






SMM Aluminum Morning Meeting Minutes, 10.16
Futures: According to the night session data on Oct. 16, technical analysis showed that the SHFE aluminum 2512 contract fluctuated upward during the Oct. 16 night session, closing up 0.60% at 21,060 yuan/mt. The MA system was in a bullish alignment (MA5: 20,951 > MA10: 20,900 > MA30: 20,815), with prices holding above the moving averages; the MACD indicator maintained a golden cross (DIF: 75.3 > DEA: 61.0), and the red momentum bars expanded. However, the trading volume of 51,859 lots shrank compared to the average volume, warranting attention to volume-momentum coordination. Considering recent highs and lows (monthly low at 20,600, high around 21,200), resistance is expected in the 21,150-21,250 range, with support in the 20,850-20,950 range. The current bullish trend remains intact, but the divergence between price and volume calls for caution against technical pullback risks.
Primary Aluminum Market: Yesterday, SHFE aluminum retreated after a rapid rise in the morning session, hitting an intraday high of 20,975 yuan/mt. In east China, tight spot supply due to low inventories prompted suppliers to refuse to budge on prices and hold back sales, while large buyers entered the market for purchases. Spot discounts narrowed further, with actual transactions at a premium of about 10-20 yuan/mt against the SMM average price. As futures prices climbed further, trading weakened, and actual transactions were mostly on par with the SMM average price. On Thursday, the east China market selling sentiment index was 3.34, up 0.13 WoW; the buying sentiment index was 3.26, up 0.08 WoW. On Thursday, SMM A00 aluminum was quoted at 20,950 yuan/mt, up 30 yuan/mt from the previous trading day, at parity against the 2511 contract, up 20 yuan/mt from the previous trading day. Trading in central China remained relatively sluggish. Downstream enterprises of aluminum semis reported weak cargo pick-up, and processing enterprises showed low enthusiasm for spot orders amid accumulating finished product inventories. However, against the backdrop of low aluminum ingot inventories, suppliers still refused to budge on prices and held back sales. Actual transactions mostly hovered at a discount of about 10 yuan/mt against the SMM average price, with sporadic trades at discounts of 15-20 yuan/mt. On Thursday, the central China market selling sentiment index was 2.69, down 0.04 WoW; the buying sentiment index was 2.55, down 0.03 WoW. SMM central China A00 aluminum was recorded at 20,870 yuan/mt, up 20 yuan/mt from the previous trading day, at a discount of 80 yuan/mt against the November contract, up 10 yuan/mt from the previous trading day. The price spread between Henan and Shanghai narrowed by 10 yuan/mt WoW to -80 yuan/mt.
Recycled Aluminum Raw Materials: This Thursday, spot primary aluminum prices rose slightly from the previous trading day, with SMM A00 spot aluminum closing at 20,950 yuan/mt, while aluminum scrap prices held flat overall. Past the midpoint of the traditional peak season, tight supply remains the main theme in the aluminum scrap market, keeping procurement prices high, though the sustainability of these high levels remains to be seen. On Thursday, baled UBC was quoted at 15,900-16,500 yuan/mt (tax excluded), while shredded aluminum tense scrap (priced based on aluminum content) was quoted at 17,300-17,800 yuan/mt (tax excluded). Baled UBC rose 50 yuan/mt WoW, while shredded aluminum tense scrap (priced based on aluminum content), scrap wheel hub, and mechanical casting aluminum scrap remained flat WoW. Regarding the price difference between A00 aluminum and aluminum scrap, the price difference for mechanical casting aluminum scrap in Shanghai was 2,212 yuan/mt, and for mixed aluminum extrusion scrap free of paint in Foshan, it was 2,189 yuan/mt. The aluminum scrap market is expected to hold up well next week, with mainstream prices for shredded aluminum tense scrap (priced based on aluminum content) likely to fluctuate around 17,500-18,000 yuan/mt. The tight supply of raw materials is unlikely to ease in the short term, and with SHFE aluminum finding strong support in the 20,800-20,850 yuan/mt range, a breakthrough above the 21,000 yuan/mt level would further transmit positive signals. On the other hand, uncertainty over Trump's tariff threats, the underwhelming performance of the downstream September-October peak season, limited acceptance of high-priced raw materials by scrap utilization enterprises, and inventory pressure on finished products at downstream scrap utilization enterprises will all curb procurement enthusiasm. The market should closely monitor whether primary aluminum prices can sustain at high levels, the restocking pace of secondary aluminum enterprises after the holiday, and the sustainability of end-use demand.
Secondary Aluminum Alloy: On Thursday, aluminum prices continued to rebound, while secondary aluminum enterprises kept their offers unchanged, adopting a wait-and-see approach. The persistently tight supply of aluminum scrap continues to provide solid cost support, and resilient demand coupled with low plant inventories underpins prices. However, caution is warranted regarding the dampening effect of high social inventory and warrant pressure on upside room, while attention should also be paid to the impact of policy implementation on the supply side. ADC12 prices are expected to hold up well in the near term, with focus on raw material availability, the pace of demand recovery, and inventory changes.
Aluminum Market Summary: Macro front: US Fed officials expressed differing views on the pace of interest rate cuts. Governor Waller advocated maintaining a cautious approach of 25 basis points per cut to address a weak labour market, while temporary Fed Governor Milan called for more aggressive 50 basis point cuts. (Bullish ★) The Ministry of Commerce held a regular press conference, addressing several hot topics. Regarding whether China and the US would hold a new round of trade talks soon, China expressed openness to equal consultations based on mutual respect. The US Treasury Secretary stated that the US might extend the three-month tariff exemption period for China if China ceases its strict rare earth export control plan, adding that US President Trump is prepared to meet with Chinese leaders in the near future. (Neutral ★) Fundamental side: In October, the commissioning of replacement projects and technological transformation projects, along with production resumptions, are expected to further increase aluminum ingot production, with daily average production projected to rise further. Regarding the proportion of liquid aluminum, the peak season continued into October, showing a slight recovery, and the proportion of local alloying of aluminum liquid at some enterprises is expected to increase further. The proportion is forecast to increase by 1 percentage point MoM to 77.3% in October. Cost side, spot alumina prices remained in the doldrums, and the real-time cost of aluminum continued to decline MoM, dropping by approximately 118 yuan/mt WoW to 16,151 yuan/mt, while the real-time theoretical profit of aluminum rose by 108 yuan/mt MoM to 4,798 yuan/mt. Demand side, post-holiday, demand for construction materials and other industrial profiles showed no significant changes in the first week, while demand for PV frames declined. This week, the domestic aluminum extrusion operating rate recorded 53.5%, down 0.1 percentage point WoW, with operating performances in other downstream sectors remaining stable. Inventory side, according to SMM statistics, domestic aluminum ingot inventory in mainstream consumption areas recorded 627,000 mt this Thursday, destocking 23,000 mt from this Monday and 22,000 mt WoW. SMM expects domestic aluminum ingot inventory overall may resume a destocking trend in the second half of October. Overall outlook: Internationally, expectations for US Fed interest rate cuts improved, but in early October, Trump reiterated tariff hike remarks, boosting market risk aversion; however, subsequent messages indicated a willingness to negotiate rationally with China, requiring continued monitoring of related developments. Domestically, the macro atmosphere is positive, supporting market confidence, and there is keen anticipation for more substantive measures in H2 to stimulate consumption and economic growth. Fundamentally, as the traditional peak season progresses further in October, the proportion of liquid aluminum is expected to increase further. Although cost support continues to weaken, demand-side performance remains stable. Inventory side, domestic aluminum ingot inventory overall is expected to potentially resume a destocking trend in the second half of October. Overall, domestic and overseas macro fronts lean optimistic, coupled with fundamentally steady performance, supporting aluminum prices to hold up well.
[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.]
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