6.4 SMM Morning Meeting Minutes
Futures:The most-traded SHFE aluminum 2607 contract closed at 24,385 yuan/mt, down 1.14%. The price was running below MA5 (24,472.00), MA10 (24,467.00), MA30 (24,606.67), and MA60 (24,688.67), with short- and medium-term moving averages gradually turning downward. The overall structure remained in the doldrums, with resistance from the moving averages above. The MACD indicator DIF (-63.4963) was above DEA (-71.8115), with the MACD red bar at 16.6305. The red bars continued to shrink, indicating that bullish momentum was gradually weakening. The suggested core trading range for SHFE aluminum is 24,300-24,850 yuan/mt. The LME aluminum 3M contract closed at $3,696.5/mt, down 0.03%, posting a slight decline. The price held above MA5 (3,712.20), MA10 (3,683.95), MA30 (3,605.12), and MA60 (3,518.49), with moving averages in a bullish alignment overall, and the medium-term uptrend remained solid. The MACD indicator DIF (50.1934) was above DEA (46.2352), with the histogram positive (7.9162), maintaining a golden cross pattern, indicating that bullish momentum was still continuing. The suggested core trading range for LME aluminum is $3,600-3,790/mt.
Macro front:The US House of Representatives passed a resolution aimed at limiting US President Trump's authority to use military force against Iran, requiring Trump to end military operations against Iran. US President Trump stated that a deal was being reached with Iran, that Iran had agreed not to possess nuclear weapons, and that he might meet with Iran's Supreme Leader at some point. Trump said the naval blockade on Iran could last until US Labor Day, September 7 this year. New York Fed President and FOMC Vice Chair Williams stated that although the Middle East war and other factors posed upside risks to inflation, US monetary policy was currently in an appropriate position. He believed the US Fed did not need to adjust interest rates in the short term, and there was no clear direction for future interest rate movements.
Fundamentals:Middle East supply disruptions continued, with the Strait of Hormuz still under Iran's naval blockade, and geopolitical premiums persisting in the short term. LME warrants fell to historical lows and ex-China spot premiums remained elevated, with the tight supply situation outside China unchanged. The US Fed's interest rate path remained unclear, with no definitive direction for short-term rate movements ahead. Inventory side, SMM aluminum social inventory was approximately 1.375 million mt as of Thursday this week, destocking by 11,000 mt compared to Monday this week. Destocking continued this week, but inventory remained at historically high levels for the same period.
Primary aluminum market:During the morning session, the SHFE aluminum 2606 contract fluctuated downward, with the overall price center rising significantly compared to the previous trading day. Affected by the sharp rise in aluminum prices, downstream buying sentiment weakened significantly. The east China market was relatively soft yesterday, with transaction prices continuing to weaken. Mainstream spot quotes in the market ranged from SMMA00 -20 yuan/mt to -10 yuan/mt. Yesterday, the east China market shipment sentiment index was 3.01, flat MoM; the purchase sentiment index was 2.70, down 0.13 MoM. Yesterday, SHFE aluminum futures prices continued to rise from the previous day's morning session. Combined with weak off-season orders from downstream processing enterprises in the central China market, overall buying sentiment in the market was subdued. Enterprises mainly digested inventories and purchased small quantities as needed, with only some traders purchasing large volumes for term arbitrage when premiums were low. Ultimately, the actual transaction price range in the central China market hovered around a discount of 230-270 yuan/mt against the SHFE aluminum 06 contract. Yesterday, the central China market shipment sentiment index was 2.89, flat MoM; the purchase sentiment index was 2.17, down 0.01 MoM.
Aluminum scrap:Yesterday, the SMM A00 price rose 130 yuan/mt MoM from the previous trading day, and the aluminum scrap market generally followed the uptrend. Supply side, the tightening regulatory stance on the "reverse invoicing" policy continued, with compliance costs in the aluminum scrap recycling segment remaining elevated. Available invoiced supplies were tight, and the core support for aluminum scrap prices was invoice scarcity rather than actual demand boost. Meanwhile, affected by the persistently inverted price spread between in and outside China aluminum scrap amid US-Iran conflict disruptions, high-quality low-priced supplies from outside China were scarce, and the supplementary role of imports to China's supply continued to weaken. Demand side, with the off-season approaching, operating rates at downstream scrap utilization enterprises remained at low levels, and end-use demand order follow-through was lackluster. Scrap utilization enterprises generally maintained a strategy of purchasing as needed with low inventory, and the overall purchasing atmosphere was cautious. Aluminum scrap market is expected to continue holding up well at high levels this week, with the mainstream price range for shredded aluminum tense scrap (priced based on aluminum content) maintained at 20,300-20,900 yuan/mt (tax-exclusive). The constraints from the "reverse invoicing" policy persist, and the tight supply pattern of compliant invoiced sources is unlikely to reverse in the short term. The lagged contraction effect of imported aluminum scrap has not been fully released, and subsequent port arrivals will continue to run at low levels. However, with the off-season approaching, the sustainability of subsequent orders for scrap utilization enterprises is concerning, and incremental end-use demand remains limited. Continued attention is needed on the progress of policy compliance, the outcome of US-Iran war negotiations, and the arrival of imported supplies at ports.
Secondary aluminum alloy:Spot cargo: Yesterday, ADC12 prices overall continued their upward trend, with most enterprises raising prices by 100-200 yuan/mt. Among the factors, increased tax burden pressure, persistent shortage of compliant raw materials, and continuously rising costs remained the core drivers of price increases. Additionally, the widening price spread between China and non-China markets further reinforced bullish expectations. Under the dual effects of cost support and supply constraints, enterprises generally showed strong willingness to hold prices firm, actively following the upward trend in quotes. In the short term, if the tight raw material supply situation does not see significant relief, ADC12 prices still have the potential to continue rising, and the market overall will hold up well.
Aluminum Market Summary:The U.S.-Iran ceasefire agreement has not yet been formally reached, and the memorandum of understanding is still being finalised. Short-term geopolitical premiums persist, and tight supply outside China continues to support LME aluminum's firm tone. On the domestic front, affected by the recent sharp rise in aluminum prices, spot aluminum purchasing sentiment in China weakened, with buyers mainly making small purchases on an as-needed basis. Inventory side, domestic inventory destocking continued but at a limited pace, constraining SHFE aluminum's upside elasticity. The divergence between domestic and overseas markets is expected to persist in the short term. In the short term, aluminum prices will LME outperforms SHFE and move sideways.
[The information provided is for reference only. This article does not constitute direct advice for investment research decisions. Clients should make prudent decisions and not use this as a substitute for independent judgment. Any decisions made by clients are not related to SMM.]
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