SHFE aluminum edged up 0.19% in the night session, with macro and fundamental factors presenting a mixed outlook. [SMM Aluminum Morning Meeting Minutes]

9.30 SMM Aluminum Morning Conference Minutes

Futures: In the previous trading day's night session, the most-traded SHFE aluminum 2511 contract opened at 20,770 yuan/mt, with the highest price at 20,835 yuan/mt, the lowest price at 20,760 yuan/mt, and closed at 20,770 yuan/mt, up 0.19% from the previous close. Trading volume was 54,300 lots, and open interest was 202,000 lots. In the previous trading day, LME aluminum opened at $2,649/mt, reached a high of $2,687.5/mt, a low of $2,649/mt, and closed at $2,670.5/mt.

Primary Aluminum Market: SHFE aluminum mainly fluctuated with adjustments in the morning session, with the price center hovering around 20,700 yuan/mt. In east China, pre-holiday stockpiling was largely completed, downstream buying sentiment weakened noticeably, some market participants gradually entered holiday mode, market trading turned sluggish, and actual transactions were at a discount of 10 yuan/mt to parity against the SMM average price. The east China market selling sentiment index was 3.26 on Monday, down 0.35 WoW; the buying sentiment index was 3.05, down 0.42 WoW. On Monday, SMM A00 aluminum was quoted at 20,690 yuan/mt, down 80 yuan/mt from the previous trading day, at a discount of 10 yuan/mt against the 2510 contract, down 10 yuan/mt from the previous trading day. In central China, approaching the Double Festival holiday, some suppliers actively sold goods. Considering low inventory and tight spot supply, suppliers still intended to hold prices firm, but downstream stockpiling was successively completed, purchasing intention weakened, and buying sentiment pulled back. Intraday actual transactions continued to weaken against the SMM central China aluminum price, from a premium of 20-30 yuan/mt to near parity, with trading volume weaker than Friday. The central China market selling sentiment index was 3.87 on Monday, up 0.09 WoW; the buying sentiment index was 3.77, down 0.16 WoW. SMM central China A00 aluminum was recorded at 20,750 yuan/mt, up 70 yuan/mt from the previous trading day, at a premium of 50 yuan/mt against the October contract, flat from the previous trading day. The Henan-Shanghai price spread rose 10 yuan/mt WoW to 60 yuan/mt.

Recycled Aluminum Raw Materials: On Monday, spot primary aluminum prices fell from the previous trading day, with SMM A00 spot aluminum closing at 20,690 yuan/mt, while aluminum scrap market prices overall held steady. With the National Day holiday approaching, enterprises in parts of Henan, Jiangxi, and Shandong reported that they had started stockpiling production raw materials in advance for the holiday. Amid aluminum scrap shortages, overall market prices continued to hover at highs. On Monday, baled UBC aluminum scrap was centrally quoted at 15,550-16,150 yuan/mt (ex-tax), shredded aluminum tense scrap (priced based on aluminum content) was centrally quoted at 17,300-17,800 yuan/mt (ex-tax). Baled UBC, shredded aluminum tense scrap (priced based on aluminum content), scrap wheel hub, and mechanical casting aluminum scrap were flat WoW. Aluminum scrap prices are expected to fluctuate at highs this week. On the one hand, the tight supply of aluminum scrap will be difficult to ease in the short term, and the supporting effect of downstream stockpiling demand before the holiday on prices continues to ferment. On the other hand, feedback on the further implementation of domestic tax rectification policies has not yet been received, but in the long term, downstream scrap utilization enterprises still have a tendency to drive down prices. Overall, the mainstream price range of shredded aluminum tense scrap (priced based on aluminum content) is expected to operate around 17,300-17,800 yuan/mt, while the price of baled UBC will hover around 15,600-16,100 yuan/mt. The market needs to closely monitor the sustainability of downstream stocking demand before the National Day holiday, the actual implementation pace of tax policies, and further price trend guidance for primary aluminum.

Secondary aluminum alloy: On the futures market, the most-traded contract 2512 for cast aluminum alloy opened at 20,325 yuan/mt on Monday of this week, reaching a high of 20,360 yuan/mt and a low of 20,240 yuan/mt, before finally closing at 20,270 yuan/mt, down 55 yuan/mt or 0.27% from the previous session. Open interest stood at 11,805 lots, with trading volume at 2,797 lots, as bulls mainly reduced their positions during the day. In the spot market, the SMM A00 aluminum price fell by 80 yuan/mt from the previous trading day to 20,690 yuan/mt on Monday of this week, while the SMM ADC12 price remained stable at 20,900 yuan/mt. The raw material stocking demand of secondary aluminum plants before the holiday is constrained by the tight supply of aluminum scrap, increasing procurement pressure and providing support for the ADC12 price. Demand side, as this year's National Day holiday overlaps with the Mid-Autumn Festival holiday, downstream die-casting enterprises will have a longer holiday period, 1–2 days longer than last year, and recent stockpiling has been largely completed, but the overall stockpiling volume is limited. Overall, the cost of aluminum scrap still provides support for the ADC12 price, but the extended holiday period for downstream enterprises and continuous inventory accumulation restrict the upside room for prices. It is expected that the ADC12 price will continue to fluctuate rangebound before the holiday, and subsequent attention should be paid to raw material supply conditions, holiday inventory changes, and the pace of demand recovery after the holiday.

Aluminum Market Summary: From a macro perspective, Li Chao, Deputy Director of the Policy Research Office of the National Development and Reform Commission (NDRC), stated on September 29 that economic operations still face challenges, and macro policies will be implemented with appropriate force in a timely manner; efforts will be made from both the supply and demand sides to expand the market for smart terminals and intelligent agents; policy guidelines related to the new generation of smart terminals and intelligent agents will be formulated; and the development of a new-type policy-based financial instrument worth 500 billion yuan is being actively promoted, with efforts to promptly invest the funds into specific projects. (Bullish ★) From a fundamental perspective, on September 29, the inventory of aluminum ingot in Guangdong was 187,000 mt, in Wuxi was 184,000 mt, and in Gongyi was 67,000 mt, totaling 438,000 mt in the three regions, an increase of 8,000 mt from the previous trading day. On September 29, regarding the inventory of aluminum billet in two regions domestically, the inventory of aluminum billet in Guangdong was 45,000 mt, and in Wuxi was 30,000 mt, totaling 75,000 mt, an increase of 3,000 mt from the previous trading day. Based on historical data for the same period and comprehensive assessments from SMM's market communications, the total inventory buildup during the National Day holiday is preliminarily estimated at around 60,000-80,000 mt. The actual extent of inventory accumulation will depend on shipments from aluminum plants before the holiday and the volume of cargo in transit. Overall, on the macro front, increased divergence within the US Fed regarding future monetary policy paths has heightened market uncertainty. In the initial post-holiday period, spot aluminum premiums are expected to face some pressure; fundamentally, aluminum prices remain under pressure at the 20,900-21,000 yuan/mt level. Entering October, some enterprises in the northern region have indicated that the proportion of liquid aluminum is expected to rise, while casting ingot volumes are likely to remain low, providing support for aluminum prices. Subsequent attention should be paid to inventory changes of aluminum ingots around the dual holidays.

[The information provided is for reference only. This article does not constitute direct investment research or decision-making advice. Clients should exercise caution in their decisions and not use this to replace independent judgment. Any decisions made by clients are unrelated to SMM.]