Aluminum prices lose moving average support, under pressure and pulling back; alumina supply-demand remains loose and weak [SMM aluminum futures brief comment]

SMM, October 13:

The most-traded SHFE aluminum 2611 contract closed at 23,320 yuan/mt today, down 265 yuan on the day, a decline of 1.12%. Trading volume was 219,610 lots, and open interest was 240,947 lots, with a daily decrease of 10,362 lots, as both bulls and bears reduced positions and exited the market. The price broke below the 5-day moving average (23,494), the 10-day moving average (23,809), the 30-day moving average (24,050), and the 60-day moving average (23,826), with all four moving averages lost, and short-term bearish pressure intensified again. The price opened lower intraday, shot up to 23,630 before pulling back on resistance, and closed near the intraday low of 23,290; the 5-day and 10-day moving averages turned downward, while the 30-day and 60-day moving averages remained on a downtrend, with the bearish alignment of moving averages re-emerging and the medium-term downtrend re-established. In MACD (12,26,9), DIF was at -145.72 and DEA at -30.03, with both lines running below the zero axis and DIF below DEA. The MACD histogram at -231.37 showed the green bars continuing to expand, indicating that bearish momentum was still being released. The negative gap between DIF and DEA widened, and the weak pattern persisted.

SMM commentary: On the macro front, expectations for US dollar rate hikes have cooled, but the dollar remains at elevated levels, continuing to weigh on valuations in the nonferrous metals sector. On the industrial front, the actual improvement in demand during China's traditional peak season has not fully met prior expectations, and downstream purchasing has turned more cautious in the high-price environment, weakening price support. On Monday, social inventory of aluminum ingots destocked by 35,000 mt, providing some price support. Overall, short-term aluminum prices face a mix of bullish and bearish factors and are expected to continue moving sideways in a consolidation pattern.

The most-traded alumina 2701 contract closed at 2,639 yuan/mt today, down 58 yuan on the day, a decline of 2.15%. Trading volume was 196,783 lots, and open interest was 269,253 lots, with a daily increase of 46,837 lots. Volume and open interest both rose while prices fell, as bearish capital continued to enter the market. The price lost the 5-day moving average (2,687), the 10-day moving average (2,690), the 30-day moving average (2,711.77), and the 60-day moving average (2,736.23), with all four moving averages pressing from above, and the short-term rebound was interrupted again. The contract opened at 2,690 yuan, reached a high of 2,695, then drifted lower throughout the session, touching a low of 2,629, and closed just 10 yuan above the intraday low, near the bottom of the day's range. The full-day average price of 2,653 yuan was notably higher than the closing price, reflecting a lack of momentum for a rebound intraday and heavy selling pressure on rallies. The 5-day and 10-day moving averages have turned downward, while the 30-day and 60-day moving averages remain on a downtrend, with the bearish alignment of moving averages re-emerging and the medium-term downward consolidation trend extending. In MACD (12,26,9), DIF was at -16.92 and DEA at -14.30, with both lines running below the zero axis and DIF below DEA. The MACD histogram at -5.24 showed the green bars persisting, as bearish momentum was released again and the weak pattern remained unchanged.

SMM commentary: As of now, total alumina inventory nationwide has continued to increase, and the pace of inventory buildup has accelerated. By segment: raw material inventory at aluminum smelters has increased somewhat, with downstream stockpiling willingness rising ahead of the holiday; finished product inventories at alumina refineries have continued to accumulate, with pressure on finished products unabated amid high production levels; port inventory has edged down and basically stabilized; inventory piled up in transit and at stations has increased; warrant inventory has risen slightly. On the industry front, weekly alumina production nationwide has continued to rise recently, with the growth mainly coming from the sustained release of new capacity in Guangxi, coupled with the full recovery of enterprises in Shanxi that were previously affected by red mud pond issues. Meanwhile, operating rates in Shandong and Henan have pulled back somewhat, and overall supply remains high, further aggravating the supply-demand surplus. Futures prices are consolidating on a weak note at low levels, market trading activity has declined, and both bulls and bears are turning cautious and wait-and-see. Downstream aluminum smelters are mainly purchasing as needed, with minor raw material restocking before the holiday, and no concentrated stockpiling has been observed. Looking ahead, metallurgical-grade alumina operating capacity is expected to remain high, existing capacity is expected to stay stable, and the weekly operating rate is likely to continue rising. No maintenance or production cut plans have been reported by enterprises so far. With winter approaching, aluminum smelters will gradually begin stockpiling, and supply pressure is expected to continue increasing. On the inventory front, high production and downstream stockpiling are offsetting each other, and total alumina inventory nationwide is expected to continue building up after the holiday. On the price front, with the supply-demand surplus unchanged and upward momentum lacking, spot prices are expected to remain stable with narrow-range weak fluctuations.

[The information provided is for reference only. This article does not constitute direct advice for investment research decisions. 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 Shanghai Metals Market.]