7.29 SMM Aluminum Morning Meeting Summary
Futures: The most-traded SHFE aluminum contract opened at 23,190 yuan/mt in the night session on July 28, reached a high of 23,535 yuan/mt, a low of 23,130 yuan/mt, and settled at 23,445 yuan/mt, up 0.97% from the previous close. During this period, prices surged on strong volume to close as a bullish candlestick, breaking through the previous consolidation range and firmly holding above the MA5 (23,317.37), MA10 (23,269.85), MA20 (23,223.10), MA40 (23,234.24), and MA60 (23,338.15) moving average system. The moving averages formed strong support, with the previous low of 22,875 serving as a solid support, and the price center continued to move upward. Trading volume surged to 142,000 lots, while open interest rose to 260,000 lots, showing a characteristic of increasing bullish positions. Incremental capital drove the market upward. From a technical perspective, on the 4-hour MACD indicator, DIFF (43.04) was above DEA (26.38), with the histogram continuing to expand, indicating strengthening bullish momentum. The short-term trend held up well. On July 28, LME aluminum opened at $3,169.5/mt, reached a high of $3,169.5/mt, a low of $3,130.5/mt, and settled at $3,148.5/mt, down 0.77% from the previous close. The price consolidated and pulled back to close as a bearish candlestick, falling below the MA5 ($3,163.27) and MA10 ($3,165.42) short-term moving averages, which turned from support to resistance. The MA20 ($3,181.95), MA40 ($3,252.74), and MA60 ($3,296.34) medium- and long-term moving averages were in a bearish alignment, with significant overhead pressure. Short-term support was seen at the $3,120 level. Trading volume increased, while open interest edged down, indicating a reduction in bullish positions with insufficient buying support. Technically, on the daily MACD indicator, DIFF (-39.73) was above DEA (-54.98), preserving a bullish crossover, but the histogram was converging, suggesting weakening upward momentum. LME aluminum continued to consolidate on a subdued note.
Macro Front: The market awaited the US and Iran pushing for peace negotiations, but the Strait of Hormuz dispute remained unresolved. However, this morning, crude oil prices surged again, with foreign media reporting that the US-Iran temporary ceasefire situation had changed again. According to CME FedWatch: The probability of the Fed keeping rates unchanged in July was 69.5%, with a 30.5% chance of a cumulative 25-basis-point hike. The probability of the Fed keeping rates unchanged through September was 23.4%, with a 56.4% chance of a cumulative 25-basis-point hike and a 20.2% chance of a cumulative 50-basis-point hike.
Fundamentals: Since late June, the SHFE/LME price ratio rapidly recovered, sharply closing the arbitrage window that had driven large-scale aluminum semis exports. As the transfer order effect gradually faded, new orders in some segments have declined, but previously committed fixed-price orders were still executed as planned. Starting in July, aluminum plate/sheet and strip exports are expected to gradually pull back, with H2 average monthly exports falling to the 280,000-320,000 mt range. Combined with the strong H1 performance, full-year exports could still reach 3.3-3.4 million mt. In terms of inventory, aluminum ingot inventory in major consumption hubs fell 0.4 from the previous trading day on Tuesday, with destocking mainly occurring in Guangdong and Wuxi.
Primary Aluminum Market: The SHFE aluminum 2606 contract center moved lower during the early session than the same period on the previous trading day. Affected by sluggish end-use demand, overall market purchases today were still primarily need-based restocking. Influenced by declining aluminum prices, some traders' willingness to sell waned to some extent, but the availability of circulating cargoes remained ample, and market acceptance of prices stayed at a weak level. Mainstream transaction prices mostly ranged from a discount of 10 yuan/mt to a premium of 10 yuan/mt against the SHFE aluminum August contract. The selling sentiment index in east China today stood at 3.08, down 0.05 from the previous trading day, while the buying sentiment index was 3.00, up 0.06 from the previous trading day. Trading atmosphere in the central China market remained sluggish today, as the night session rebounded and downstream processing enterprises took a wait-and-see stance. Off-season soft demand, combined with restrictions from safety inspections, left downstream plants with low purchase willingness, with only some traders engaging in small-scale restocking. Purchases of cargoes with current-month invoices by some traders, who had insufficient invoice quotas, drove up prices of such cargoes, but overall trading volume was limited. Eventually, actual transaction prices in the central China market settled around a range of discounts of 90-110 yuan/mt against the SHFE aluminum August contract. The selling sentiment index in central China today was 3.11, up 0.02 from the previous trading day, while the buying sentiment index was 2.86, down 0.05 from the previous trading day.
Aluminum Scrap: Today, the SMM A00 spot aluminum price closed at 23,200 yuan/mt, flat from the previous trading day, and the aluminum scrap market held overall steady. Regarding 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 on July 28 was approximately 2,030 yuan/mt, while the price difference between A00 aluminum and shredded aluminum tense scrap stood at around 710 yuan/mt, both continuing to run at historically extremely low levels. On the import front, customs data showed that China's aluminum scrap imports totaled approximately 132,800 mt in June 2026, down from 152,000 mt in May, marking the third consecutive month of decline. Looking at cumulative data for 2026, total aluminum scrap imports from January to June amounted to approximately 981,800 mt. Recently, import orders from Southeast Asia to the Guangdong region have increased. Although the import arbitrage window improved from the previous period, new transactions were mostly concentrated on low-priced cargoes, and overall spot market activity remained limited. Affected by the UAE's aluminum scrap export ban and the EU's tariff hikes, the contraction effect on high-quality imported aluminum scrap supply will become more apparent in the future. The aluminum scrap market is expected to maintain a narrow rangebound pattern this week, pressured by demand while supported by costs. Against the deepening off-season backdrop, downstream end-use orders will show little substantive improvement, and scrap utilization enterprises will continue their as-needed purchasing strategy, meaning a significant recovery in the purchasing atmosphere is unlikely. 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 difference between primary and scrap aluminum has narrowed to a historical low, significantly eroding the cost advantage of aluminum scrap over primary aluminum. If primary aluminum prices subsequently decline further, the substitution effect of primary aluminum for scrap will accelerate and become evident, so close attention needs to be paid to the crowding-out effect of aluminum price trends on aluminum scrap demand.
Secondary Aluminum Alloy: Spot market: Today, ADC12 market quotes remained broadly stable. Cost side, aluminum scrap prices remained at high levels, coupled with relatively firm primary aluminum prices, providing some support to ADC12 prices; however, demand side was weak, as downstream enterprises gradually entered high-temperature holidays, orders decreased somewhat, and market trading activity declined. Amid the dual impact of cost support and weak demand, ADC12 prices are expected to continue to move sideways in the short term. The market watches for the subsequent recovery of end-use demand and changes in raw material prices.
Outlook: The persistence of the Middle East geopolitical risk premium, combined with continued destocking of domestic aluminum ingots, jointly underpinned aluminum prices; however, the continuous release of overseas aluminum long-term capacity, weak traditional end-use demand in China, together with repeated expectations for US Fed interest rate hikes and uncertainty from the Middle East geopolitical situation, placed significant pressure on the upside room for aluminum prices. In the short term, aluminum prices maintained a consolidation pattern.
[The information provided is for reference only. This article does not constitute direct investment research advice. Clients should make decisions prudently and not use this as a substitute for independent judgment. Any decisions made by clients are not related to SMM.]
