8.13 SMM Aluminum Morning Meeting Minutes
Futures: SHFE aluminum closed at 24,195 yuan/mt, down 0.62%, with prices falling below MA5 (24,187) but still above MA10 (23,961), MA30 (23,435) and MA60 (23,708). Short-term moving average support is facing a test, but the medium-term bullish structure remains intact. The MACD indicator showed DIF=224.4 and DEA=128.3, maintaining a golden cross, but the histogram narrowed to 192.2 (vs. 224.33 the previous day), and bullish momentum weakened somewhat. Trading volume shrank further to 48,900 lots, and market wait-and-see sentiment was strong at high levels. The recommended core trading range for SHFE aluminum is 23,800-24,500 yuan/mt. LME aluminum closed at $3,312/mt, edging down 0.05%, with prices falling below MA5 (3,318.6) but still above MA10 (3,274.55), MA30 (3,198.73) and MA60 (around 3,326). Short-term moving average support is facing a test, but the medium-term bullish structure remains intact. The MACD histogram narrowed to 41.42 (vs. 53.97 the previous day), and bullish momentum weakened somewhat. The recommended core trading range for LME aluminum is $3,280-3,340/mt.
Macro Front: The latest US inflation data were released. Data released by the US Department of Labor showed that US July unadjusted CPI YoY growth slowed to 3.4%, core CPI YoY growth slowed to 2.5%, seasonally adjusted CPI rose 0.1% MoM, and core CPI rose 0.2% MoM, all in line with market expectations. After the data release, traders' expectations for a US Fed interest rate hike in September remained broadly steady.
Fundamentals: Supply side, China's weekly aluminum production was basically stable this week, and the proportion of liquid aluminum rose 0.19 percentage points WoW. Outside China, with new projects ramping up production and production resumptions continuing to advance, aluminum supply is expected to keep rising. However, the global aluminum ingot destocking trend is unlikely to change in the short term. Demand side, the downstream processing industry is in the traditional consumption off-season, and overall operating rates are under pressure. Aluminum billet processing fees pulled back, reducing substitution demand for aluminum ingot. Inventory side, China's aluminum social inventory continued its destocking trend this week. As of Thursday, China's aluminum ingot social inventory fell by 19,000 mt from Monday to 898,000 mt, and by 35,000 mt from Thursday last week. Aluminum ingot inventory is expected to continue destocking in the short term. Overseas supply side, UAE EGA's semi-annual results report disclosed the production resumption progress at the AlTaweelah aluminum smelter, which was shut down after an attack on March 28. Of the plant's 1,262 pots, 18% have been restarted, and production is expected to return to pre-incident levels in Q1 2027. The alumina refinery's H1 2026 production fell significantly YoY, and capacity recovered to 50% of pre-incident levels in early July.
Primary Aluminum Market: In early trading, the SHFE aluminum 2608 contract continued to run at high levels. Wuxi saw relatively large warehouse withdrawals, while inbound volumes were relatively small due to temporary weather issues. Trading among traders was relatively active. The main transaction center for SHFE aluminum spot premiums today was between 8-10 yuan/mt and the August contract +10 yuan/mt. The shipment sentiment index in east China today was 3.17, up 0.02 day on day; the purchase sentiment index was 3.26, up 0.06 day on day. Aluminum futures prices rose for several consecutive days. Buying sentiment in central China remained sluggish throughout, as downstream processing enterprises were constrained by insufficient off-season orders and high in-factory inventories, combined with high aluminum prices; buying sentiment stayed low and showed a further weakening trend. Aluminum prices rose and premiums and discounts moderated somewhat, so suppliers' willingness to sell recovered slightly. In the end, actual transaction prices in central China centered around discounts of 100-140 yuan/mt against the SHFE aluminum August contract. The shipment sentiment index in central China today was 3.09, up 0.03 day on day; the purchase sentiment index was 2.93, down 0.01 day on day. Futures continued to surge today, while spot in south China was hit by multiple pressures. High absolute prices plus high premiums drove suppliers to sell aggressively for cash, and there was even a brief bout of stampede-like selling; the downward trend in premiums and discounts was hard to contain. Meanwhile, demand-side absorption had significantly weakened: downstream users only maintained the most basic passive just-in-time procurement, while traders entered only slowly to push for lower prices and buy on dips. In addition, localized bearish sentiment picked up, further amplifying the supply-demand imbalance at both ends. Mainstream quotations were at discounts of -30 to -10 yuan/mt; deep-discount cargoes were rampant in circulation, and there were even some extremely low-priced sell-offs, with the market gradually showing signs of being quoted but barely traded. Spot transaction prices were concentrated at premiums of 100 yuan/mt to 140 yuan/mt against the SHFE aluminum 2608 contract.
Aluminum Scrap:Today, the SMM A00 spot aluminum price closed at 24,370 yuan/mt, up sharply by 270 yuan/mt from the previous trading day. China's aluminum scrap market broadly followed the increase, with aluminum tense scrap prices generally up 100 yuan/mt, while bare bright aluminum wire, aluminum extrusion scrap free of paint, and other similar materials rose by 200-300 yuan/mt. In terms of price spreads, on August 12, the price difference between A00 aluminum and mixed aluminum extrusion scrap free of paint in Foshan was around 2,360 yuan/mt, and the price difference between A00 aluminum and shredded aluminum tense scrap was around 1,260 yuan/mt. As primary aluminum prices continued to rise, aluminum scrap lacked momentum to follow, and the price spread widened again. Secondary aluminum alloy and its downstream demand weakened at the margin; combined with high inventories of wrought aluminum alloy scrap raw materials such as doors and windows in Henan and other areas, the price transmission mechanism for aluminum scrap was hindered, and momentum to follow price increases was clearly insufficient. Affected by the traditional consumption off-season, operating rates at downstream cast aluminum alloy enterprises continued to decline, order volumes shrank, and the aluminum scrap market lacked substantial support. Looking ahead, the supply-demand mismatch is unlikely to be reversed in the short term. Scrap utilization enterprises will likely maintain a purchasing-as-needed and low-inventory operating strategy. Market trading sentiment is unlikely to improve materially. Shredded aluminum tense scrap prices based on aluminum content are expected to be dragged by stagnant raw material prices and weak downstream demand this week, remaining under pressure overall, with the mainstream trading range expected to center around 20,200-20,800 yuan/mt.
Secondary Aluminum Alloy: Spot Market: Today, ADC12 market quotes held up well overall, and the SMM average price was raised by 100 yuan/mt. Primary aluminum and aluminum scrap prices continued to rise, further strengthening raw material cost support and boosting market willingness to follow the increase, with solid support below prices. However, end-users were still in the high-temperature off-season. Orders and consumption were mediocre, and downstream mainly made just-in-time purchases. Improvement in spot transactions was limited, and the demand side still exerted some pressure on price increases. In the short term, if futures and aluminum scrap prices remain strong, ADC12 prices still have room to follow further gains, but weak demand will limit spot gains. The market is expected to continue a narrow sideways pattern with cost support and demand constraints coexisting.
Comprehensive Outlook: Macro front, US July CPI and core CPI YoY growth rates slowed to 3.4% and 2.5%, respectively, both in line with market expectations. The mild pullback in inflation eased market concerns about further aggressive rate hikes by the US Fed. The short-term upward momentum of US Treasury yields weakened, and macro liquidity pressure moderated somewhat, providing staged support for aluminum prices. The fundamental gap persisted, and aluminum ingot inventory continued to draw down. Overseas supply side, UAE's EGA disclosed the production resumption progress at the AlTaweelah aluminum smelter. Currently, 18% of the plant's 1,262 pots have been restarted, and the production resumption pace was faster than the market had previously expected. The supply tightness premium priced earlier faces pullback pressure. In the short term, aluminum prices are expected to consolidate on a strong note, but upside room will be somewhat capped by production resumption expectations.
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