SMM Oct 13 Aluminum Morning Meeting Minutes:
Futures: The most-traded SHFE aluminum 2611 contract closed at 23,490 yuan/mt, down 95 yuan from yesterday's settlement price, a decline of 0.40%. It opened at 23,580.00 yuan/mt during the day, fluctuating within a range of 23,415-23,630 yuan/mt. Prices are running below the MA5 (23,528.00), MA10 (23,825.50), MA30 (24,055.17), and MA60 (23,828.58) moving averages. The rebound met resistance and pulled back again, revealing a low-level weak consolidation structure, with the moving averages above forming key pressure resistance. The MACD indicator's DIF (-132.1547) is below the DEA (-27.3207), and the MACD green bar value is -209.6680, with bearish momentum remaining relatively strong. The core trading range for SHFE aluminum is suggested to be 23,200-23,800 yuan/mt. The LME aluminum 3M contract settled at $3,048.00/mt, up 0.03%. It opened at $3,050.00/mt during the day, fluctuating within a range of $3,047.00-3,051.00/mt. Prices are running below the MA5 (3,063.80), MA10 (3,097.10), MA30 (3,218.30), and MA60 (3,223.88). After a sustained decline, prices stabilized slightly at low levels, revealing a low-level weak consolidation structure, with the moving averages above forming clear resistance. The MACD indicator's DIF (-55.4246) is below the DEA (-39.2926), and the MACD green bar is -32.2639, with bearish momentum still dominant. The core trading range for LME aluminum is suggested to be $2,900-3,150/mt.
Macro front: The Ministry of Finance and the State Taxation Administration issued an announcement that starting April 1, 2027, the VAT export rebate rate for new energy vehicles will be reduced from 13% to 9%. The export consumption tax policy will remain unchanged, and the consumption tax refund (exemption) policy will continue to apply. Experts noted that this policy will force automakers to carefully consider changes in tax costs, accelerate the establishment of overseas plants, and reduce reliance on complete vehicle exports. Data released by CAAM showed that China's NEV exports reached 571,000 units in September, up more than 160% YoY. Cleveland Fed President Hammack said that smaller, more frequent monetary policy adjustments help keep inflation expectations stable, which is better than waiting now and risking the need for larger policy corrections later. However, as a voting member of the FOMC, she did not explicitly state support for a rate hike this month.
Fundamentals: According to SMM statistics, overseas aluminum production outside China fell 2.4% YoY in September 2026, mainly due to lower YoY loads at aluminum plants in the Middle East. Overseas daily average production rebounded 2.2% MoM, with production resumptions in the Middle East and production ramp-up at newly commissioned projects in Indonesia, Vietnam, and India continuing to drive the rebound in daily average production. Looking ahead to October 2026, production resumptions in the Middle East are expected to continue advancing; newly commissioned projects in Indonesia and India are expected to continue ramping up production, but some projects originally planned for Q4 commissioning have experienced varying degrees of delays, and production growth is expected to gradually slow down. Demand side, the September-October peak season drove the comprehensive operating rate up MoM, but processing fees for some processed products came under pressure, leading to production cuts and shutdowns, with the proportion of liquid aluminum falling to 78.2%. As of this Monday, China's aluminum ingot social inventory destocked by 35,000 mt from last Thursday, while building up 13,000 mt from before the holiday, with aluminum destocking resuming.
Primary aluminum market: In east China, SHFE aluminum futures center moved higher intraday from the previous trading day, but weekend warehouse withdrawal data in east China performed well. The SHFE aluminum 2610-2611 contract structure is currently in backwardation of around 100 yuan/mt, and the market is expected to quote a premium of nearly 200 yuan/mt against the SHFE aluminum 2611 contract tomorrow. Yesterday, SMM A00 aluminum ingot transactions closed at a premium of 50-70 yuan/mt. In central China, SHFE aluminum futures rebounded, while downstream processing enterprises saw sluggish follow-through in end-user orders, and in-factory inventory remained high, weakening the willingness to purchase and restock. Yesterday, trading sentiment in central China remained sluggish. Suppliers also showed limited willingness to hold prices firm, with market quotes moving lower continuously. Ultimately, actual transaction prices in central China were concentrated in a discount range of 20-50 yuan/mt against the SHFE aluminum October contract. In south China, aluminum prices rose yesterday, and the spot market was lukewarm. No inventory buildup pressure was seen over the weekend, and inventory had a positive impact on sentiment, but under the backwardation structure, the actual basis remained high, with some divergence in market operations—firm price-holding coexisting with slight downward adjustments. The mainstream was in a range from small discounts to parity, with spot circulation overall controllable. The willingness to restock amid price rises was moderate, providing some demand support; however, overall sentiment was somewhat cautious toward high prices, with purchases mainly driven by rigid demand. Follow-through momentum weakened after market entry, and the transaction pace was steady. Spot transaction prices were concentrated at a premium of 200-240 yuan/mt against the SHFE aluminum 2610 contract.
Aluminum scrap: Yesterday, SMM A00 aluminum closed at 23,810 yuan/mt, up 160 yuan/mt from the previous trading day. Price performance diverged across aluminum scrap categories, with baled UBC prices unchanged yesterday and aluminum tense scrap prices raised by 100 yuan/mt. On price differences, the price difference between A00 aluminum and mixed aluminum extrusion scrap free of paint in Foshan was about 2,492 yuan/mt, and the price difference between A00 aluminum and shredded aluminum tense scrap was about 1,160 yuan/mt. After the National Day holiday, the aluminum scrap market continued to hold up well. Supply side, aluminum scrap yards have all briefly resumed operations, with some increase in material release, but recycling policies still constrain circulation, with invoice quota limitations widespread and the tight invoice supply situation unlikely to ease in the short term. Tight supply will continue to support prices. Demand side, as the traditional peak consumption season for cast aluminum alloy gradually kicks off, enterprises are accelerating order-taking and procurement pace, and aluminum tense scrap prices are expected to see stronger support under the tight supply-demand balance. Demand for wrought aluminum alloy is moderate, with relatively ample in-factory inventory, but tax audit restrictions are expected to reduce aluminum scrap supply, gradually opening a channel for price increases.
Secondary aluminum alloy: Futures: Yesterday, the most-traded AD2612 cast aluminum alloy contract opened at 23,370 yuan/mt, dipped to 23,300 yuan/mt after the open before quickly rallying. It shot up to 23,465 yuan/mt in early trading where it met resistance, consolidated at highs, then pulled back step by step. Intraday volume expanded as it dipped to 23,315 yuan/mt and stabilized, rebounded in late trading, and closed at 23,355 yuan/mt at midday, up 155 yuan/mt or 0.67% from yesterday's settlement price of 23,200 yuan/mt. Spot: Yesterday, the ADC12 market center edged slightly higher, with the SMM ADC12 price up 100 yuan/mt from the previous day to 24,500 yuan/mt. Cost side, higher aluminum and copper prices pushed up procurement costs for aluminum scrap and copper alloy elements. Combined with ongoing tax invoice issues constraining compliant raw material procurement, cost pressure on enterprises persists, providing relatively strong support for ADC12 prices and limiting near-term downside. Demand side remains relatively weak, with demand release during the traditional September-October peak season falling short of expectations, constraining the sustainability of price rises. Overall, the current ADC12 market features strong cost support but insufficient demand follow-through, and the tension between the willingness to hold prices firm and downstream affordability persists. Near-term prices are expected to move sideways, and further upside will depend on aluminum price trends, raw material cost changes, and actual downstream procurement.
Comprehensive outlook: Macro dimension, expectations for US dollar rate hikes have cooled, but the dollar remains at highs, continuing to weigh on valuations across the nonferrous metals sector. Industry dimension, the actual improvement in demand during China's traditional peak season has not fully met earlier expectations, and downstream procurement has turned more cautious in a high-price environment, weakening price support. On Monday, aluminum ingot social inventory destocked by 35,000 mt, providing some price support. Overall, near-term aluminum prices face intertwined bullish and bearish factors and are expected to consolidate sideways.
[The information provided is for reference only. This article does not constitute direct investment research advice. Clients should make decisions prudently and should not use this as a substitute for independent judgment. Any decisions made by clients are not related to SMM.]
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