[SMM Analysis]Cost Push and Policy Disturbance Drove ADC12 Price Up in August, Demand Fulfillment in Focus for September

This week, the overall operating rate of leading domestic aluminum downstream processing enterprises rose 1 percentage point (ppt) WoW to 61.7%, as the "September peak season" effect gradually emerged, with recovery trends improving across all sectors. The operating rate of primary aluminum alloy producers edged up 0.2% to 56.6%, showing a slow recovery pace during the peak season, as the time-lag effect of policy support transmitting to end-use demand persists, with no clear positive factors driving a significant rise in operating rates. The operating rate of leading aluminum plate/sheet and strip producers surged 1.2 ppts to 68.6%, benefiting from order volume growth in automotive and 3C sectors and a rebound in foreign trade, while higher aluminum prices boosted stockpiling willingness, making it the industry chain's recovery leader. The operating rate of the aluminum wire and cable industry increased 1 ppt to 64.8%, driven by concentrated delivery of power grid orders in Jiangsu and Henan, though small and medium-sized producers in Hebei lagged due to environmental protection-driven production restrictions during the military parade, with the rate expected to exceed 66% next week after capacity release in North China. The operating rate of aluminum extrusion producers rebounded 1 ppt to 53%, as construction extrusion remained weighed down by real estate but was supported by export orders to the Middle East and Africa, while industrial extrusion saw continued PV module installation rush and initial signs of growth in automotive battery tray orders. The operating rate of leading aluminum foil producers maintained steady growth of 0.8 ppts to 71.9%, with packaging foil and decorative foil replacing air-conditioner foil as new drivers, as the industry prepares for the Mid-Autumn Festival and National Day stockpiling cycle. The operating rate of secondary aluminum producers rose significantly by 1.8 ppts to 55.3%, lifted by the end of environmental restrictions and peak-season restocking, though tight aluminum scrap supply and uncertain tax rebate policies continued to constrain capacity release among small and medium-sized enterprises. SMM analysis indicates the aluminum processing industry has entered a "structural peak season," with broader operating rate increases expected by mid-September, focusing on key variables such as power grid construction cycles, PV export performance, and automotive industry order patterns.

[SMM Cast Aluminum Alloy Morning Comment: Secondary Aluminum Alloy Social Inventory Maintains Buildup Pace, Short-Term Focus on Consumption Recovery] On Thursday, aluminum prices continued their downward trend, while secondary aluminum producers maintained stable quotes, with the SMM ADC12 price holding firm at 20,750 yuan/mt. Currently, tight aluminum scrap supply has driven up procurement costs for enterprises, supporting persistently firm ADC12 market quotes. Downstream consumption is in a phase of modest recovery, with limited order growth for enterprises, and the peak season realization still requires time.

[SMM Aluminum Morning Meeting Minutes: US Labor Market Weakness Strengthens Expectations for US Fed Interest Rate Cuts, Manufacturing National Standard Upgrade Boosts Long-Term Demand] The macro environment at home and abroad remains favorable. Supply side, replacement capacity continues to ramp up, with weekly production increasing slightly to 847,300 mt. Cost side, the full cost of domestic aluminum stood at 16,618 yuan/mt, down 36 yuan/mt WoW, while the industry average profit narrowed to around 3,991 yuan/mt, decreasing 84 yuan/mt WoW. Downstream demand showed marginal improvement, with the proportion of liquid aluminum rising and casting ingot volume declining. However, the aluminum ingot inventory has yet to peak, and actual demand has not seen significant recovery. Downstream enterprises face limited room for cost increases. Aluminum prices are expected to remain under pressure at the 20,900-21,000 yuan/mt range, but expectations for interest rate cuts coupled with seasonal demand may provide some support. SMM expects aluminum prices to move sideways in the short term.

[SMM Analysis]Secondary Aluminum Market Remains Strong in Short Term Focus on Demand Recovery and Policy Implementation

[SMM Aluminum Weekly Review: Demand Shows No Significant Improvement, Inventory Inflection Point Yet to Arrive, Aluminum Prices Remain Under Pressure in the Short Term]

[SMM Aluminum Morning Brief: Macro Tailwinds and Fundamentals Intertwined, Aluminum Prices Expected to Fluctuate at Highs in Short Term] Integrating macro and fundamental factors, aluminum prices during the traditional September peak season are more likely to rise than fall overall, yet upside resistance persists. For aluminum prices to effectively break through the key resistance level of 21,000 yuan/mt, the market must await the materialization of consumption peak season expectations during the September-October peak season. In the short term, prices are expected to fluctuate at highs.

[SMM Cast Aluminum Alloy Morning Comment: Policy Wait-and-See Sentiment Coupled with Tight Raw Material Supply Intensifies Market Game] On Wednesday, aluminum prices fluctuated rangebound, with secondary aluminum producers maintaining stable quotations. The SMM ADC12 price held steady at 20,750 yuan/mt. Currently, regional tax rebate policies remain unclear, fostering strong wait-and-see sentiment in the secondary aluminum market. Compounded by persistently tight raw material supply, procurement pressure on enterprises has increased. Demand side, as the traditional peak season approaches, downstream orders showed slight recovery. However, high prices continued to constrain transaction volumes, with downstream players primarily making just-in-time procurement.