Macro front, internationally, mid-week this Wednesday, US Supreme Court justices expressed significant doubts about former President Trump's authority to unilaterally impose comprehensive tariffs, questioning whether Trump could bypass Congress to initiate trade conflicts. However, government officials stated that most tariffs could still be implemented through other, more complex legal tools. Notably, the tariffs Trump imposed on steel, aluminum, and automobiles were established under different laws and are thus not directly affected by this case. Domestically, a spokesperson for the Ministry of Commerce stated that following consultations in Kuala Lumpur, the China-US economic and trade teams reached consensus outcomes mainly in the following areas: the US will cancel the additional 10% so-called fentanyl tariffs on Chinese goods, the additional 24% reciprocal tariffs imposed by the US will be suspended for another year; the US will suspend the implementation of the 50% ownership rule for export controls for one year; the US will suspend Section 301 investigations into China regarding maritime issues, etc., for one year. On October 30 local time, President Xi Jinping met with US President Trump in Busan. Xi pointed out that the economic and trade teams of the two countries had in-depth exchanges on important economic and trade issues and reached consensus on resolving issues. The teams should quickly refine and finalize follow-up work, maintain and implement the consensus, using tangible results to provide a "ballast stone" for the economies of China, the US, and the world. Mid-week, relevant meetings were also held between China and South Korea, and China and Russia. Premier Li Qiang presided over a State Council executive meeting on October 31, deploying measures to accelerate the cultivation and opening of scenarios to promote the large-scale application of new scenarios.
Fundamentals side, according to SMM statistics, domestic aluminum production in October 2025 (31 days) increased 1.13% YoY and was up 3.52% MoM. The traditional peak season continued in October; although the "October peak season" was slightly less robust than expected, as downstream processing plants around aluminum smelters commenced operations and ramped up production, the rebound in the proportion of liquid aluminum at domestic aluminum smelters still exceeded expectations. The industry's proportion of liquid aluminum rebounded 1.4 percentage points MoM to 77.7% this month. Based on SMM's liquid aluminum proportion data, domestic aluminum casting ingot volume in September decreased approximately 13.5% YoY and fell about 2.6% MoM to around 834,000 mt. Cost side, although the real-time cost for aluminum edged higher during the week, the strong aluminum price meant the high-profit structure for aluminum smelters remained unaffected. The cost rose about 72 yuan/mt WoW from last Thursday to 16,115 yuan/mt, while the immediate theoretical profit for aluminum increased 87 yuan/mt MoM to 5,244 yuan/mt. Demand side, entering November, the industry is in a transition phase between the peak and off-seasons, coupled with aluminum prices remaining high. Downstream procurement is primarily for rigid demand, with extrusion enterprises generally reporting a decrease in orders on hand, and operating rates showing a pullback. The weekly operating rate for domestic aluminum extrusion recorded 52.6% this week, down 0.9 percentage points WoW. Operating rates in other downstream sectors showed varying degrees of weakening. Inventory side, according to SMM statistics, aluminum ingot inventory in mainstream domestic consumption areas recorded 622,000 mt this Thursday, a decrease of 5,000 mt from this Monday, but an increase of 3,000 mt WoW. SMM expects domestic aluminum ingot inventory to stabilize with a slight increase in the first half of November, hovering around 600,000-650,000 mt.
Overall, macro front, optimistic domestic and overseas macro sentiment persisted. Questions were raised about whether Trump has the authority to initiate trade conflicts bypassing Congress, though most tariffs could still be implemented using other, more complex legal tools. Meanwhile, tariffs imposed by Trump on steel, aluminum, and automobiles were not directly affected. Significant divergence remained regarding a US Fed interest rate cut in December. China-US economic and trade teams reached good consensus after consultations, and relevant meetings were also held between China and South Korea, and China and Russia mid-week. Fundamentals side, domestic operating aluminum capacity remained flat MoM in October, with supporting processing plants near aluminum smelters driving the proportion of liquid aluminum to exceed expectations. Entering November 2025, winter environmental protection-driven production restrictions are expected to impact operations at individual enterprises, but considering that aluminum production cannot immediately drop to zero shortly after pot shutdowns, the production change is expected to be relatively small. Proportion of liquid aluminum side, some enterprises reported that end-user demand is expected to weaken next month, and the proportion of liquid aluminum is expected to pull back, particularly in the second half of November, where expectations for a pullback strengthened. Currently, aluminum prices are fluctuating at highs, coupled with severe smog in central China leading to the successive issuance of environmental protection-driven production restriction policies, which somewhat suppressed demand. Inventory side, as the traditional peak season ended, the proportion of liquid aluminum faced some pressure at high levels in November, aluminum ingot supply pressure increased, and demand stability was difficult to guarantee under high aluminum prices. According to SMM statistics, aluminum ingot inventory in mainstream domestic consumption areas recorded 622,000 mt this Thursday, an increase of 3,000 mt WoW. SMM expects domestic aluminum ingot inventory to stabilize with a slight increase in the first half of November, hovering around 600,000-650,000 mt. Overall, although fundamental drivers are limited, domestic and overseas macro performance remains optimistic, and the pattern of aluminum prices fluctuating at highs is unlikely to change. SHFE aluminum is expected to trade between 21,300-21,900 yuan/mt next week, while LME aluminum is expected to trade between $2,830-2,930/mt.
