6.11 SMM Morning Meeting Minutes
Futures: SHFE aluminum daytime session closed at 23,940 yuan/mt, edging up 0.02%. The price remained well below MA5 (24,072), MA30 (24,451), and MA60 (24,592), and only above the unusually low MA10 (23,626), staying under all key moving averages overall, with the bearish alignment pattern unchanged. MACD: DIF = -159.47, DEA = -110.01, death cross downward, negative histogram expanded to -98.93, with bearish momentum further strengthening. Trading volume remained low at 88,100 lots, with subdued market participation. The recommended core trading range for SHFE aluminum is 23,700-24,100. LME aluminum closed at $3,484/mt, down 0.29%, breaking below MA60 (3,526.47) and remaining below all moving averages (MA5=3,544.3, MA10=3,625.7, MA30=3,597.55), with the moving average system forming a bearish alignment and the medium-term trend weakening. MACD: DIF = -3.13, DEA = 24.72, death cross continued, negative histogram expanded to -55.71, with bearish momentum persistently strengthening. The recommended core trading range for LME aluminum is 3,440-3,500.
Macro Front: Middle East tensions flared up again. US President Trump threatened that due to slow progress in negotiations to end the conflict with Iran, the US would launch “very violent” strikes against Iran and did not rule out targeting Iranian infrastructure. US Defense Secretary Hegseth stated that key Iranian facilities would be bombed. Iran’s armed forces said they would respond “more severely, more forcefully, and more devastatingly than ever before.” Data released by the US Labor Department showed that, driven by rising energy prices, US CPI rose 4.2% YoY in May, hitting a new high since May 2023 and in line with market expectations; core CPI rose 2.9% YoY, a new high since September 2025. The US CPI inflation returned to 4% for the first time in three years, further solidifying expectations for US Fed interest rate hikes this year.
Fundamentals: Supply side, according to SMM data, domestic aluminum production edged down slightly last week. The proportion of liquid aluminum rebounded 0.12 percentage points WoW last week, with downstream liquid aluminum demand remaining moderate, while the core focus remains on aluminum semis exports. Downstream processing segments performed divergently. Although in the consumption off-season, strong export demand in some segments partly offset weak domestic demand. Weekly operating rates for secondary alloy, aluminum plate/sheet and strip, and aluminum foil weakened, while primary alloy operations recovered. Aluminum wire and cable and aluminum extrusion segments broadly stabilized. Overall, the weekly operating rate of leading downstream enterprises edged down 0.1 percentage points WoW. On the inventory front, as of Thursday, domestic aluminum ingot social inventory stood at 1.312 million mt, destocking 48,000 mt from Monday and 63,000 mt from the previous Thursday, with the destocking pace continuing to accelerate.
Primary Aluminum Market: Market expectations for US interest rate hikes suppressed the upward channel of SHFE aluminum. The SHFE aluminum 2606 contract fluctuated downward in the morning session, with the overall price center significantly lower than the previous trading day. Buying sentiment in the east China market improved yesterday. The mainstream spot transaction price was at a discount of 60-70 yuan/mt against the SHFE 06 contract. Yesterday, the selling sentiment index in east China was 2.86, flat MoM, and the purchasing sentiment index was 2.90, up 0.1 MoM. As SHFE aluminum futures prices continued to decline, buying sentiment among downstream processing enterprises in central China recovered slightly yesterday, with purchase willingness at lower prices improving. Moreover, with low absolute prices, the price spread between central China and east China was relatively small, and trading firms engaging in both spot and futures markets tended to sell in large volumes to capture earlier spreads. Ultimately, the actual transaction price range in the central China market was around a discount of 60-90 yuan/mt against the SHFE 06 contract. Yesterday, the selling sentiment index in central China was 2.89, up 0.01 MoM, and the purchasing sentiment index was 2.22, flat MoM.
Aluminum Scrap: The SMM A00 price continued to decline by 120 yuan/mt from the previous trading day to 23,900 yuan/mt yesterday, with the aluminum scrap market following suit with a slight decline. Regarding the price difference between A00 aluminum and aluminum scrap, on June 10, the price difference between A00 aluminum and mixed aluminum extrusion scrap free of paint in Foshan was 2,458 yuan/mt, and the price difference between A00 aluminum and shredded aluminum tense scrap fell below 2,000 yuan/mt to 1,920 yuan/mt. Supply side, regulatory scrutiny of the "reverse invoicing" policy continued to intensify, with tax refunds canceled in some provinces and stricter tax inspections driving up costs for raw materials with invoices. Some enterprises in areas such as Anhui and Jiangxi have experienced production cuts or suspensions. Warehouse inflows at aluminum scrap distribution centers declined YoY, and inventory of aluminum tense scrap decreased due to reduced inflows. Currently, compliance costs in the raw material recovery chain remain high, available supply with invoices remains tight, and invoice scarcity has become the core support for prices. Meanwhile, amid the US-Iran conflict, the price spread between Chinese and overseas markets was inverted, with imports of low-priced, high-quality materials being scarce, weakening the domestic supply replenishment. Demand side, off-season effects emerged, with downstream scrap utilization enterprises' operating rates running low and end-user orders following weakly. Enterprises maintained a strategy of purchasing as needed and keeping low inventory, with a cautious purchasing atmosphere. Aluminum scrap market prices is expected to continue to hold up at high levels. Tight supply of compliant materials with invoices will persist, providing bottom support for aluminum scrap prices. The lagging contraction effect of imported aluminum scrap has not yet fully played out, and subsequent port arrivals will remain low, with limited import replenishment under a situation where the overseas market outperforms the domestic market. Meanwhile, as the off-season deepens, the sustainability of orders at downstream scrap utilization enterprises raises concern. They continue to maintain a strategy of purchasing as needed and keeping low inventory, with the purchasing atmosphere unlikely to improve significantly. Currently, invoicing risks in the industry remain high, expectations of supply-side contraction strengthen, while downstream demand weakness exerts downward pressure, resulting in an overall supply-demand dual weakness situation.
Secondary Aluminum Alloy: Spot market: Yesterday, the ADC12 market operated steadily with weak willingness to adjust prices. SMM ADC12 price remained flat at 23,900 yuan/mt. This week, cast aluminum alloy futures diverged from SHFE aluminum, with cast alloy futures strengthening steadily while SHFE aluminum fell below the 24,000 yuan/mt level. Spot A00 aluminum prices continued to decline, while ADC12 prices showed resilience. Yesterday, the price spread between the two returned to positive territory, ending the inversion that had persisted since April, highlighting the alloy's price resilience. Cost support remained robust: aluminum scrap prices followed A00 declines to a limited extent, and persistently tight supply of compliant raw materials further solidified the price floor. Demand side, the weakness continued, with the off-season deepening further and production cuts at end-users such as OEMs leading to some pullback in orders. Overall, with both cost support and demand constraints at play, significant upward momentum is lacking, but downside room is also limited. As the ADC12-A00 spread recovers further, the possibility of a slight price uptick cannot be ruled out. It is recommended to keep monitoring aluminum scrap market dynamics and the pace of recovery in automotive end-use demand.
Aluminum Market Summary: Macro front, Trump threatened a "very violent" strike on Iran's infrastructure, and Iran responded firmly. However, the market has become desensitized to his repeated similar statements, and the geopolitical risk premium weakened marginally. US May CPI rose 4.2% YoY, a three-year high, while core CPI also firmed, cementing expectations for US Fed rate hikes within the year. Expectations of liquidity tightening weighed on metals prices. Fundamentals side, the overseas supply gap is expected to provide strong bottom support for aluminum prices, and expectations for rising energy costs also provide a bullish driver. This Thursday, destocking of domestic aluminum ingot social inventory accelerated notably, effectively easing the previous high inventory pressure. However, the still relatively high inventory pressure in China is expected to limit the upside room for domestic aluminum prices. In the short term, domestic aluminum prices are expected to mainly fluctuate and adjust.
[The information provided is for reference only. This article does not constitute direct investment research or decision-making advice. Clients should make prudent decisions and not rely on this as a substitute for independent judgment. Any decisions made by clients are not related to SMM.]
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