ADC12 Aluminum Prices Stable, Weak Demand Limits Upside Room

Today, the SHFE aluminum futures center shifted slightly lower compared with the previous day’s morning session. Combined with wide premiums and discounts in overall market quotes, traders in the central China market showed a strong willingness to hold prices firm and hold back from selling, driving market prices continuously higher, while the shipment sentiment index kept declining. Transactions were mostly for hedging and arbitrage by futures-spot traders, while downstream processing enterprises showed low purchasing sentiment. Ultimately, the actual transaction price range in the central China market was around a premium of -170 to -200 yuan/mt against the SHFE aluminum August contract.

[Aluminum Divergence Consolidation Recovery Inside and Outside China; Middle East Tensions Ease, Disturbing Aluminum Price Risk Premium] Overall, recent improvement on the macro front, interest rate hike expectations remaining on hold and easing the marginal constraints on the nonferrous metals sector, along with the continued rise in the proportion of liquid aluminum in China, have supported aluminum prices. However, the continued rollout of long-term aluminum capacity outside China, weak traditional end-use demand in China during the traditional off-season, and disturbances from Middle East geopolitical uncertainties are expected to result in aluminum prices consolidating on a strong note.