China-U.S. Trade Frictions Ease, Short-Term Macro Tailwinds Alleviate Downward Pressure [SMM Aluminum Morning Meeting Minutes]

11.11 SMM Aluminum Morning Meeting Minutes

Futures:From a technical perspective, SHFE aluminum 2601 prices at night session closed at 21,675 yuan/mt. The MA5 (21,675) and MA60 (21,674) are near the current price, but the MA10 (21,677) and MA20 (21,677.33) are slightly higher, forming short-term resistance. The MACD indicator is negative (DIF: -0.0843, DEA: 0.4607, MACD: -1.0900), indicating strengthening bearish momentum. The trading volume was 64,880 lots, with a daily increase in open interest of -2,613 lots, accompanying a slight price drop, suggesting generally weak and subdued market participation. Referencing recent highs and lows (night session high: 21,740, low: 21,655) and yesterday's settlement price of 21,650, the short-term resistance zone is viewed at 21,720-21,740, while the support zone is seen at 21,650-21,670. The overall trend is bearish, and it is necessary to monitor whether the support level can hold to avoid further declines.

Macro Front:The US officially announced a one-year suspension of the implementation of Section 301 investigation measures against China's shipbuilding and other industries. China announced a one-year suspension of collecting special port dues on US vessels and a one-year suspension of countermeasures against five US-related subsidiaries of Hanwha Ocean Co., Ltd. (Bullish ★) After a 40-day government shutdown, the US Senate procedurally voted to pass a temporary funding bill aimed at ending the government shutdown, but the Senate has not yet scheduled a final vote on the bill, which also still requires a final vote in the House of Representatives. (Neutral ★) An official from the State-owned Assets Supervision and Administration Commission of the State Council stated that central state-owned enterprises continue to increase investment in key areas such as technological innovation, industrial renewal, and equipment upgrades. In the first three quarters, they completed fixed-asset investment of over 3 trillion yuan, an increase of over 3%, with investment in emerging industries accounting for approximately 40%. (Bullish ★)

Fundamentals:According to SMM statistics, domestic aluminum production in October 2025 (31 days) increased by 1.13% YoY and increased by 3.52% MoM. The traditional peak season continued in October. Although the "October peak season" was slightly less robust than expected, with the commencement and production increases of downstream processing plants supporting aluminum smelters, the proportion of liquid aluminum at domestic aluminum smelters rebounded more than expected. The industry's proportion of liquid aluminum increased by 1.4 percentage points MoM to 77.7% this month. Based on SMM's proportion of liquid aluminum data, domestic aluminum casting ingot volume in September decreased by 13.5% YoY and decreased by 2.6% MoM to around 834,000 mt. Demand side, entering November, the industry is in a transition phase between the peak and off-seasons, coupled with persistently high aluminum prices. Downstream procurement is primarily for rigid demand. Extrusion enterprises generally reported a decrease in orders on hand, and the operating rate showed a pullback. Last week, the domestic aluminum extrusion weekly operating rate was 52.6%, down 0.9 percentage points WoW. Operating rates in other downstream sectors showed varying degrees of weakening. According to SMM statistics, aluminum ingot inventories in major domestic consumption areas recorded 627,000 mt this Monday, up 5,000 mt WoW. SMM expects domestic aluminum ingot inventory trends to stabilize with a slight increase in the first half of November, hovering around 600,000-650,000 mt.

Primary Aluminum Market:SHFE aluminum fluctuated considerably in the morning session, hitting a high near 21,600 yuan/mt and a low of 21,495 yuan/mt. In east China, market views diverged; high absolute prices dampened purchasing by downstream processors, with some enterprises reporting transactions at a discount of 5-10 yuan/mt against the SMM average price. Traders showed moderate buying sentiment, mainly purchasing for hedging purposes. Suppliers mostly quoted at parity to a premium of 10 yuan/mt against the SMM average price. Overall actual transactions ranged from a discount of 10 yuan/mt to a premium of 10 yuan/mt against the SMM average price. The east China market selling sentiment index was 2.98 this Monday, up 0.01 WoW; the buying sentiment index was 2.84, down 0.03 WoW. SMM A00 aluminum was quoted at 21,490 yuan/mt this Monday, down 50 yuan/mt from the previous trading day, at a discount of about 30 yuan/mt against the 2511 contract, flat from the previous trading day. In the central China market, suppliers showed some intention to hold prices firm this Monday. Downstream purchases remained just-in-time procurement, but traders' hedging sentiment rebounded. Actual transactions centered around a premium of 10-20 yuan/mt against the SMM average price. The central China market selling sentiment index was 2.90 this Monday, up 0.01 WoW; the buying sentiment index was 2.88, up 0.01 WoW. SMM central China closed at 21,380 yuan/mt, down 40 yuan/mt from the previous trading day, at a discount of 140 yuan/mt against the November contract, up 10 yuan/mt from the previous trading day. The price spread between Henan and Shanghai was -110 yuan/mt, up 10 yuan/mt from the previous trading day.

Recycled Aluminum Raw Materials:Spot primary aluminum prices fell this Monday compared to the previous trading day, with SMM A00 spot closing at 21,490 yuan/mt. Aluminum scrap market prices followed aluminum lower. As the traditional peak season ended, downstream demand diverged significantly: demand for scrap used in cast aluminum alloys remained stable, providing more consumption support, while demand for scrap used in wrought aluminum alloys showed initial signs of weakening. However, tight market supply remained the main theme, keeping procurement prices high, though the sustainability of high levels needs observation. Baled UBC scrap was mainly quoted at 16,350-16,950 yuan/mt (ex-tax) this Monday; shredded aluminum tense scrap (priced based on aluminum content) was mainly quoted at 17,750-18,250 yuan/mt (ex-tax). Baled UBC prices held steady or dropped slightly by 50 yuan/mt WoW. Prices for clean tapping aluminum wire, shredded aluminum tense scrap (priced based on aluminum content), scrap wheel hubs, and mechanical casting aluminum scrap fell by 0-50 yuan/mt WoW. Spot aluminum prices dropped slightly on Monday, with aluminum scrap prices in Shanghai, Zhejiang, and Jiangsu also following a minor downward adjustment. In terms of the price difference between A00 aluminum and aluminum scrap, the price difference for mechanical casting aluminum scrap in Shanghai narrowed by 50 yuan to 2,752 yuan/mt MoM, while the price difference between A00 aluminum and mixed aluminum extrusion scrap free of paint in Foshan narrowed by 50 yuan to 2,289 yuan/mt MoM. The aluminum scrap market is expected to maintain a strong hold this week, with the mainstream price range for shredded aluminum tense scrap (priced based on aluminum content) potentially moving up to 17,900-18,400 yuan/mt. The macro environment both at home and abroad continues to release positive signals, and the improvement in orders for downstream casting alloy processing is likely to continue, providing sustained support for aluminum scrap prices. However, two major risks need to be watched: first, under the backdrop of high aluminum prices, enterprises are mostly making just-in-time procurement, reducing raw material inventory stockpiling, which may suppress prices; second, the implementation of environmental protection-driven production restrictions in central China and the potential risk of primary aluminum prices retreating after a rapid rise. If these risks materialize, the aluminum scrap market will face pressure to correct. Overall, the future aluminum scrap market will continue to exhibit a complex tug-of-war between sellers and buyers. It is recommended that market participants closely monitor the trend of primary aluminum prices, changes in downstream demand, and the direction of environmental protection policies.

Secondary Aluminum Alloy: On Monday, the SMM A00 spot aluminum price fell by 50 yuan/mt to 21,490 yuan/mt; in the secondary aluminum market, the ADC12 price remained stable at 21,350 yuan/mt. On Monday, the aluminum price saw a narrow decline, and the secondary aluminum market maintained a wait-and-see attitude, with enterprises showing little willingness to adjust prices. The tight supply of aluminum scrap, coupled with the high prices of auxiliary materials such as copper, provided strong cost-side support, giving ADC12 prices short-term upward momentum. Although there is resilience in end-use consumption, high aluminum prices have made downstream procurement more cautious. In the short term, ADC12 prices will hold up well, and attention should be paid to the improvement in aluminum scrap supply, the effectiveness of relevant policy implementations, and changes in the procurement pace of downstream enterprises.

Summary of Aluminum Market Trends: The US has suspended its Section 301 investigation into Chinese shipbuilding and other sectors for one year, and China has simultaneously paused special port fees for US ships and countermeasures against Hanwha Ocean's subsidiaries, which helps to ease Sino-US trade tensions and boost expectations for aluminum demand in export sectors like shipbuilding. Domestically, central state-owned enterprises' fixed asset investment in the first three quarters exceeded 300 billion yuan, with emerging industries accounting for 40%, continuously strengthening the pull on aluminum consumption in new energy, aerospace, and other downstream sectors, supported by equipment renewal policies. This is expected to sustain the medium and long-term resilience of aluminum consumption. Overall, the marginal improvement in the external environment and supportive domestic industrial policies jointly consolidate the demand outlook for the aluminum market, providing favorable support for aluminum prices. From a fundamental perspective, entering November 2025, winter environmental restrictions are expected to affect the operations of some enterprises, but considering that electrolysis pot production cannot immediately drop to zero after shutdowns, the change in production is expected to be relatively small. Proportion of liquid aluminum, some enterprises report that end-user demand is expected to weaken next month, and the proportion of liquid aluminum is expected to pull back, especially in the second half of November, expectations for a pullback in the proportion of liquid aluminum strengthen. Currently, aluminum prices are fluctuating at highs, coupled with severe smog in central China leading to the gradual issuance of environmental protection-driven production restriction policies, which somewhat suppresses demand. Overall, macro tailwinds will partially offset fundamental pressures, but the emergence of off-season characteristics in demand and marginal inventory accumulation will limit the upside room for aluminum prices, and the pattern of aluminum prices fluctuating at highs in the short term remains unchanged.

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