segment, raw material inventory at aluminum smelters declined, mainly because spot prices remained relatively high, prompting downstream smelters to slow their procurement pace of high-priced raw materials and rely more on consuming in-factory inventory. Alumina refinery inventory increased slightly, but maintenance and production cuts at some Shanxi enterprises and new capacity releases in south China offset each other, keeping overall growth relatively limited. At ports, inventory rebounded due to consecutive arrivals of new vessels. Warrant inventory continued to decline, affected by invoicing issues and the narrowing spread between futures and spot prices, which weakened the willingness to deliver to warehouses. In-transit and station inventory accumulated, mainly as previous warrants expired and were released into the spot market, coupled with continued shipments from Guangxi, increasing supply in the circulation link. In the short term, the alumina market operating pattern is expected to remain largely unchanged. Although some enterprises using domestic ore have maintenance arrangements, the impact on monthly production is limited, and inventory levels are likely to remain at current status. On the price front, as regional spot mismatch issues gradually ease, the spot price center may pull back slightly, with subsequent trends likely to be under pressure.
[The information provided is for reference only. This article does not constitute direct investment research advice. Clients should make prudent decisions, do not substitute this for independent judgment, and any decisions made by clients are unrelated to Shanghai Metals Market.]
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