September-October peak season in sight, aluminum prices hold up well [SMM Aluminum Morning Meeting Summary]

8.29 SMM Aluminum Morning Meeting Summary

Futures: The most-traded SHFE aluminum 2510 contract opened at 20,760 yuan/mt during the night session, reaching a highest price of 20,780 yuan/mt and a lowest price of 20,695 yuan/mt, closing at 20,705 yuan/mt. Trading volume was 4.8 lots, and open interest was 241,000 lots. LME opened at $2,607.5/mt, with a highest price of $2,611/mt, a lowest price of $2,607.5/mt, and closed at $2,609/mt.

Macro: (1) Li Chenggang, Vice Minister and International Trade Representative of the Ministry of Commerce, led a delegation to visit Canada from August 24 to 27, co-hosting the 28th China-Canada Economic and Trade Joint Committee with the Canadian side. Both sides agreed to continue leveraging the mechanism platform of the China-Canada Economic and Trade Joint Committee, accumulating positive outcomes in economic and trade areas through subsequent communication and exchanges, and promoting healthy, stable, and sustainable development of China-Canada economic and trade relations. Afterward, Li Chenggang's team will travel to Washington, US, to meet with relevant US officials. (Bullish ★) (2) The US Q2 real GDP annualized revision increased by 3.3% MoM, higher than the expected 3.1% and the initial value of 3%. The Q2 core PCE price index annualized revision increased by 2.5% MoM, consistent with the initial value but lower than the expected 2.6%. (Bullish ★)

Fundamentals: (1) According to SMM statistics, on August 28, the inventory of primary aluminum ingot in major domestic consumption areas was 620,000 mt, up 4,000 mt from Monday and up 24,000 mt from last Thursday. (Bearish ★) (2) On August 28, 2025, according to SMM statistics, the inventory of aluminum billet in Guangdong was 62,500 mt, and in Wuxi, it was 31,000 mt, totaling 93,500 mt, an increase of 500 mt from the previous period. (Bearish ★) (3) On August 28, SMM statistics showed that the inventory of primary aluminum in the Shanghai Bonded Zone was 79,500 mt, and in the Guangdong Bonded Zone, it was 20,000 mt, totaling 99,500 mt, a decrease of 2,400 mt from last week. (Bullish ★)

Primary Aluminum Market: Yesterday, the center of SHFE aluminum early trading moved upward, but the absolute price fell compared to the previous trading day, with the center around 20,720 yuan/mt. In east China, the absolute price of futures aluminum fell, and downstream procurement sentiment recovered, but still mainly focused on just-in-time procurement, with insufficient restocking enthusiasm. Actual transactions were on par with the SMM average price. The east China market's selling sentiment index was 2.84, up 0.06 WoW; the purchasing sentiment index was 2.5, up 0.18 WoW. SMM A00 aluminum was quoted at 20,730 yuan/mt, down 110 yuan/mt from the previous trading day, at a discount of 20 yuan/mt against the 09 contract, unchanged from the previous day. In central China, after the absolute price fell, downstream restocking enthusiasm increased, and trading activity turned from the previous days' silence to active. Actual transactions were at a premium of 10-20 yuan/mt against the SMM central China aluminum price, with the market shifting from hedging-based just-in-time procurement to low-price restocking by processing enterprises. Yesterday, the sentiment index for shipments in the central China market was 2.97, up 0.53 MoM; the purchasing sentiment index was 2.89, up 0.78 MoM. SMM A00 aluminum against SHFE aluminum 2509 contract closed at 20,570 yuan/mt, down 90 yuan/mt from the previous trading day, with a discount of 180 yuan/mt against the 09 contract, up 20 yuan/mt.

Recycled aluminum raw materials: Yesterday, the spot price of primary aluminum fell 110 yuan/mt compared to the previous trading day, with SMM A00 spot closing at 20,730 yuan/mt, and the overall aluminum scrap market followed the decline. As the traditional peak season approaches, orders for some downstream scrap utilization enterprises have recovered, but the tight supply in the aluminum scrap market remains the main theme, keeping procurement prices high. Yesterday, the concentrated quotes for baled UBC were 15,550-16,050 yuan/mt (excluding tax), and shredded aluminum tense scrap (priced based on aluminum content) were 17,100-17,600 yuan/mt (excluding tax). Baled UBC fell 50 yuan/mt MoM, and shredded aluminum tense scrap (priced based on aluminum content) fell 100 yuan/mt MoM. In Jiangxi and Anhui regions, the prices of aluminum tense scrap followed a 100 yuan/mt decline, while in Hubei and Hunan, the aluminum scrap prices remained stable, adopting a wait-and-see approach. It is expected that next week, aluminum scrap prices will fluctuate at highs, with the tug-of-war between sellers and buyers intensifying. From a macro perspective, the ongoing special cleanup of irregular tax rebates in multiple regions will have a profound impact on the cost structure of the recycled aluminum industry. During the policy transition period, downstream scrap utilization enterprises, to offset the potential increase in tax costs, may further drive down purchasing prices, increasing the risk of aluminum scrap price declines. However, the tight supply situation is unlikely to change in the short term, especially the scarcity of shredded aluminum tense scrap resources, which will continue to give suppliers bargaining power. SMM expects that the mainstream range for shredded aluminum tense scrap (priced based on aluminum content) will hover around 17,100-17,600 yuan/mt (excluding tax), while baled UBC prices, supported by rigid demand, will linger between 15,500-16,000 yuan/mt (excluding tax). Overall, the market needs to closely monitor the implementation of policies and the strength of the "September peak season" consumption recovery, as price trends will depend on the outcome of the tug-of-war between cost transmission and supply shortages.

Secondary aluminum alloy: On the futures side, yesterday, the most-traded cast aluminum alloy 2511 futures contract opened at 20,350 yuan/mt, reached a high of 20,360 yuan/mt, a low of 20,230 yuan/mt, and finally closed at 20,350 yuan/mt, down 15 yuan/mt or 0.07% from the previous trading day. Open interest was 8,229 lots, and trading volume was 1,883 lots, with bulls mainly reducing their positions. In the spot market, SMM A00 aluminum price fell 110 yuan/mt to 20,730 yuan/mt compared to the previous day, while SMM ADC12 price remained steady at 20,750 yuan/mt. Due to the tight circulation, aluminum scrap prices remained firm, continuing to support ADC12 prices. Additionally, frequent news of the cancellation of tax rebates and supplementary taxes in various regions has led to a strong desire among enterprises to pass on costs, making prices more likely to rise than fall in the short term. Demand side, approaching the traditional September peak season, downstream procurement only recovered mildly, and high prices suppressed market inquiry activity but actual transactions were average; the spot-futures price spread strengthened, improving shipments for trading firms engaging in both spot and futures market. ADC12 prices are expected to continue fluctuating upward in the short term, supported by cost, low inventory, and policy pressure, but slow demand recovery may limit upside room. Follow-up attention should focus on policy implementation progress, aluminum scrap supply recovery, and marginal changes in end-use demand.

Summary: On the macro front recently, global economic and trade friction continued to ease, the China-Canada Joint Economic and Trade Committee released positive signals of cooperation, coupled with better-than-expected US economic data, boosting market risk appetite. Market sentiment leaned optimistic, supporting aluminum prices. Demand side, as August draws to a close, the September-October peak season is approaching, and weekly operating rates downstream showed stronger signs of recovery this week. The operating rate of leading domestic aluminum extrusion enterprises rose 1.5 percentage points WoW to 52%, mainly driven by industrial extrusion enterprises led by PV extrusion. Other sectors such as aluminum plate/sheet, strip and foil, and aluminum wire and cable also saw certain increases in operating rates. Inventory side, according to SMM statistics, on August 28, aluminum ingot inventory in mainstream domestic consumption areas was 620,000 mt, up 4,000 mt from this Monday and up 24,000 mt WoW from last Monday. Aluminum ingot absolute prices pulled back slightly, and buying sentiment improved, but it has not yet reached the level to stimulate large-scale market restocking. Under the off-season, the inventory buildup pace and high aluminum prices will continue to suppress spot premiums. Overall, on the macro front, rising expectations for US Fed interest rate cuts and China's policies boosting domestic demand have created a generally favorable atmosphere, which is expected to improve the aluminum consumption outlook. However, it will take time for domestic policy support to transmit to actual consumption. In the traditional September peak season, aluminum prices are more likely to rise than fall overall, but top-side pressure remains. For aluminum prices to effectively break through the important resistance level of 21,000 yuan/mt, it will require the realization of expectations for the September-October peak season in aluminum consumption, and verification through the subsequent appearance of a destocking turning point for domestic aluminum ingots and continued strength in downstream operating performance. SMM expects aluminum prices to continue holding up well in the near term.

[The information provided is for reference only. This article does not constitute direct investment research advice. Clients should make decisions cautiously and not use this to replace independent judgment. Any decisions made by clients are unrelated to SMM.]