Indonesia's strategic transformation from bauxite exporter to integrated aluminum producer is encountering significant headwinds in 2025. Market analysis reveals a growing disparity between readily available bauxite supply and the slower-than-anticipated operationalization of alumina refineries, creating temporary market imbalances that require strategic navigation. Seven major refinery projects face implementation hurdles, primarily due to funding constraints, delaying the full realization of Indonesia's downstream ambitions.

[SMM Cast Aluminum Alloy Morning Comment: U.S.-China Tariff Conflict Intensifies, Cast Aluminum Alloy's Most-Traded Contract Closed Lower Under Pressure Last Friday] On the macro front, the U.S.-China trade war reignited, putting nonferrous metals futures under pressure. Fundamentally, last week's supply tightness and price strength drove...

[SMM Aluminum Morning Meeting Minutes: US-China Tariff Disputes Resurface, Aluminum Prices to Remain Under Pressure in the Short Term] The SHFE aluminum 2511 contract declined during the night session on October 10, closing at 20,755 yuan/mt, down 1.59%. The MA indicators show that MA5 (20,766), MA10 (20,764), and MA30 (20,764) are all above the closing price, with the short-term moving averages in a bearish arrangement, indicating price pressure; open interest decreased by 11,501 lots, reflecting low market participation and limited downward momentum; in the MACD indicator, both DIF and DEA are negative, and the MACD histogram is -0.9044, confirming the continuation of the bearish trend. SHFE aluminum broke below key levels during the night session, with a bearish technical outlook. The key resistance level is 21,050-21,100 yuan/mt, which poses strong resistance; the primary support below is the night session low of 20,730 yuan/mt, and if breached, prices may test the 20,600-20,700 range. On the macro front: China has taken note of the US announcement of plans to impose 100% tariffs on Chinese goods. The US actions severely harm China's interests and undermine the atmosphere of bilateral economic and trade talks, to which China firmly objects. However, on the evening of October 12, US Vice President Vance, in an interview regarding Trump's latest tariff threats, signaled some moderation. Vance stated during the program: "Trump is willing to engage in rational negotiations with China. (Bearish ★)

Following the 8-day Double Festival holiday, SMM monitored the changes in China's aluminum ingot and aluminum billet inventories before and after the National Day holiday. In 2025, the domestic aluminum ingot inventory increased by a total of 57,000 mt, a rise of 9.6%, while the aluminum billet inventory increased by 24,000 mt, up 20.9%. The combined inventory of aluminum ingots and billets accumulated by 81,000 mt, an increase of 11.5%. The inventory buildup was generally in line with pre-holiday expectations, with no significant surprises. In early October, the domestic primary aluminum industry chain inventory exhibited the core characteristics of "controllable total volume and regional divergence," with specific analysis as follows...

Indonesia's reinstatement of the mandatory annual RKAB (Work Plan and Budget) approval cycle, effective October 2025, marks a decisive policy reversal to assert direct state control over the mining sector. This shift from three-year planning aims to manage the structural oversupply in the bauxite market where prices of USD 28-30 reflect a 25-30% discount to the official benchmark by enabling precise annual production quotas. The government intends to use this tool to align bauxite output with the scheduled commissioning of 7-8 new alumina refineries requiring over 20 million tons of annual input, thereby forcing market rebalancing and accelerating downstream integration. The success of this high-stakes strategy hinges on mitigating its inherent risks: eroded investor confidence from regulatory volatility and industry consolidation that could reduce market participants by 30-40%, potentially undermining the capital investment required for a globally competitive downstream industry.

【SMM Analysis】 The European Union’s Carbon Border Adjustment Mechanism (CBAM) is a policy introduced to prevent carbon leakage and ensure fair competition by regulating the import of carbon-intensive goods into the EU. Launched in October 2023, CBAM targets six high-emission sectors: cement, iron and steel, aluminium, fertilisers, electricity, and hydrogen. The CBAM mechanism and export restrictions may become one of the key concerns in international aluminum trading and significantly affect the flow of aluminum raw materials and aluminum products.

[SMM Aluminum Morning Meeting Summary: Macro and Fundamentals in a Tug-of-War, SHFE Aluminum to Fluctuate Upward in the Short Term] In the previous trading day's night session, the most-traded SHFE aluminum 2511 contract opened at 21,110 yuan/mt, reached a high of 21,205 yuan/mt and a low of 21,100 yuan/mt, and closed at 21,100 yuan/mt, up 0.05% from the previous close, with a trading volume of 81,000 lots and open interest of 205,000 lots. On the previous trading day, LME aluminum opened at $2,749/mt, reached a high of $2,807.5/mt and a low of $2,746/mt, and closed at $2,782.5/mt. On the macro front, the minutes from the US Fed’s September meeting released on Wednesday showed that Fed officials unanimously agreed that risks in the US job market were sufficient to support an interest rate cut, but opinions on the pace of cuts varied widely, with officials remaining vigilant about high inflation. (Bullish ★) During the National Day holiday, the property market showed increased divergence, with the daily average transaction area of new residential homes in Beijing and Shenzhen increasing by 52% and 22% YoY, respectively, while Guangzhou, Hangzhou, and Chengdu saw YoY declines in daily average transactions of new commercial housing. (Neutral) Fundamentals-wise, on October 9, aluminum ingot inventories in Guangdong stood at 207,000 mt, Wuxi at 202,000 mt, and Gongyi at 95,000 mt, bringing the total inventory across the three locations to 504,000 mt, an increase of 75,500 mt from the previous trading day. As for domestic aluminum billet inventories in two locations on October 9, Guangdong held 57,000 mt and Wuxi 39,500 mt, totaling 96,500 mt, an increase of 22,000 mt from the previous trading day.

[SMM Cast Aluminum Alloy Morning Comment: Aluminum Scarcity Difficult to Ease, Silicon Metal Sentiment Cools, ADC12 Holds Up Well] Overall, the supply-demand imbalance in raw materials persists, with enterprises facing significant procurement and cost pressures, coupled with steady and improving demand, providing upward momentum for prices. However, high and continuously rising social inventories may impose some constraints on the upside room for prices. In the short term, ADC12 prices are expected to maintain a fluctuating trend with relative strength. Going forward, it will be essential to closely monitor the circulation of raw materials, trends in social inventory changes, and the pace of downstream demand recovery after the holiday.