7.28SMM Aluminum Morning Meeting Minutes
Futures: The most-traded SHFE aluminum contract opened in the night session on July 27 at 23,255 yuan/mt, hit a high of 23,320 yuan/mt, a low of 23,230 yuan/mt, and closed at 23,275 yuan/mt, up 0.34% from the previous close. During this period, prices inched higher within the consolidation range and ended with a bullish candlestick, holding above the short-term MA cluster of MA5 (23,240.47), MA10 (23,227.58), MA20 (23,196.05), and MA40 (23,223.35); the moving average system provided bottom support, while upside was capped by the medium- and long-term MA60 (23,339.00). The recent low of 22,875 served as effective support, and the market center shifted steadily higher. Trading volume during the period was 64,858 lots, shrinking from the prior session, while open interest stood at 252,000 lots, edging up slightly. Technically, on the 4-hour chart, the MACD's DIFF (28.90) stays above the DEA (21.03), with the golden cross continuing, and the red histogram in positive territory, indicating that bullish momentum remains. In the near term, the market will likely continue to move sideways, and an upside breakout still needs fresh capital inflows. LME aluminum opened on July 27 at $3,164.0/mt, hit a high of $3,187.5/mt, a low of $3,150.0/mt, and closed at $3,173.0/mt, up 0.25% from the previous close. During the session, prices moved sideways with a slight gain, trading near the MA5 (3,173.12) and facing resistance from the MA10 (3,169.65) and MA20 (3,185.66); the medium- and long-term moving averages MA40 (3,258.23) and MA60 (3,301.45) remained in a bearish alignment, forming overhead resistance. The recent low of 3,040 provided solid support, and the rebound pace was relatively slow. Daily volume was 9,815 lots, shrinking from prior sessions, while open interest stood at 591,000 lots, down slightly from the previous session. Technically, on the daily chart, the MACD's DIFF (-41.03) stays above the DEA (-58.79), with the golden cross structure intact, and the red histogram in positive territory, suggesting the market will likely consolidate at lows for repair in the near term. Upside room is constrained by macro and supply expectations.
Macro front: On July 27, the National Bureau of Statistics (NBS) released data showing that in H1, amid steady industrial production growth and a continued rebound in industrial product prices, the revenue of industrial enterprises above designated size was up 6.5% YoY, picking up 1.5 percentage points from Q1. Akshay Singal, Global Head of Citi's Short-Term Interest Rate Trading, said that the bank is taking positions in the July Fed meeting contract based on "high conviction," meaning those trades will profit if the central bank holds rates steady. Currently, the swap market sees a near 40% probability of the Fed hiking rates by 25 basis points this week. According to CME's FedWatch tool, the probability of the Fed keeping rates unchanged in July is 63.7%, while the probability of a cumulative 25bp hike is 36.3%. The probability that the US Fed will hold rates steady through September is 18.5%, the probability of a cumulative 25bp hike is 55.7%, and the probability of a cumulative 50bp hike is 25.8%.
Fundamentals: In late July, domestic aluminum billet processing fees continued to pull back from their highs in June, with φ120 processing fees in some major consumption regions approaching the cost line, creating coexisting pressures of holding prices firm and shipping. According to SMM's latest data, as of July 23, social inventory of aluminum billet in major consumption regions in China had risen to 121,000 mt, marking two consecutive weeks of inventory buildup; during the same period, warehouse withdrawals fell to 33,000 mt, a notable WoW pullback. Against the backdrop of weakening marginal demand during the off-season, increased arrivals in South China, and a relatively stable center in aluminum prices, whether processing fees can stabilize near the cost line has become a core market concern. On balance, SMM maintains its forecast for China's aluminum foil exports in 2026 at around 1.3 million mt. Based on the 683,200 mt achieved in H1, about 616,800 mt need to be realized in H2, averaging approximately 102,800 mt per month, down 9.7% from the H1 monthly average of 113,900 mt. This target faces certain challenges given the current SHFE/LME price ratio, but considering the execution momentum of locked-in orders, the full-year target of 1.3 million mt remains highly achievable.
Primary Aluminum Market: During the morning session, the SHFE aluminum 2606 contract center edged slightly higher than the same period of the previous trading day. Due to weak end-use demand, overall market procurement today remained focused on restocking for essential needs. With ample circulating cargoes, market price acceptance remained weak. The mainstream transaction price for cargoes with invoices dated this month was mainly on par with the SHFE aluminum August contract. In east China today, the sell sentiment index was 3.13, unchanged from the previous day; the buying sentiment index was 2.94, also unchanged from the previous day. Market trading sentiment in central China was relatively mediocre today. Monday marked the first day of next-month invoicing; downstream processing enterprises showed little buying interest, with only a few maintaining minimal just-in-time purchases. Suppliers were not keen to hold prices firm, and price quotes showed a downward trend. Meanwhile, transactions for this-month invoice cargoes were relatively active, with traders short of invoices trading considerable volumes, but against the backdrop of an overall shortage of invoices, prices stayed high. Ultimately, the actual transaction price range for next-month invoice cargoes in central China centered around a discount of 100-120 yuan/mt against the SHFE August contract. In central China today, the sell sentiment index was 3.1, unchanged from the previous day; the buying sentiment index was 2.9, down 0.05 from the previous day.
Aluminum Scrap: Today, SMM A00 spot aluminum closed at 23,200 yuan/mt, unchanged from the previous trading day, and the aluminum scrap market held steady overall. In terms of price differences between A00 aluminum and aluminum scrap, on July 27, the price difference between A00 aluminum and mixed aluminum extrusion scrap free of paint in Foshan was about 2,030 yuan/mt, and the difference for shredded aluminum tense scrap was about 710 yuan/mt, both continuing to run at historically low levels. Imports: According to customs data, China's aluminum scrap imports in June 2026 totaled approximately 132,800 mt, marking the third consecutive month of decline from May's 152,000 mt. Cumulative data for 2026 shows that total aluminum scrap imports from January to June reached approximately 981,800 mt. Recently, import orders from Southeast Asia to the Guangdong region have increased. Although the import window has improved from earlier levels, new transactions were mostly concentrated on low-priced resources, and overall spot market activity remained limited. Affected by the UAE's aluminum scrap export ban and the EU's tariff hike policy, the contraction effect on high-quality sources of imported aluminum scrap will become more apparent in the future. This week, the aluminum scrap market is expected to continue its narrow sideways pattern pressured by demand and supported by costs. Against the backdrop of the deepening off-season, downstream end-user orders are unlikely to see substantial improvement, and scrap utilization enterprises continue to purchase as needed, making it difficult for the procurement atmosphere to improve significantly. The mainstream trading range for shredded aluminum tense scrap (priced based on aluminum content) is expected to be around 19,800-20,500 yuan/mt. Currently, the price spread between A00 aluminum and aluminum scrap has narrowed to a historical low, significantly weakening the economic advantage of aluminum scrap over primary aluminum. If primary aluminum prices continue to decline, the substitution effect of primary aluminum for scrap will accelerate. Close attention should be paid to the crowding-out effect of aluminum price trends on aluminum scrap demand.
Secondary aluminum alloy: Spot market: Today, ADC12 market quotations remained generally stable. From the cost side, compliant aluminum scrap supply remained tight, and high procurement costs continued to support ADC12 prices. From the demand side, as the traditional off-season deepened, some downstream enterprises gradually entered high-temperature holidays, and reduced orders further weakened procurement enthusiasm. In the context of a tug-of-war between cost support and weak demand, the market lacked new drivers, and most enterprises chose to keep quotations stable, waiting to see aluminum price trends and end-user order performance. In the short term, the ADC12 market is expected to maintain a pattern of sideways movement and cautious stability.
Overall Outlook: Recently, macro sentiment has improved slightly, with ongoing Middle East geopolitical risk premiums and continuous destocking of China's aluminum ingots jointly underpinning aluminum prices. However, the continued expansion of aluminum capacity outside China, weak traditional end-use demand in China, and recurring macro uncertainties have put significant pressure on the upside room for aluminum prices. In the short term, aluminum prices are expected to maintain a consolidation pattern.
[The information provided is for reference only. This article does not constitute direct investment research advice. Clients should make decisions cautiously and not use this as a substitute for independent judgment. Any decisions made by clients are not related to SMM.]
