Macro Strength Supports Aluminum Prices to Continue Fluctuating at Highs [SMM Aluminum Morning Meeting Minutes]

SMM Aluminum Morning Meeting Minutes 10.29

Futures:During the night session on October 28, the most-traded SHFE aluminum contract opened at 21,180 yuan/mt, reached a highest price of 21,280 yuan/mt and a lowest price of 21,155 yuan/mt, and finally closed at 21,245 yuan/mt, up 0.50%. The night session showed an upward surge followed by fluctuations, with the trading center moving higher. From a technical perspective, the MA moving averages continued their bullish alignment (MA5: 21,249.00 > MA10: 21,205.00 > MA20: 21,077.25 > MA60: 20,918.67), while the MACD 4-hour candlestick level saw a narrowing red column, maintaining a golden cross state (DIFF: 99.48, DEA: 87.72). In terms of trend, SHFE aluminum remains in an upward channel but is experiencing a short-term pullback. Considering recent highs and lows (low around 20,640, high around 21,365), resistance is expected in the 21,350–21,550 range, with support in the 20,650–20,850 range.

Macro Front:The "Proposal of the Central Committee of the Communist Party of China on Formulating the 15th Five-Year Plan for National Economic and Social Development" was released on October 28. It proposed fostering and strengthening emerging and future industries, accelerating the development of strategic emerging industrial clusters such as new energy, new materials, aerospace, and the low-altitude economy; promoting quantum technology, biomanufacturing, hydrogen and nuclear fusion energy, brain-computer interfaces, embodied AI, and sixth-generation mobile communications to become new economic growth drivers; and enhancing the inclusiveness and adaptability of capital market systems, improving the coordinated function of investment and financing in capital markets. (Bullish ★) According to a report by Canada's The Globe and Mail on the 28th, cited by the Global Times, Canadian Prime Minister Carney stated that he plans to meet with Chinese leaders this week during the APEC 32nd Informal Leadership Meeting in South Korea. The report mentioned that Canada has been preparing for this meeting for months, aiming to try to repair diplomatic rifts that have lasted for years and promote the resolution of trade disputes. (Bullish ★)

Fundamentals:Inventory side, according to SMM statistics, on October 28, combined aluminum billet inventory in two regions totaled 101,500 mt, showing a slight destocking compared to the previous period, while combined aluminum ingot inventory in three regions was 470,500 mt, an increase of 3,500 mt from the previous period. Supply side, domestic operating aluminum capacity remained flat, while overseas supply is expected to decline, which may support overseas aluminum prices. Demand side, some downstream enterprises reported a decrease in orders on hand in October, with limited room for further demand growth ahead, but overall demand performance remained stable in the short term.

Primary Aluminum Market:Yesterday, SHFE aluminum mainly fluctuated downward during the early session, with the trading center hovering around 21,190 yuan/mt after pulling back. In East China, absolute high prices continued to fluctuate at highs, but under spot discounts, traders' willingness to sell weakened, and actual transactions were around parity with the SMM average price. On Tuesday, the sales sentiment index in the east China market was 2.86, up 0.01 WoW, while the purchasing sentiment index was 2.82, up 0.03 WoW. On Tuesday, SMM A00 aluminum closed at 21,160 yuan/mt, flat from the previous trading day, at a discount of about 40 yuan/mt against the 2511 contract, also unchanged from the previous day. In the central China market, as the absolute price did not increase further, downstream buyers' restocking sentiment improved slightly, but purchases were still mainly made in batches. Actual transactions were mostly concluded around parity with the SMM average price. On Tuesday, the sales sentiment index in the central China market was 2.88, up 0.01 WoW, and the purchasing sentiment index was 2.84, up 0.01 WoW. SMM A00 aluminum in central China was recorded at 21,030 yuan/mt, flat from the previous trading day, at a discount of 170 yuan/mt against the November contract, unchanged from the previous day. The price spread between Henan and Shanghai was -130 yuan/mt, flat from the previous trading day.

Recycled Aluminum Raw Materials:Yesterday, spot primary aluminum prices held flat from the previous trading day, with SMM A00 spot aluminum closing at 21,160 yuan/mt. Aluminum scrap prices remained generally stable. As the traditional peak season approaches its end, tight supply remains the main theme in the aluminum scrap market, keeping procurement prices high, though the sustainability of these elevated levels remains to be seen. Yesterday, baled UBC was quoted in a range of 16,000-16,500 yuan/mt (ex-tax), while shredded aluminum tense scrap (priced based on aluminum content) was quoted at 17,500-18,000 yuan/mt (ex-tax). Baled UBC prices rose 50 yuan/mt WoW, while shredded aluminum tense scrap (priced based on aluminum content), scrap wheel hub, and mechanical casting aluminum scrap increased by 100 yuan/mt WoW. Due to improved demand from downstream alloys, shredded aluminum tense scrap prices followed the upward trend. Quotations for aluminum tense scrap series were collectively raised in Jiangxi, Hubei, Foshan, Anhui, Hunan, and other regions, with increases ranging from 100-200 yuan. The aluminum scrap market is expected to hold up well this week, with the mainstream price range for shredded aluminum tense scrap (priced based on aluminum content) hovering around 17,500-18,000 yuan/mt. As primary aluminum prices stabilize above the 21,000 yuan/mt mark, further positive sentiment is expected to transmit, supporting aluminum scrap prices. The tight supply situation is unlikely to change in the short term. Demand side, 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 enterprises after the holiday and the sustainability of end-use demand. If primary aluminum prices retreat after a rapid rise or downstream demand falls short of expectations, the aluminum scrap market may face pullback pressure. Overall, the market will continue to see a tug-of-war between sellers and buyers, requiring close monitoring of primary aluminum trends and policy developments.

Secondary Aluminum Alloy:Yesterday, SMM A00 aluminum was quoted at 21,160 yuan/mt, flat from the previous day, while SMM ADC12 prices held steady at 21,200 yuan/mt. The tight supply situation for aluminum scrap persists, and procurement costs have climbed further. To ensure order fulfillment, enterprises generally procure at high prices, with low-priced sources being scarce. Affected by factors such as insufficient raw material circulation, high-priced raw materials eroding profits, and unclear policies in Jiangxi and Anhui, industry supply has contracted. Overall demand remains resilient, coupled with low finished product inventories at manufacturers and ongoing pressure for order deliveries, providing some support to market prices. In the short term, driven by rigid cost support and a tight supply-demand balance, ADC12 aluminum alloy ingot prices are expected to hold up well. Subsequent attention should focus on raw material supply, consumption performance, and inventory changes.

Aluminum Market Summary:The current macro environment is generally favorable: on one hand, market optimism about a potential U.S.-China trade agreement continues to rise, significantly boosting global risk appetite; on the other hand, domestic macro policies maintain a pro-growth stance, effectively supporting market confidence. However, with the US Fed's interest rate meeting approaching, market caution regarding policy rate adjustment signals and subsequent trade negotiations may curb market volatility in the near term. Fundamentally, overseas supply is expected to tighten, while domestic supply remains stable. Overall aluminum supply and demand are projected to tighten. On the inventory side, pressured by high aluminum prices and weak downstream demand, domestic aluminum ingot inventories may shift from weak destocking to weak inventory buildup from late October to early November. Cost side, affected by declining alumina prices, support has weakened somewhat. In the short term, amid macro tailwinds and mixed fundamental factors, aluminum prices are expected to fluctuate at highs.

[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.]