Macro sentiment keeps aluminum prices fluctuating at highs in the short term [SMM Aluminum Morning Meeting Summary]

7.23 SMM Aluminum Morning Meeting Summary

Futures Market: On the previous trading day's night session, the most-traded SHFE aluminum 2509 contract opened at 20,915 yuan/mt, with a high of 20,975 yuan/mt, a low of 20,890 yuan/mt, and closed at 20,925 yuan/mt, up 0.12% from the previous close. LME aluminum opened at $2,639.0/mt, with a high of $2,660.0/mt, a low of $2,631.5/mt, and closed at $2,652.0/mt, up 0.42%.

Macro: (1) US President Trump stated that Fed Chairman Powell is expected to leave his position. Trump claimed that current interest rates are too high, which is affecting the housing market. He suggested that interest rates should be reduced by 3 percentage points or even more. (Bullish ★) (2) In the first half of the year, foreign investors net purchased $10.1 billion worth of domestic stocks and funds, reversing the overall net selling trend of the past two years. This indicates an increased willingness of global capital to allocate to the domestic stock market. Recent surveys show that 30% of global central banks plan to increase their allocation to RMB assets. (Bullish ★) (3) US President Trump announced on social media that the US has reached trade agreements with the Philippines and Indonesia. Trump stated that tariffs on Philippine goods will be reduced from 20% to 19%. Thailand is in the final stages of negotiating a key trade agreement with the US, with new tariff rates expected to drop to around 20%. Malaysia hopes to secure a tariff rate below 25%. (Neutral)

Fundamentals: (1) A certain aluminum plant in Guangxi, which had previously undergone technological transformation, recently began gradually restarting its pots. The first batch involved restarting 50,000 mt/year across 84 pots, with full operation expected next month. The remaining transformed capacity is expected to be restarted by the end of the year. (Bearish ★) (2) According to customs data, China exported 105,900 mt of aluminum foil in June 2025, down 13% MoM and 23% YoY. China exported 245,700 mt of aluminum plate/sheet and strip in June 2025, down 12% MoM and 25% YoY. (Bearish ★) (3) According to SMM statistics, on July 22, the inventory of aluminum ingots in Guangdong was 159,000 mt; in Wuxi, it was 119,500 mt; and in Gongyi, it was 70,500 mt. The total inventory across these three locations was 349,000 mt, an increase of 5,500 mt from the previous trading day. (Bearish ★)

Primary Aluminum Market: Yesterday morning, the most-traded SHFE aluminum contract fluctuated at highs around the daily average line of 20,850 yuan/mt. In east China, downstream purchasing sentiment was weak after aluminum prices surged, with most transactions occurring between traders. Suppliers had a strong willingness to sell during the day, and spot premiums continued to decline. Despite this, market transactions remained sluggish at high aluminum prices, with transactions against the SMM average price ranging from -20 to -30 yuan/mt. Yesterday, SMM A00 aluminum was reported at 20,940 yuan/mt, up 50 yuan/mt from the previous trading day, with a premium of 70 yuan/mt against the 08 contract, down 30 yuan/mt from the previous trading day. The central China market remained largely unchanged from yesterday, with many sellers in the market but downstream enterprises purchasing only a small volume of spot orders. Most processing material enterprises chose to wait and see, and the market premium continued to be crushed, with a discount of 20 to 40 yuan/mt against SMM central China. SMM central China A00 aluminum closed at 20,750 yuan/mt against the SHFE aluminum 2508 futures contract, up 30 yuan/mt from the previous trading day. The price spread between Henan and Shanghai was -190 yuan/mt, expanding by 20 yuan/mt from the previous trading day, with a discount of 120 yuan/mt against the 2508 futures contract.

Recycled aluminum raw materials: Yesterday, the spot primary aluminum price rose by 50 yuan/mt from the previous trading day. SMM A00 spot aluminum closed at 20,940 yuan/mt, and the aluminum scrap market generally followed the increase. In the current traditional off-season, downstream scrap utilization enterprises have weak order releases, with purchases mainly driven by immediate needs. Yesterday, the centralized quoted price for baled UBC aluminum scrap was 15,500-16,000 yuan/mt (tax not included), and the centralized quoted price for shredded aluminum tense scrap was 16,000-17,500 yuan/mt (tax not included). By region, Shanghai, Jiangsu, Shandong, and other places closely followed aluminum price movements, with price adjustments ranging from 50-100 yuan/mt. In Guizhou, Hunan, Anhui, and other places, price adjustments lagged behind aluminum price movements, with a growing fear of high prices and quoted prices remaining unchanged from before. In terms of the price difference between A00 aluminum and aluminum scrap, the price difference between A00 aluminum and mixed aluminum extrusion scrap free of paint in Foshan increased by 50 yuan/mt from the previous day to 1,956 yuan/mt, while the price difference between mechanical casting aluminum scrap in Shanghai decreased by 4 yuan/mt from the previous day to 1,932 yuan/mt.

Secondary aluminum alloy: On the futures market, yesterday, the most-traded cast aluminum alloy 2511 futures contract opened at the lowest point of 20,125 yuan/mt, reaching a high of 20,300 yuan/mt, setting a new record high after listing, and finally closed at 20,280 yuan/mt, up 115 yuan/mt or 0.57% from the previous trading day, with a trading volume of 4,377 and an open interest of 9,938. Bears mainly reduced their positions during the day. In the spot market, yesterday, the SMM A00 aluminum price rose by another 50 yuan/mt from the previous day to 20,940 yuan/mt, and the SMM ADC12 price rose by 50 yuan/mt to 20,250 yuan/mt. The recent continuous upward movement of aluminum prices has driven a general increase in aluminum scrap prices, further pushing up the cost of ADC12 and igniting market sentiment for price adjustments. However, actual consumption has shown mediocre performance, with limited transactions. Overall, the cost support of aluminum scrap for secondary aluminum alloy prices has strengthened in the short term, but weak demand combined with high social inventory will constrain the upside room for prices of secondary aluminum alloys such as ADC12. It is expected that they will maintain a fluctuating rangebound trend in the short term.

Summary: Overall, in terms of macro factors, domestic policies related to "anti-rat race" competition have driven industrial metals higher, with the long-term tone of "promoting consumption and stabilizing growth" remaining unchanged. Overseas, macro tariff easing and increased market attention to interest rate cut expectations. On the fundamental side, due to factors such as arrival rhythms, inventory performance has fluctuated, but considering the release of supply increments and the suppression of the off-season for consumption, expectations for inventory buildup remain strong. Recently, capital sentiment has been strongly influenced by macro policies such as "anti-rat race" and "high-quality development." It is expected that aluminum prices will mainly fluctuate at highs in the short term. Subsequent attention should be paid to changes in inventory and capital sentiment.

[Data Source Statement: Except for publicly available information, other data are derived from public information, market exchanges, and processed by SMM based on its internal database model, for reference only and not constituting decision-making advice.]