[SMM Weekly Aluminum Price Review: Aluminum Prices Hold Up Well at High Levels Supported by Macro Tailwinds, While Inventory Buildup Remains a Key Pressing Factor]

[SMM Analysis]Tightening supply drives prices up, and the price difference between primary metal and scrap continues to narrow

【SMM Scrap Aluminum Market Analysis: Four Converging Factors in 2025 Undermine Southeast Asia’s Comparative Advantage】In 2025, Southeast Asia’s scrap aluminum market plunged into a deep contraction, with export volumes dropping sharply. This downturn is expected to persist throughout the year and extend into early 2026. A synthesis of the macro environment and industry operations reveals four primary pressures: sudden tightening of local policies and geopolitical risks, rapid expansion of regional recycled-aluminum demand, port congestion coupled with declining logistics efficiency, and the imposition of steep U.S. tariffs. The combined resonance of these factors makes it unlikely that Southeast Asia’s export competitiveness in scrap aluminum can recover in the short term.

[SMM Morning Comment on Cast Aluminum Alloy: Tight Supply of Aluminum Scrap Drives Up Costs; Short-Term Focus on Consumption Improvement] Aluminum prices expanded their gains on Wednesday, with aluminum scrap prices accelerating their upward trend amid undersupply, generally rising by 50-100 yuan/mt, which further pushed up the price of ADC12. SMM ADC12 prices increased by 100 yuan/mt to 20,350 yuan/mt. In August, the secondary aluminum market remained constrained by the tight supply of aluminum scrap, with enterprises facing continuous cost pressure, supporting ADC12 prices. However, the lack of significant improvement in consumption will limit the upside potential for price increases, and it is expected that secondary aluminum alloy prices will predominantly hold up well within a narrow range. In the short term, close attention should be paid to the progress of end-user demand recovery and the improvement in aluminum scrap supply.

[SMM Aluminum Morning Meeting Summary: Macro Tailwinds Support Aluminum Prices Fluctuating at Highs, Off-Season Weak Consumption Brings Pullback Pressure] On the macro side, mild US inflation data has solidified expectations for a September interest rate cut by the US Fed and has increased market bets on further easing policies later this year. From a fundamental perspective, in terms of supply, there have been relatively small changes, with the operating production of electrolytic aluminum showing a steady and slight increase. On the cost side, the total weekly cost for the electrolytic aluminum industry is 16,738 yuan/mt, with minimal changes, and the industry's high profits persist. Demand side, currently affected by the off-season, consumption from terminals to processed materials remains weak. The growth rates of industries such as home appliances and PV, which had strong support in the early stage, have slowed down. Some export orders for aluminum terminals have also declined, and the construction industry is still experiencing a super-seasonal decline. With aluminum prices at highs during the off-season, consumption may be further impaired. In the short term, the trend of continued inventory buildup remains unchanged. Overall, the combination of macro tailwinds both domestically and overseas, along with potential risks in electrolytic aluminum supply, has driven aluminum prices to rebound to highs. However, during the off-season of consumption, the pressure of inventory buildup remains significant. After the positive sentiment is digested, the center of aluminum prices will pull back somewhat, still facing pressure at the 21,000 yuan/mt threshold.

[SMM Analysis]The operating rate of secondary aluminum producers rose against the trend in July, but may pull back in August due to weak demand

Futures: Overnight, LME copper opened at $9,768.5/mt, touched a low of $9,747.5/mt at the beginning of the session, then fluctuated upward throughout the day, nearing a high of $9,865/mt before closing at $9,840/mt, up 1.17%.