Aluminum ingot inventory sees a slight buildup, with short-term aluminum prices in the doldrums [SMM aluminum futures brief comment]

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SMM July 1 Report:

Today, the most-traded SHFE aluminum 2508 contract opened at 20,565 yuan/mt, with a high of 20,640 yuan/mt, a low of 20,525 yuan/mt, and closed at 20,635 yuan/mt, up 0.22%. Trading volume reached 85,800 lots, and open interest stood at 283,000 lots.

SMM Commentary: On the macro front, domestic supportive policies continue to strengthen, maintaining a pro-consumption direction. Overseas macro conditions present a mixed picture with lingering risks. Fundamentally, some aluminum smelters increased casting ingot production, compounded by the off-season and fear of high prices in downstream sectors. Market transactions remained subdued, and aluminum ingot inventory saw a slight buildup. As of July 1, 2025, inventories in Guangdong, Wuxi, and Gongyi stood at 15.2 mt, 10.75 mt, and 7 mt respectively, totaling 32.95 mt, up 0.65 mt from the previous day. Spot premiums/discounts weakened significantly. It is expected that aluminum prices will remain weak in the short term. Future developments require monitoring casting ingot volumes and inventory changes.

Today, the most-traded alumina 2509 contract opened at 2,944 yuan/mt, peaking at 2,950 yuan/mt, bottoming at 2,911 yuan/mt, and closing at 2,945 yuan/mt, up 0.03%. Trading volume reached 161,000 lots, and open interest stood at 280,000 lots.

SMM Commentary: In the near term, alumina operating capacity is expected to remain elevated, keeping spot market supply relatively loose and capping spot alumina prices. However, rising futures prices have generated some transfer-to-delivery-warehouse demand, signaling potential stabilization of spot alumina prices after recent declines. Cost-wise, Q3 bauxite long-term contract prices are anticipated to stabilize or decline, leading to a marginal reduction in overall alumina production costs. As alumina prices continue to fall, cost support effects are expected to gradually emerge. Spot alumina prices are expected to fluctuate within a range in the short term.

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