Macro and Fundamentals Resonate Positively, Aluminum Prices Expected to Fluctuate at Highs [SMM Aluminum Morning Meeting Minutes]

SMM Aluminum Morning Meeting Minutes, 10.24

Futures: During the night session on October 23, the most-traded SHFE aluminum contract opened at 21,270 yuan/mt, reached a highest price of 21,310 yuan/mt and a lowest price of 21,235 yuan/mt, and finally closed at 21,265 yuan/mt, up 0.64%. The night session generally saw a pattern of opening higher with a gap and then fluctuating, with the trading center hovering around 21,270 yuan/mt. From a technical perspective, the MA moving averages maintained a bullish alignment (MA5: 21,110 > MA10: 21,018 > MA30: 20,974 > MA60: 20,877), and the MACD 60-minute candlestick showed expanding red bars, maintaining a golden cross state. The night session's highest price broke through the previous high of 21,200 yuan/mt. In the short term, prices are expected to hover at highs. Considering the new high and low points (the monthly low of 20,640 and the high around 21,310), the resistance level is projected in the 21,400-21,580 range, and the support level is expected in the 20,730-20,930 range. Caution is warranted against the risk of a pullback from highs.

Macro Front:On October 23, 2025, the Communiqué of the Fourth Plenary Session of the 20th Central Committee of the Communist Party of China was released. The plenum set the main economic and social development goals for the 15th Five-Year Plan period: achieving significant progress in high-quality development, substantially increasing the level of self-reliance and strength in science and technology, making new breakthroughs in further comprehensively deepening reform, significantly enhancing the degree of social civility, continuously improving the quality of life for the people, achieving new major progress in building a Beautiful China, and further consolidating the national security barrier. The plenum proposed building a modern industrial system and consolidating and strengthening the foundation of the real economy. It emphasized focusing economic development efforts on the real economy, adhering to the directions of intelligentization, greening, and integration, accelerating the building of a manufacturing powerhouse, a quality powerhouse, a space powerhouse, a transportation powerhouse, and a cyber powerhouse, maintaining a reasonable proportion of manufacturing, and constructing a modern industrial system with advanced manufacturing as the backbone. It is necessary to optimize and upgrade traditional industries, cultivate and strengthen emerging and future industries, promote the high-quality and efficient development of the service sector, and build a modern infrastructure system. (Bullish ★) A spokesperson for the Ministry of Commerce, responding to media questions regarding China-U.S. economic and trade consultations, stated that, as agreed by both sides, He Lifeng, Member of the Political Bureau of the CPC Central Committee and Vice Premier of the State Council, will lead a delegation to Malaysia from October 24 to 27 to hold economic and trade consultations with the U.S. side. (Neutral ★) According to the Ministry of Commerce, as of October 22, 2025, the number of applications for the 2025 vehicle trade-in subsidies exceeded 10 million, including over 3.4 million for vehicle retirement and renewal, and over 6.6 million for replacement updates. (Bullish ★)

Fundamentals:Inventory side, Thursday's daily inventory of aluminum ingots in mainstream consumption areas recorded 457,000 mt, with a destocking of 6,000 mt WoW; aluminum billet inventory recorded 101,000 mt, with a destocking of 1,500 mt WoW. Cost side, the average cost of the aluminum industry recorded 16,092 yuan/mt on Wednesday, down 12 yuan/mt WoW, mainly affected by the decline in alumina prices. The average industry profit expanded by 22 yuan/mt to 4,888 yuan/mt. Supply and demand side, supply side, domestic operating aluminum capacity remained stable at around 44.06 million mt, with the proportion of liquid aluminum slightly increasing by 0.13 percentage points to 77.24% as of Thursday this week. Demand side, the operating rate of leading domestic aluminum downstream processing enterprises recorded 62.4% this week, down 0.1% WoW, overall showing the characteristics of "stabilizing in peak season, internal divergence". Specifically, the operating rate of primary aluminum alloy increased slightly by 0.6 percentage points to 59.0%; the operating rate of aluminum plate/sheet and strip decreased by 1 percentage point to 67.0%; the operating rate of aluminum wire and cable rose slightly by 0.4% to 64.4%; the operating rate of aluminum extrusion increased slightly to 53.7%; the operating rate of aluminum foil decreased by 0.4 percentage points to 71.9%; the operating rate of secondary aluminum producers remained at 58.6%.

Primary Aluminum Market:Yesterday, the SHFE aluminum early trading center remained above 21,000 yuan/mt. In east China, suppliers' willingness to sell increased, but downstream purchasing was weak due to high absolute prices. Around market opening, suppliers attempted to offer at the average price to a discount of 10 yuan/mt, but trading volume was poor. After negotiation, actual transactions settled at a discount of 20 yuan/mt to a discount of 10 yuan/mt against the SMM average price. Today, the selling sentiment index in the east China market was 3.02, down 0.17 MoM; the buying sentiment index was 2.97, down 0.15 MoM. Today, SMM A00 aluminum was quoted at 21,040 yuan/mt, up 60 yuan/mt from the previous trading day, at a discount of about 10 yuan/mt against the 2511 contract, down 10 yuan/mt from the previous trading day. In central China, selling sentiment was high before and just after market opening, but purchasing was limited. With high aluminum prices, fear of price declines was strong, and enterprises purchased cautiously, resulting in low trading volume. Around 10 a.m., large players entered the market purchasing at high prices, trading volume increased, and market transaction prices rose to a discount of 10 yuan/mt to near the average price. Overall purchasing sentiment rebounded somewhat. Today, the selling sentiment index in the central China market was 2.82, up 0.05 MoM; the buying sentiment index was 2.70, up 0.04 MoM. SMM Central China A00 recorded 20,910 yuan/mt, up 50 yuan/mt from the previous trading day, at a discount of 1,420 yuan/mt against the November contract, down 20 yuan/mt from the previous trading day. The Henan-Shanghai price spread was -130 yuan/mt, down 10 yuan/mt from the previous trading day.

Recycled Aluminum Raw Materials:Yesterday, the spot primary aluminum price increased compared to the previous trading day, breaking through the 21,000 mark, with SMM A00 spot closing at 21,040 yuan/mt. The aluminum scrap market price adjustments diverged. As the traditional peak season nears its end, tight supply in the aluminum scrap market remains the main theme, with purchase prices remaining high, but the sustainability of high levels needs to be considered. Yesterday, baled UBC aluminum scrap was mainly offered at 15,900-16,500 yuan/mt (ex-tax), while shredded aluminum tense scrap (priced based on aluminum content) was mainly offered at 17,300-17,800 yuan/mt (ex-tax). Baled UBC rose 100 yuan/mt MoM, while shredded aluminum tense scrap (priced based on aluminum content), scrap wheel hub, and mechanical casting aluminum scrap remained flat MoM. Regarding the price difference between A00 aluminum and aluminum scrap, the price difference between A00 aluminum and mechanical casting aluminum scrap in Shanghai widened by 60 yuan/mt MoM to 2,302 yuan/mt, and the price difference between A00 aluminum and mixed aluminum extrusion scrap free of paint in Foshan widened by 60 yuan/mt MoM to 2,299 yuan/mt. The aluminum scrap market is expected to hold up well next week, with the mainstream price range for shredded aluminum tense scrap (priced based on aluminum content) hovering around 17,500-18,000 yuan/mt. If primary aluminum prices stabilize above the 21,000 yuan/mt mark, it will further transmit positive effects and support aluminum scrap prices, as the tight supply situation is unlikely to change in the short term. Demand side, demand resilience remains in sectors such as NEVs and PV, but the end of the traditional peak season and high social inventory pressure may curb procurement enthusiasm. Attention should be paid to the restocking pace of secondary aluminum alloy enterprises after the holiday and the sustainability of end-use demand. If primary aluminum prices retreat after a rapid rise or downstream demand declines too quickly, the aluminum scrap market may face pullback pressure. Overall, the market will continue the tug-of-war between sellers and buyers, and close attention should be paid to the trend of primary aluminum and policy developments.

Secondary Aluminum Alloy:Yesterday, the SMM A00 aluminum price was quoted at 21,040 yuan/mt, up 60 yuan/mt from the previous day, while the SMM ADC12 price rose 100 yuan/mt to 21,200 yuan/mt. Currently, aluminum scrap supply remains tight, and procurement costs climbed further during the week. To ensure order fulfillment, enterprises generally procured at high prices, with low-priced sources scarce, leading to a continuous rise in comprehensive production costs, thereby pushing up offers. Overall demand remains resilient, coupled with low finished product inventories at manufacturers and ongoing order delivery pressure, providing some support to market prices. In the short term, supported by rigid cost support and a tight supply-demand balance, ADC12 aluminum alloy ingot prices are expected to hold up well. Subsequent focus should be on raw material supply, consumption performance, and inventory changes.

Aluminum Market Summary:Overall, the macro front leans favorable, but with a new round of China-U.S. trade consultations imminent and ongoing news about the Russia-Ukraine conflict, related developments need continuous monitoring. Domestically, the macro atmosphere is positive, as the plenary session proposed a new model for economic and social development, supporting market confidence. Fundamentally, supply side, domestic operating aluminum capacity remained flat, while overseas supply is expected to decline, which may support overseas aluminum prices. Demand side, the weekly operating rates of downstream leading enterprises dipped slightly, but demand performance overall remains stable in the short term. Cost side support weakened, as aluminum costs continued to decline affected by falling alumina prices. Inventory side, domestic aluminum ingot inventory is expected to enter a destocking trend in the second half of October. Overall, the domestic and overseas macro front is leaning optimistic, coupled with tightening supply-demand fundamentals and inventory drawdowns. Short-term aluminum prices are expected to hover at highs.

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