Macro front, internationally, US August PPI increased 2.6% YoY, compared to an expected 3.3% rise; it fell 0.1% MoM, versus an expected 0.3% increase. The US August PPI declined for the first time in four months, reinforcing expectations for a US Fed interest rate cut at next week's meeting, with the market almost fully pricing in three rate cuts for the remainder of the year. Mexican President Sheinbaum stated that the country is considering imposing additional tariffs on nations without trade agreements with Mexico, including China. Trump signed an executive order allowing the US to dynamically adjust tariffs (such as zeroing out tariffs on certain goods) after reaching framework or final agreements with foreign trading partners, while maintaining existing steel and aluminum derivative tariffs until agreements are signed. Domestically, the MIIT and five other departments jointly launched a special campaign to rectify online chaos in the automotive industry. Vice Minister of Commerce Yan Dong stated at a press conference on the 8th that the China-ASEAN Free Trade Area 3.0 negotiations have been fully completed, and China will maintain communication with ASEAN, actively advance the signing process, and push for the formal signing of the China-ASEAN Free Trade Area 3.0 protocol by year-end. The 2025 interim reporting season concluded; although the overall performance of real estate companies was not ideal, it has somewhat restored market confidence.
Fundamentals side, domestic operating aluminum capacity remained high, with the industry operating rate edging up WoW as some replacement and technological transformation projects in south-west China progressed steadily. Proportion of liquid aluminum, September is the traditional peak season, and some enterprises reported increased plans for direct sales of liquid aluminum, with the proportion of liquid aluminum expected to rebound slightly. Cost side, spot alumina prices fluctuated within a narrow range, and the real-time cost of aluminum changed minimally MoM, falling by about 11 yuan/mt WoW to 16,738 yuan/mt last Thursday, while the immediate theoretical profit of aluminum rose 121 yuan/mt MoM to 3,951 yuan/mt. Cost side, spot alumina prices remained in the doldrums, and the real-time cost of aluminum continued to decline MoM, dropping by about 182 yuan/mt WoW to 1,643 yuan/mt last Thursday, while the immediate theoretical profit of aluminum increased 432 yuan/mt MoM to 4,422 yuan/mt. Demand side, with the arrival of the September peak season consumption period, most extrusion enterprises reported improved order situations. This week, the operating rate of leading domestic aluminum extrusion enterprises rebounded 1 percentage point WoW to 54%, and operating rates in other downstream sectors also saw varying degrees of recovery. Inventory side, according to SMM statistics, domestic mainstream consumption area aluminum ingot inventory recorded 625,000 mt this Thursday, destocking 6,000 mt from this Monday and 1,000 mt WoW from last Thursday. Although outflows from warehouses showed some improvement entering September, premiums and discounts remained under pressure. Additionally, it is reported that while in-transit cargoes are expected to decrease recently, the decline is still not significant, and whether the destocking inflection point will smoothly emerge in mid-September requires further observation.
Overall, the aluminum market currently benefits from multi-dimensional macro tailwinds, providing strong support for aluminum prices. Internationally, the US PPI declined in August for the first time in four months, reinforcing expectations for a US Fed interest rate cut at next week's meeting. The market has almost fully priced in three rate cuts for the remainder of the year. Uncertainty around the tariff war persists, but its negative impact has diminished. Domestically, market confidence has recovered, and there is eager anticipation for more substantive measures in H2 to boost consumption and economic growth. Fundamentally, September is the traditional peak season, with the proportion of liquid aluminum expected to rebound slightly. Although cost support continues to weaken, demand-side performance is recovering. Inventory-wise, according to SMM statistics, domestic electrolytic aluminum ingot inventory in major consumption areas recorded 625,000 mt this Thursday, down 6,000 mt from this Monday and down 1,000 mt WoW. Although outflows from warehouses improved in September, premiums and discounts remained under pressure. Although in-transit cargoes are expected to decrease, the decline is not yet significant. Whether the destocking inflection point will smoothly emerge in mid-September requires further observation. Overall, domestic and overseas macro tailwinds, coupled with a recovering fundamental performance, are keeping aluminum prices holding up well. SHFE aluminum is expected to trade at 20,700–21,200 yuan/mt next week, while LME aluminum is expected to trade at $2,600–$2,680/mt. However, as aluminum prices approach the 21,000 yuan threshold, downstream acceptance and performance remain to be seen. SMM will continue to track the actual fulfillment of orders across various sectors.
