[SMM Aluminum Morning Meeting Summary: Macro Trade Frictions Ease, but Invisible Inventory Pressure of Aluminum Ingots Persists] On the macro front, the EU postponed retaliatory tariffs against the US, easing trade frictions and strengthening expectations for US Fed interest rate cuts (50 basis points cut expected within the year), putting pressure on the US dollar and benefiting commodities. On the supply side, domestic operating aluminum capacity remained stable, with the proportion of liquid aluminum pulling back and an increase in casting ingot volume, leading to more marketable supplies and a continuous inventory buildup in social inventory, suppressing aluminum price increases. On the demand side, the off-season atmosphere persisted downstream, with spot purchasing as needed and weak upward momentum in spot premiums. The PV, NEV, and home appliance sectors remained in the off-season. Despite the decline in aluminum prices, there was no significant improvement trend in orders on hand at processing plants. On the inventory front, weekly outflows from warehouses of aluminum ingots increased by 18,200 mt, but outflows from warehouses of aluminum billets declined, and inventories of aluminum ingots and billets continued to accumulate, highlighting invisible inventory pressure and the suppression of the off-season consumption. In the short term, under the off-season consumption, expectations for inventory buildup remain strong, and premiums and discounts of spot aluminum are in the doldrums, with a projected sustained pressure-bearing operation pattern. Whether subsequent prices can break through depends on observing the inventory trend and signals of consumption recovery during the transition from the off-season to the peak season in August.

[SMM Morning Comment on Cast Aluminum Alloy: The most-traded cast aluminum futures contract edges down slightly, likely to maintain narrow and weak oscillations in the short term] On Monday, aluminum prices continued to correct downward. Aluminum scrap prices remained firm for the time being, but silicon prices continued to decline. Yesterday, the price of oxygen-blown #553 silicon fell by 250 yuan/mt from last Friday to 9,450 yuan/mt, continuing to weaken the cost support for secondary aluminum alloy. Meanwhile, end-use consumption has remained sluggish recently, with some downstream industries experiencing a decline in production due to high temperatures, leading to a reduction in orders for secondary aluminum plants and sluggish market transactions.

Source: Vedanta Limited FY 2026 Q1 earnings call, 31 July 2025

SMM's monthly production data for base metals is released at the end of each month, aiming to uncover the true fundamentals for industry chain professionals and investors, and providing a clearer grasp of the future direction of the metals market.

Futures market: Overnight, LME copper opened at $9,626/mt, initially touched a high of $9,665/mt, then fluctuated downward to a low of $9,580.5/mt during the session, and ended rangebound at $9,607/mt by the close, down 1.26%.

[SMM Aluminum Morning Meeting Summary: New Round of Tariff Hikes Implemented, Aluminum Prices to Remain Under Pressure in the Short Term] From the macro perspective, the US has implemented a new round of tariff hikes, involving major trading partners such as Canada and Brazil. The escalation of trade barriers has heightened concerns about global economic growth, negatively impacting the demand outlook for industrial metals. Although domestic manufacturing data shows structural optimization, the market remains cautious about the effectiveness of subsequent policy stimulus. On the supply side, domestic operating aluminum capacity remains stable, with the proportion of liquid aluminum pulling back and an increase in casting ingot volume, leading to more marketable supplies and a continuous buildup of social inventory, which suppresses aluminum price increases. On the cost side of the aluminum industry, costs remained stable during the week, with no significant changes in the raw material segment. However, with the center of aluminum prices moving downward, the industry's average profit margin narrowed by approximately 149 yuan/mt. On the demand side, the off-season atmosphere persists downstream, with spot purchases made as needed and spot premiums struggling to rise. The PV, NEV, and home appliance sectors remain in the off-season. Despite the decline in aluminum prices, there has been no significant improvement trend in the orders on hand at processing plants. In terms of inventory, according to SMM statistics, on August 4, domestic social inventory of electrolytic aluminum stood at 564,000 mt, an increase of 20,000 mt from Thursday last week. Against the backdrop of the off-season, the expectation of inventory buildup remains strong. Overall, domestically, the favorable macro atmosphere remains unchanged, and the "anti-rat race" sentiment has dissipated. Attention will now turn to the impact of the Sino-US negotiation results. On the fundamental side, with the release of supply increments and the suppression of consumption during the off-season, the expectation of inventory buildup remains strong. Spot premiums and discounts are expected to remain weak, and aluminum prices are anticipated to remain under pressure. Subsequent focus should be on changes in inventory and demand.

[SMM Morning Comment on Cast Aluminum Alloy: Weakened Cost Support Coupled with Sluggish Demand Leads to Weak Consolidation of ADC12 Prices] Yesterday, aluminum prices dropped back slightly, and the secondary aluminum market maintained a stable pattern, with SMM ADC12 prices holding steady at 20,100 yuan/mt. Recently, end-use consumption has been sluggish, and actual transactions have been sluggish amid weak demand. However, the consistently high purchasing prices of aluminum scrap have provided support for prices. Overall, cost support has led to a relatively moderate decline in ADC12 prices this week, with the discount range between ADC12 and A00 narrowing. However, under the pressure of the off-season demand, there is significant resistance to price increases. In the short term, cost support, weak demand, and high inventory pressures are competing with each other, and ADC12 prices may continue to fluctuate rangebound.

In terms of domestic bauxite supply, according to SMM's calculations, China's bauxite production in July 2025 (31 days) increased by 4.6% MoM and 7.4% YoY. China’s domestic bauxite production remained relatively stable, and it is expected that there will be limited supply increases in the short term.