This week, the Central Plains (Zhongyuan) market premium continued to weaken, with the discount against the SHFE aluminum September (09) contract widening day by day from RMB 60/mt on August 24 to RMB 120/mt on August 28. This was mainly attributed to persistently high absolute aluminum prices; subdued appetite for cargo among downstream processors, who tended to postpone purchases and reduce in-plant inventories; the switch to next-month invoice trading, which left trading in the next-month-invoice market lackluster; the opening of cross-regional arbitrage windows and anticipated arrivals of in-transit northern-origin cargoes; and a notable loosening of market liquidity.
In August, the SMM A00 aluminum (Central Plains) price started the month at RMB 23,330/mt, then trended upward in a volatile fashion as inventories declined and market sentiment improved, reaching an intramonth high of around RMB 24,250/mt on August 12. Prices subsequently pulled back amid fluctuating macro sentiment and "peak season" demand falling short of expectations, dipping to an intramonth low of roughly RMB 23,530/mt (August 20) around mid-to-late month, before trading in a high-level range of RMB 23,600–23,900/mt in the final third of the month and closing near RMB 23,790/mt at month-end. The August average price in the Central Plains market stood at approximately RMB 23,761/mt, with a monthly amplitude of about RMB 920/mt.
On social inventories, the destocking trend persisted throughout the month, while bonded-zone inventories edged down from 117,000 mt to 116,000 mt. On the supply side, domestic primary aluminum weekly output held steady, the molten aluminum ratio dipped slightly, and overseas smelter restarts and newly commissioned capacity continued to ramp up. On the demand side, the traditional consumption off-season is drawing to a close, but anticipated peak-season stocking failed to materialize; operating rates across downstream processing segments remained under pressure overall, with signs of a recovery in orders for photovoltaic profiles, though the overall improvement remained muted.
Recently, macro pressures on aluminum prices have intensified. Combined with the fading geopolitical risk premium between the US and Iran and a pullback in oil prices, this has created headwinds above the market. However, continued domestic destocking and the approach of the "Golden September" peak season provide strong support below. With bullish and bearish factors intertwined, aluminum prices are expected to remain range-bound at high levels in the short term: next week, the most-traded SHFE aluminum contract is projected to trade in a range of RMB 23,400–24,100/mt, and LME aluminum in a range of USD 3,150–3,280/mt. For the Central Plains market, elevated absolute prices and downstream demand falling short of expectations suggest the discount may remain on the weak side in the short term. Market participants are advised to monitor the actual realization of peak-season demand, the sustainability of destocking, and macro policy variables.
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