SHFE Aluminum Shot Up from Low to Repair Short-Term MA; Alumina Tumbled Sharply Under All-MA Pressure [SMM Aluminum Brief Review]

SMM, July 30:

Today, the most-traded SHFE aluminum 2609 contract closed at 23,625 yuan/mt, up 240 yuan, or 1.03%. Trading volume was 209,579 lots, and open interest was 250,601 lots, with a daily decrease of 3,175 lots. Capital clearly exited, with both bulls and bears reducing positions to lock in profits. The price held above the 5-day, 10-day, and 30-day moving averages but remained below the 60-day line. Short-term bearish pressure has significantly eased as the price continues to repair from lows following a steep decline earlier. Today the price shot up to close sharply higher, with bulls showing improving buying support at lower levels. The 5-day and 10-day moving averages have turned upward, while the 30-day and 60-day moving averages remain in a downtrend, indicating that the medium-term downward trend is intact. The 60-day line above forms strong medium- and long-term resistance, capping upside room for the rebound, while the short-term moving averages below offer solid support from the lower end. The DIF and DEA lines are below the zero axis, but the gap continues to narrow, signaling greatly diminished bearish momentum and strengthening rebound momentum from lows—overall downward pressure has markedly eased.

SMM Commentary: Persistent Middle East geopolitical risk premiums, coupled with continued destocking of domestic aluminum ingots, have jointly underpinned aluminum prices. However, headwinds remain—overseas forward aluminum capacity continues to be added, domestic end-use demand is weak, expectations for US Fed interest rate hikes keep resurfacing, and uncertainties surrounding the Middle East geopolitical situation add volatility. As a result, upside room for aluminum prices faces clear pressure, and prices are expected to maintain a fluctuating trend in the near term.

Today, the most-traded alumina 2609 contract settled at 2,648 yuan/mt, down 36 yuan, or 1.34%. Trading volume reached 381,349 lots, and open interest was 248,892 lots, with a MoM decrease of 6,152 lots, reflecting funds reducing positions and exiting. The price settled below the 5-day, 10-day, 30-day, and 60-day moving averages, with the shorter-period averages forming bearish pressure from top to bottom. Short-term bears continued to press, sending the price sharply lower to test new lows, while bullish buying support at lows remained weak. Medium- and long-term moving averages have all shifted from support to resistance levels, and the medium-term drifting lower trend has not changed. Any rebound repair phase will face layered resistance from these moving averages.

SMM Commentary: Supply side, weekly production was basically flat with the previous week, and operations were stable. But the supply surplus pattern remains unchanged and continues to weigh on prices. On the inventory front, total national alumina inventory increased by 24,000 mt WoW to 7.028 million mt, extending the inventory buildup trend. In markets outside China, earlier geopolitical conflicts brought a large influx of low-priced cargoes into China, draining overseas circulating inventory. Recently, overseas spot conditions have tightened due to concentrated restocking demand from new capacity preparations in Indonesia and production resumption and restocking in the Middle East, pushing alumina prices outside China significantly higher. Looking ahead, China lacks macro bullish catalysts, and the oversupply situation continues to pressure prices. Short-term prices are expected to remain in the doldrums. Moreover, with expectations for production ramp-up in Guangxi, inventories are likely to build further next week.

[The information provided is for reference only. This article does not constitute a direct recommendation for investment research decisions. Clients should make decisions prudently and not use this as a substitute for independent judgment. Any decisions made by the client are unrelated to Shanghai Metals Market.]