5.12 SMM Morning Meeting Minutes
Futures:The most-traded SHFE aluminum 2606 contract closed at 24,690 yuan/mt, up 0.57%. The price was above MA5 (24,554.00), MA10 (24,614.50), and MA60 (24,532.25), but below MA30 (24,753.83), with short-term moving averages providing support while the price was under pressure at MA30. The MACD indicator DIF (-37.1805) was below DEA (18.0351), with the histogram in negative territory (-110.4312), indicating weakening bearish momentum. The suggested core trading range for SHFE aluminum is 24,000-25,200. LME aluminum 3M closed at $3,573.5/mt, down 0.22%, moving sideways. The price was above MA5 (3,536.90), MA10 (3,527.40), and MA30 (3,527.32), and also above MA60 (3,387.01), with short-, medium-, and long-term moving averages all providing support, indicating an overall bullish trend. The MACD indicator DIF (27.9887) was below DEA (36.4100), with the histogram in negative territory (-16.8426), indicating weakening upward momentum. The suggested core trading range for LME aluminum is $3,500-3,620/mt.
Macro front:A spokesperson of the Ministry of Foreign Affairs announced that at the invitation of President Xi Jinping, US President Trump will pay a state visit to China from May 13 to 15. This will be the first face-to-face meeting between the two heads of state since their meeting in Busan last October, and the first visit to China by a US president in nine years. President Xi Jinping will have an in-depth exchange of views with President Trump on major issues concerning China-US relations as well as world peace and development. US-Iran negotiations have reached an impasse. US President Trump stated that the ceasefire agreement between the US and Iran remains in effect but is "extremely fragile" and in a "precarious" state. Trump said the core of the US proposal is that "Iran must never possess nuclear weapons," yet Iran did not make such a commitment in its response. Trump has not yet decided whether to restart the "freedom plan" to facilitate passage through the Strait of Hormuz. Iran's Ministry of Foreign Affairs stated that the negotiation priorities are ending the war, lifting sanctions, and resolving the blockade, and that decisions on issues such as uranium enrichment will be made at an appropriate time.
Fundamentals:In China, the lifting of the installation suspension order, backlogged supplies entering warehouses, concentrated release of enterprise inventories, and cautious end-user stockpiling willingness combined to drive a continued increase in domestic aluminum ingot social inventory, exerting strong downward pressure on domestic aluminum prices. In markets outside China, geopolitical conflicts disrupted the aluminum supply side, and LME aluminum inventory continued destocking, hitting a multi-year historical low. Inventory side, on Monday, aluminum ingot inventory in major domestic consumption areas stood at 1.44 million mt, down 1,000 mt WoW from last Friday, with destocking mainly in Guangdong and Gongyi.
Primary aluminum market:Yesterday morning, the SHFE aluminum 2605 contract fluctuated upward, with the overall price center rising compared to the previous trading day. Driven by higher aluminum prices, market selling sentiment rose notably yesterday, with increased activity on the offer side but no significant improvement on the buy side. The mainstream spot quotation fell from the SMMA00 aluminum average price to SMMA00-10 yuan/mt. Yesterday, the east China market selling sentiment index was 2.91, up 0.17 WoW; the purchasing sentiment index was 2.66, flat WoW. Yesterday, the trading atmosphere in the central China market remained relatively subdued, but improved slightly WoW. Buying sentiment among downstream processing enterprises remained sluggish. As aluminum prices rose, market premiums showed a downward trend, with quotations falling from a premium of 20-30 yuan/mt over the central China price before the opening to between a premium of 10 yuan/mt and a discount of 10 yuan/mt to the central China price. Yesterday, the central China market selling sentiment index was 2.82, up 0.01 WoW; the purchasing sentiment index was 2.29, up 0.01 WoW.
Aluminum scrap:Yesterday, A00 aluminum prices rose 170 yuan/mt from the previous trading day, and aluminum scrap market prices generally followed with increases of 100-200 yuan/mt. The mainstream range for shredded aluminum tense scrap (priced based on aluminum content) operated around 20,500-21,000 yuan/mt (tax exclusive). Imported zorba (Ningbo Port) operated in the range of 21,670-21,970 yuan/mt (tax inclusive). Regarding the price spread, on May 11, the price difference between A00 aluminum and mixed aluminum extrusion scrap free of paint in Foshan was recorded at 2,643 yuan/mt, and the price difference between A00 aluminum and shredded aluminum tense scrap was 1,998 yuan/mt. Supply side, the shipment pace of aluminum scrap in May remained generally stable compared to April YoY, raw material prices swung wildly, and aluminum scrap yards generally held back from selling and held prices firm; high LME prices led import traders to adopt cautious strategies, and subsequent imports are expected to pull back. Demand side, the traditional off-season set in, the operating rate of secondary aluminum producers pulled back slightly, aluminum tense scrap was purchased as needed with low inventory operations, wrought aluminum alloy scrap was supported by secondary aluminum plate/sheet and strip operating rates but with limited strength, downstream demand was mainly rigid with strong wait-and-see sentiment. This week, the aluminum scrap market is expected to remain in the doldrums at high levels, with the mainstream range for shredded aluminum tense scrap (priced based on aluminum content) maintained at 20,500-21,300 yuan/mt (tax exclusive). Supply side, policy constraints are unlikely to ease in the short term, tight compliant supply sources coupled with expected pullback in imports provided certain price support. Demand side, the off-season effect continued, downstream secondary aluminum enterprises remained cautious and watchful, purchasing mainly through small rigid-demand restocking orders, the divergence pattern between aluminum tense scrap and wrought aluminum alloy scrap remained unchanged, order increments were limited, and vigilance is still needed against market risks from aluminum price fluctuations and tight supply.
Secondary aluminum alloy:Spot cargo side, the ADC12 market was generally stable with slight rise yesterday. Most enterprises raised quotations by 100 yuan/mt, following the SHFE aluminum futures rebound and rising aluminum scrap raw material costs. Although market sentiment has recovered somewhat, weak downstream demand remains a significant constraining factor, leading enterprises to adopt a cautious pricing mentality, with most following the prevailing market trend. In the short term, ADC12 prices are expected to move sideways within a narrow range amid the tug-of-war between cost support and lackluster demand.
Aluminum Market Summary:Supply disruption risks for aluminum outside China have not yet subsided, and the ex-China aluminum ingot supply-demand gap will continue to provide support for aluminum prices; meanwhile, the continuation of higher-than-expected inventory buildup in China will weigh on domestic aluminum prices. At the same time, tightened invoicing regulations may lead to structural tightness in spot cargo, and the weakening spot market will further limit upside room for domestic aluminum prices. Close attention should be paid to the potential turning point in China's social inventory, which could drive a rebound in aluminum prices.
[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 replace their own independent judgment with this content. Any decisions made by clients are unrelated to SMM.]
