[SMM Cast Aluminum Alloy Morning Comment: Aluminum Scrap Supply Shortage Drives Prices Up, Downstream Consumption Shows Mild Recovery] Aluminum prices rebounded for three consecutive days, driving aluminum scrap prices to follow suit with a rapid increase of 100 yuan/mt. Driven by cost pressures, secondary aluminum producers generally raised quotations by 100 yuan/mt, with strong market willingness to adjust prices. Since September, downstream consumption has shown a mild recovery trend, with demand continuously improving though the traditional peak season characteristics have not fully emerged. In the short term, ADC12 prices are expected to hover at highs under cost support, but further upside room may be limited due to restrained demand recovery momentum and increased social inventory. The market should closely monitor raw material supply conditions, demand recovery pace, and policy-related impacts moving forward.

[SMM Cast Aluminum Alloy Morning Comment: The Most-Traded Contract Closed Lower Overnight, Tight Aluminum Scrap Supply Supports ADC12] Aluminum prices fluctuated rangebound, while the secondary aluminum market remained stable overall, with most quotations unchanged. Currently, aluminum scrap supply remains tight, driving up procurement costs for enterprises and supporting ADC12 prices. Downstream consumption shows a gradual recovery trend, but enterprises report limited order growth, as the peak season effect has yet to fully materialize. In the short term, ADC12 prices are expected to hover at highs due to cost support, though upside room is constrained by sluggish demand recovery and rising social inventory. Subsequent focus should center on raw material supply conditions, demand recovery progress, and policy guidance.

Futures side, during the previous trading day's night session, the most-traded SHFE aluminum 2510 contract opened at 20,695 yuan/mt, reached a high of 20,740 yuan/mt, a low of 20,695 yuan/mt, and closed at 20,725 yuan/mt, up 0.05% from the previous close. LME aluminum opened at $2,609.5/mt, reached a high of $2,625/mt, a low of $2,600.5/mt, and closed at $2,609.5/mt, up 0.27% from the previous close.

Britain’s Financial Conduct Authority (FCA), a financial regulatory body, has approached Swiss-based energy and commodity trading firm Mercuria over its unusually large aluminium holdings on the London Metal Exchange (LME).

Futures side, the most-traded SHFE aluminum 2510 contract opened at 20,750 yuan/mt in the previous trading day's night session, with the highest price at 20,790 yuan/mt, the lowest price at 20,655 yuan/mt, and closed at 20,665 yuan/mt, down 30 yuan/mt or 0.14% WoW.

[SMM Cast Aluminum Alloy Morning Comment: Regional Aluminum Scrap Price Adjustments Show Divergence, Tight Supply to Keep Short-Term Highs] Last Friday, aluminum prices edged up slightly, while secondary aluminum producers held quotes largely steady, with the SMM ADC12 price unchanged at 20,750 yuan/mt. Currently, aluminum scrap supply remains tight, driving up procurement costs for enterprises and sustaining firm ADC12 market quotes. Downstream consumption is in a modest recovery phase, with limited order growth for manufacturers, and the peak season's full impact still requires time to materialize.

[SMM Analysis]Cost Push and Policy Disturbance Drove ADC12 Price Up in August, Demand Fulfillment in Focus for September

This week, the overall operating rate of leading domestic aluminum downstream processing enterprises rose 1 percentage point (ppt) WoW to 61.7%, as the "September peak season" effect gradually emerged, with recovery trends improving across all sectors. The operating rate of primary aluminum alloy producers edged up 0.2% to 56.6%, showing a slow recovery pace during the peak season, as the time-lag effect of policy support transmitting to end-use demand persists, with no clear positive factors driving a significant rise in operating rates. The operating rate of leading aluminum plate/sheet and strip producers surged 1.2 ppts to 68.6%, benefiting from order volume growth in automotive and 3C sectors and a rebound in foreign trade, while higher aluminum prices boosted stockpiling willingness, making it the industry chain's recovery leader. The operating rate of the aluminum wire and cable industry increased 1 ppt to 64.8%, driven by concentrated delivery of power grid orders in Jiangsu and Henan, though small and medium-sized producers in Hebei lagged due to environmental protection-driven production restrictions during the military parade, with the rate expected to exceed 66% next week after capacity release in North China. The operating rate of aluminum extrusion producers rebounded 1 ppt to 53%, as construction extrusion remained weighed down by real estate but was supported by export orders to the Middle East and Africa, while industrial extrusion saw continued PV module installation rush and initial signs of growth in automotive battery tray orders. The operating rate of leading aluminum foil producers maintained steady growth of 0.8 ppts to 71.9%, with packaging foil and decorative foil replacing air-conditioner foil as new drivers, as the industry prepares for the Mid-Autumn Festival and National Day stockpiling cycle. The operating rate of secondary aluminum producers rose significantly by 1.8 ppts to 55.3%, lifted by the end of environmental restrictions and peak-season restocking, though tight aluminum scrap supply and uncertain tax rebate policies continued to constrain capacity release among small and medium-sized enterprises. SMM analysis indicates the aluminum processing industry has entered a "structural peak season," with broader operating rate increases expected by mid-September, focusing on key variables such as power grid construction cycles, PV export performance, and automotive industry order patterns.