SHFE aluminum consolidates on a strong note and stands firm above moving averages, alumina rebounds with position reduction and weakness eases [SMM Aluminum Brief Review]

SMM, August 5:

Today, the SHFE aluminum 2609 contract opened at 23,800 yuan/mt, reached a high of 23,840 yuan/mt, dipped to a low of 23,665 yuan/mt, and finally closed at 23,785 yuan/mt, up 60 yuan/mt or 0.25% from the previous trading day. Trading volume was 111,800 lots and open interest was 240,100 lots, with a daily position decrease of 2,167 lots. The price settled above the MA5 (23,698), MA10 (23,493), MA20 (23,321), MA40 (23,370.38) and MA60 (23,759.83), sustaining a short-term bullish pattern. The MACD DIFF (72.44) was above the DEA (-27.77), with the histogram at 200.41, indicating ongoing release of bullish momentum. The daily position decrease of 2,167 lots signaled a slight outflow of funds, and upward momentum on the futures eased compared to the prior period.

SMM Comment: Progress was made in indirect technical talks between the US and Iran, with discussions held on fund repatriation and strait security, while nuclear consultations are about to initiate. The geopolitical risk premium continued to narrow, while disputes over the management rights of the Strait of Hormuz persisted, leaving uncertainty over the resumption of strait passage. A hawkish shift from the US Fed boosted the US dollar index, pressuring base metals prices. Macro headwinds drove aluminum prices lower across China and overseas markets. In the short term, bearish factors dominated, and aluminum prices are expected to remain in the doldrums.

Today, the alumina 2609 contract opened at 2,639 yuan/mt, reached a high of 2,674 yuan/mt, dipped to a low of 2,632 yuan/mt, and finally closed at 2,666 yuan/mt, up 28 yuan/mt or 1.06% from the previous trading day. Trading volume was 152,400 lots and open interest was 200,000 lots, with a daily position decrease of 15,599 lots. The price settled above the MA5 (2,641.80) but remained below the MA10 (2,668.40), MA20 (2,685.05), MA40 (2,757.15) and MA60 (2,768.82). The short-term trend saw some repair, but the overall weak pattern has not yet been reversed. The MACD DIFF (-33.16) was below the DEA (-32.76), with the histogram at -0.80, showing a clear narrowing of bearish momentum. The daily position decrease of 15,599 lots pointed to a significant outflow of funds; today's rise largely reflected a short-covering rebound.

SMM Comment: According to SMM statistics, as of last Thursday, China's total alumina inventory edged down WoW. From an inventory structure perspective, raw material inventory at aluminum smelters continued a slight destocking trend. However, due to recent sharp price fluctuations and market divergence on the outlook, restocking interest was weak, and end-users mainly stayed on the sidelines. In-factory inventory at alumina refineries declined, mainly impacted by phased maintenance at some enterprises in the north, where production constraints led to priority consumption of in-factory stocks; this impact is expected to gradually fade after the maintenance concludes next week. Port inventory continued to accumulate, as high port arrivals from ex-China supplemented spot supply, adding to market pressure. Overall, the oversupply pattern remained unchanged. Before the implementation of Guinea’s bauxite ore quota policy, the market lacked a clear positive driver. It is expected that the inventory trend will shift from weak destocking to a slight buildup next week, with supply-demand conditions staying loose and alumina prices continuing to consolidate on a weak note.

[The information provided is for reference only. This article does not constitute direct advice for investment research decisions. Clients should make prudent decisions and should not use this as a substitute for their own independent judgment. Any decisions made by clients are unrelated to Shanghai Metals Market.]