Futures market: Overnight, LME copper opened at $9,606.5/mt, initially touched a low of $9,597/mt, then fluctuated upward rangebound, and finally closed at $9,678/mt, up 0.43%, with trading volume at 11,000 lots and open interest at 268,000 lots.

[SMM Morning Comment on Cast Aluminum Alloy: Social Inventory of Aluminum Alloy Ingots Exceeds 30,000 mt, with Foshan and Ningbo as the Main Contributors to the Increase; Secondary Aluminum Prices Unlikely to Break Out of Fluctuation Rangebound in the Short Term] Following the significant drop in aluminum prices on Monday, there was a slight rebound for three consecutive days starting from Tuesday, with a cumulative increase of 100 yuan/mt. However, the secondary aluminum market struggled to catch up, and prices remained stable. On Thursday, the SMM ADC12 price remained unchanged at 20,000 yuan/mt. As the aluminum price decline was greater than that of ADC12, the price spread between the two narrowed WoW. In the short term, aluminum prices are expected to remain in the doldrums, and with the support of aluminum scrap costs, the price spread is expected to narrow further.

Futures Market: On the previous trading day's night session, the most-traded SHFE aluminum 2509 contract opened at 20,400 yuan/mt, with a high of 20,545 yuan/mt, a low of 20,380 yuan/mt, and closed at 20,520 yuan/mt.

[SMM Analysis]This week, as the decline in aluminum prices outpaced that of ADC12, the inversion between the two narrowed compared to last week (WoW). In the short term, aluminum prices are expected to continue in a doldrums pattern. Supported by aluminum scrap costs, the price spread between the two is anticipated to narrow again. However, given weak demand and high social inventory levels, the upside room for ADC12 prices is also limited. It is expected that in the short term, secondary aluminum alloy prices will maintain a fluctuating rangebound pattern.

To ensure consistency between the data and its source and respond to customer feedback, we will uniformly adjust the date display of LME inventory data in our non-ferrous metal database.

According to SMM statistics, as of July 17, the aluminum billet inventory at domestic mainstream consumption areas stood at 156,000 mt, a decrease of 5,000 mt from Monday and a decrease of 4,000 mt from Thursday last week. In terms of outflows from warehouses, the total outflows of domestic aluminum billet from July 7 to July 13 amounted to 44,200 mt, showing an increase of 9,400 mt MoM. Since the inventory buildup turning point was established in mid-June, the aluminum billet inventory level has continued to rise, reaching the highest level for the same period in three years. However, a slight destocking of aluminum billet was achieved within the week. Does this indicate that the inventory buildup turning point for aluminum billet has already formed? This slight destocking of aluminum billet was mainly driven by the impact of production cuts in aluminum billet and the restocking of downstream rigid demand. Since entering July, aluminum billet manufacturers have been receiving news of production cuts due to the accumulation of in-plant inventory and unoptimistic order expectations, aiming to alleviate operational pressure on funds. Meanwhile, the scale of production cuts in regions such as Guangxi, Yunnan, and Guizhou continues to expand, resulting in fewer arrivals in South China and Nanchang areas within the week. Despite the off-season atmosphere in the market, downstream players primarily focused on digesting raw material inventory in the early stage due to the high aluminum prices. This week, the price center has loosened somewhat, stimulating downstream rigid demand restocking, thereby driving down the aluminum billet inventory. SMM believes that while the production cuts by aluminum billet manufacturers have alleviated the arrival pressure on the supply side, the current restocking of rigid demand is more of a short-term driver, and the main theme of the downstream off-season has not changed. Therefore, from a long-term perspective, the aluminum billet inventory will still maintain the rhythm of inventory buildup, and the overall trend has not significantly changed. SMM expects that the aluminum billet inventory will operate within the range of 150,000-180,000 mt next week.

[Daily Review of ADC12 Prices: The most-traded cast aluminum alloy contract closed slightly higher, with bears reducing their positions during the day] On the spot market, the SMM A00 aluminum price rose slightly by 50 yuan/mt to 20,570 yuan/mt on Thursday compared to the previous day, while the SMM ADC12 price remained stable at 20,000 yuan/mt. Following a significant drop in aluminum prices on Monday this week, prices have rebounded slightly for three consecutive days starting from Tuesday, with a cumulative increase of 100 yuan/mt. However, the secondary aluminum market lacked sufficient upward momentum, and prices continued to remain stable.