2.9 SMM Morning Meeting Minutes
Futures:Last Friday, SHFE aluminum night session closed at 23,585 yuan/mt, up 0.98%, fluctuating rangebound during the session. The price traded below the short-term moving averages MA5 (23,610) and MA10 (24,118), under short-term pressure, but remained above the long-term MA60 (22,945.17), with the medium-term foundation intact. The MACD indicator's DIF (79.9094) and DEA (278.9238) showed a high-level death cross, with the histogram deeply negative (-398.0288), indicating significant downward momentum. The suggested core trading range for SHFE aluminum is 23,400–24,000. LME aluminum night session closed at $3,110/mt, up 2.78%, with notable gains. The price stood above MA60 ($2,991.28) but slightly below MA30 ($3,114.58), showing some repair in the medium-to-long-term structure, though short-term moving average pressure remains. The MACD indicator's DIF (14.0760) and DEA (36.3308) were in a death cross, but the negative histogram value (-44.5096) narrowed, suggesting weakening downward momentum. The suggested core trading range for LME aluminum is $3,080–$3,150.
Macro Front:US President Trump signed an executive order threatening tariff hikes on countries purchasing goods and services from sanctioned Iran. The order took effect on February 7. It stated that the US deemed it necessary to impose tariffs, such as 25%, on countries that directly or indirectly procure or import Iranian goods and services. (Bearish ★) The US announced a provisional trade agreement framework recently reached with India, under which India will eliminate or reduce tariffs on US industrial products and various food and agricultural items, while the US will lower the so-called reciprocal tariff rate on Indian goods from 25% to 18%. President Trump also signed an executive order deciding to cancel the additional 25% tariff on Indian exports to the US, imposed based on India's direct or indirect imports of Russian oil, effective February 7. (Bullish ★)
Fundamentals:Supply side, domestic and overseas newly commissioned aluminum projects ramping up production pushed up the daily average production. Demand side, production end, as the Chinese New Year holiday approached, downstream processing enterprises began holidays successively, leading to a decline in operating rates and weakening demand; the proportion of liquid aluminum dropped 8.6 percentage points WoW. Trading end, after the absolute aluminum price fell, traders' bullish sentiment supported increased procurement, spot discounts narrowed, and transactions showed slight recovery. However, the social inventory buildup trend continued, with Monday's inventory up 21,000 mt from last Thursday, inventory pressure gradually increasing; the post-holiday social inventory peak is expected to hit a new high in nearly three years.
Primary Aluminum Market:In the morning session, SHFE aluminum 2602 fluctuated downward, with the price center lower than the previous trading day. Affected by the decline in aluminum prices, overall market buying sentiment improved, leading to a narrowing of spot premiums/discounts across the market. The mainstream transaction prices were concentrated at a premium of 10 yuan/mt to 30 yuan/mt. Last Friday, the shipment sentiment index in the east China market was 2.84, flat MoM; the purchasing sentiment index was 2.80, up 0.11 MoM. SMM A00 aluminum was quoted at 23,340 yuan/mt, down 420 yuan/mt from the previous trading day, at a discount of 180 yuan/mt against the 2602 contract, up 30 yuan/mt from the previous trading day. Last Friday, trading in the central China market tended to be sluggish. As the Chinese New Year holiday approaches, downstream processing plants are nearing completion of stockpiling, maintaining only small just-in-time procurement, with only some traders restocking on dips. Suppliers' willingness to collect payments by year-end weakened compared to the previous day, and market activity was sluggish. The actual transaction prices in the central China market finally hovered around parity to a premium of 30 yuan/mt against the central China price. Last Friday, the shipment sentiment index in the central China market was 2.69, down 0.05 MoM; the purchasing sentiment index was 2.17, down 0.05 MoM. SMM central China closed at 23,240 yuan/mt, down 400 yuan/mt from the previous trading day, at a discount of 280 yuan/mt against the 2602 contract, up 50 yuan/mt from the previous trading day. The Henan-Shanghai price spread was -100 yuan/mt, narrowing by 20 yuan/mt from the previous trading day.
Secondary Aluminum Raw Materials:Last Friday, spot primary aluminum prices continued to pull back from the previous trading day, with SMM A00 spot closing at 23,140 yuan/mt. Aluminum scrap prices generally held steady or followed with slight declines last Friday. Last Friday, baled UBC scrap was mainly quoted at 16,700-17,150 yuan/mt (ex-tax), shredded aluminum tense scrap (priced based on aluminum content) was mainly quoted at 18,900-19,600 yuan/mt (ex-tax). Regarding the price difference between A00 aluminum and aluminum scrap: on February 6, the price difference between A00 aluminum and mixed aluminum extrusion scrap free of paint in Foshan was 3,360 yuan/mt, and the price difference between A00 aluminum and shredded aluminum tense scrap in Foshan was 2,554 yuan/mt. Recently, directly impacted by recycling policies and against the backdrop of high aluminum prices forcing scrap prices to follow upward, a situation of "nominal prices without actual transactions" has emerged. Scrap utilization enterprises in related provinces were forced to reduce or halt production, downstream purchasing sentiment was significantly dampened, and procurement was conducted as needed. Aluminum scrap prices are expected to hover at highs next week, with the mainstream range for shredded aluminum tense scrap (priced based on aluminum content) projected at 19,000-19,800 yuan/mt (ex-tax). Before the holiday, repeated environmental protection-related controls in Anhui, Henan, Hebei, and other regions, combined with high aluminum prices, provided bottom support for aluminum scrap prices, while suppressed demand forced scrap utilization enterprises and scrap yards to enter the holiday early. The pattern of "nominal prices without actual transactions" is difficult to change, and the overall tug-of-war between sellers and buyers continues. Close monitoring is required on the production halts and operational rates of downstream processing enterprises and the implementation progress of environmental protection measures in various regions, remaining vigilant against the possibility of continued sluggish trading in the aluminum scrap market if aluminum prices pull back again.
Secondary Aluminum Alloy:On the futures side, the aluminum alloy 2603 contract opened at 21,945 yuan/mt, intraday showing a pattern of retreating after a rapid rise and fluctuating downward. In early trading, prices rebounded slightly driven by sentiment recovery, but faced significant resistance at the 22,000–22,150 yuan/mt level, failing to hold above it effectively. In the afternoon, as bulls accelerated position reductions, prices gradually pulled back and retested the previous low area. Overall, short-term rebound momentum remains insufficient, with futures still in a weak consolidation phase following the high-level pullback, and funds are mainly reducing positions and adopting a wait-and-see approach. In the spot market, A00 aluminum prices fell by 200 yuan/mt from the previous trading day to 23,140 yuan/mt, while SMM ADC12 prices edged down by 50 yuan/mt to 23,550 yuan/mt. Last Friday, secondary aluminum market quotations showed some divergence, with some enterprises choosing to hold steady and observe, while others lowered their offers by about 100 yuan/mt. Driven by the price decline, downstream procurement mainly focused on restocking at lower levels, and transaction activity improved slightly compared to the previous period. On the supply side, as the Chinese New Year approaches, production schedules for secondary aluminum plants during the holiday period are gradually being clarified. Most enterprises plan to suspend production between February 5 and 13, with resumption times concentrated mainly after the eighth day of the lunar new year or after the Lantern Festival. The expected shutdown period ranges from 8 to 20 days, with the average shutdown duration extending by about 2 days YoY. The lengthened shutdown period is partly due to recent intensified aluminum price fluctuations and partly influenced by generally weaker downstream demand, as well as stricter policies and ongoing environmental protection-related controls. Overall, downstream demand continues to contract, and fundamental support for prices is marginally weakening. Before the holiday, secondary aluminum alloy prices are expected to consolidate weakly at high levels, with the price center dropping back slightly.
Aluminum Market Summary:On the macro front, the US threat of tariff hikes on countries involved in trade with Iran will disrupt global trade flows and suppress risk appetite, creating headwinds for aluminum prices. On the supply side, newly commissioned aluminum projects domestically and overseas continue to ramp up production, with daily average production maintaining an upward trend, sustaining supply pressure. On the demand side, the market has entered the pre-Chinese New Year off-season, as downstream processing enterprises gradually begin holidays, leading to a decline in operating rates and noticeably weaker consumption from the production side. Currently, the pace of aluminum ingot inventory buildup is accelerating, and market expectations indicate that post-holiday inventory peaks will reach multi-year highs. Visible inventory pressure is gradually becoming a key practical factor suppressing aluminum prices. In summary, influenced by earlier macro headwinds, substantial capital exited with profits, leading to a decline in aluminum prices and a reduction in open interest. However, as precious metals did not show further downward trends, aluminum prices stabilized accordingly. In the short term, aluminum prices are expected to consolidate.
[The information provided is for reference only. This article does not constitute direct investment research advice. Clients should make decisions cautiously and not use this to replace independent judgment. Any decisions made by clients are unrelated to SMM.]
![As the Chinese New Year holiday approaches, market trading sentiment declines [SMM Spot Aluminum Midday Review]](https://imgqn.smm.cn/usercenter/zsKTq20251217171652.jpg)
