SMM, October 14:
The most-traded SHFE aluminum 2611 contract closed at 23,285 yuan/mt today, down 175 yuan on the day, a decline of 0.75%. Trading volume was 133,073 lots, and open interest was 237,527 lots, with a daily decrease of 3,420 lots, as both bulls and bears continued to reduce positions and exit. Prices remained below the 5-day moving average (23,331), 10-day moving average (23,385), 30-day moving average (23,713), and 60-day moving average (23,824), with all four moving averages pressing down from above. The contract opened at 23,300 during the day, faced resistance near the intraday high of 23,430, then consolidated lower, closing near the intraday low of 23,270. The intraday high was lower than the previous day's closing level, and the rebound failed to sustain. The 5-day moving average has crossed below the 10-day moving average, forming a death cross, while the 30-day and 60-day moving averages continue to drift lower, further solidifying the bearish alignment of moving averages. In MACD (12,26,9), DIF was at -173.15 and DEA at -58.66, with both lines below the zero axis and DIF below DEA. The MACD histogram was at -228.99, with the green bars persisting, though the bar narrowed from -231.37 the previous day. DIF and DEA remained in negative territory, and the weak pattern was unchanged. Trading volume of 133,100 lots was below the 5-day average volume of 176,700 lots and the 10-day average volume of 164,900 lots, indicating a decline on shrinking volume, with bears showing limited willingness to press further.
SMM commentary: On the macro front, the US dollar remains elevated, and expectations for US Fed interest rate hikes within the year persist, continuing to weigh on valuations across the nonferrous metals sector. On the industrial front, the actual improvement in demand during China's traditional peak season has not fully met earlier expectations, and downstream purchasing has turned more cautious amid high prices, weakening price support. The destocking of domestic aluminum ingot social inventory has resumed, providing some support to prices. Overall, bullish and bearish factors are intertwined for aluminum prices in the short term, and prices are expected to consolidate on a subdued note within a range in the near term.
The most-traded alumina 2701 contract closed at 2,626 yuan/mt today, down 27 yuan on the day, a decline of 1.02%. Trading volume was 117,484 lots, and open interest was 280,840 lots, with a daily increase of 11,587 lots, as both volume and open interest rose while prices fell. Prices remained below the 5-day moving average (2,667.60), 10-day moving average (2,678.90), 30-day moving average (2,708.43), and 60-day moving average (2,733.42), with all four moving averages pressing down from above. The contract opened at 2,639 during the day, reached a high of 2,645, then drifted lower in a one-sided consolidation, touching a low of 2,623 and closing near the intraday low. The full-day average price of 2,635.05 was above the closing price. The 5-day moving average has crossed below the 10-day moving average, forming a death cross, while the 30-day and 60-day moving averages continue to drift lower, further solidifying the bearish alignment of moving averages. In MACD (12,26,9), DIF was at -20.6861 and DEA at -15.5747, with both lines below the zero axis and DIF below DEA. The MACD histogram was at -10.2228, with green bars persisting, and DIF and DEA remained in negative territory. Trading volume of 117,500 lots was below the 5-day average volume of 131,400 lots, the 10-day average volume of 146,600 lots, and the 20-day average volume of 154,700 lots. Market trading activity declined, with both bulls and bears turning cautious and adopting a wait-and-see stance.
SMM commentary: As of now, total alumina inventory nationwide has continued to increase, with the pace of inventory buildup accelerating. By segment: raw material inventories at aluminum smelters have increased, with downstream stocking willingness rising ahead of the holiday; finished product inventories at alumina refineries have continued to accumulate, with pressure on finished products persisting amid high production levels; port inventories have edged down and largely stabilized; inventories in transit and at railway stations have increased; warrant inventories have 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 storage issues. Meanwhile, operating rates in Shandong and Henan have pulled back somewhat, but overall supply remains high, further intensifying 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 adopting a wait-and-see stance. Downstream aluminum smelters are mainly purchasing as needed, with modest raw material restocking ahead of 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 at present. 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 maintain an inventory buildup trend after the holiday. On the price front, the supply-demand surplus remains unchanged, and upward drivers are weak. Spot prices are expected to remain stable with narrow fluctuations on a subdued note.
[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 their own independent judgment. Any decisions made by clients are not related to SMM.]
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