[SMM Analysis: Year-End Aluminum Billet Production Data Released, Will Production Cuts Be Unavoidable as Off-Season Deepens?] Mixed trends coexisted! Domestic aluminum billet supply-side operating rates remained generally stable in November, with final production figures meeting expectations. As the September-October peak season concluded, some aluminum billet enterprises planned ahead to switch production to aluminum bus bars, primary alloys, aluminum rods, and other products. Meanwhile, some group enterprises, affected by poor overall annual profitability, implemented marginal production cut adjustments in November, showing signs of supply contraction during the off-season. However, due to the better-than-expected performance of aluminum billet processing fees, particularly in South China, some billet plants in South-West China increased production accordingly. Coupled with the ramp-up of newly commissioned capacity in Q4, the domestic aluminum billet supply side achieved a temporary stable transition amid these mixed trends. The daily average production of primary aluminum billets in November pulled back slightly to around 50,000 mt/day, down MoM from October, in line with earlier expectations. However, SMM expects that as the off-season deepens in December and high aluminum prices further suppress processing fees and downstream demand...

Brief Review: At the beginning of the month, the December tender pricing set by leading downstream aluminum enterprises was officially finalized. The tender prices generally trended upward, settling in the range of 10,200-10,300 yuan/mt. With the clarification of tender prices, aluminum fluoride prices generally increased by 250-300 yuan/mt following this guidance. Cost side, the core raw material for aluminum fluoride, sulphuric acid, continued its strong price trend, providing solid support for aluminum fluoride costs. Meanwhile, the price of another key raw material, fluorite, experienced a pullback, alleviating some production pressure on enterprises and contributing to a slight improvement in industry profitability, which in turn boosted production enthusiasm. Demand side performance remains the main constraint in the current market, with no significant improvement in downstream procurement pace. The overall demand atmosphere remains mediocre, and effective synergistic support between supply and demand has yet to materialize. Subsequent attention should focus closely on dynamic changes in raw material costs and adjustments in the downstream procurement pace.

[SMM Aluminum Morning Meeting Minutes: Macro Tailwinds and Fundamentals Support SHFE Aluminum's Night Session Strength, Maintaining Highs Pattern] On the fundamentals side, this year's Chinese New Year break occurs relatively late, limiting the extent of weakening aluminum demand in December. The release of new capacity and production still requires some time, resulting in limited production growth in December. Additionally, seasonal transportation disruptions for aluminum ingots in Xinjiang are expected, likely leading to relatively tight inventory levels, providing fundamental support for aluminum prices. With the combined effect of macro and fundamental factors, SMM expects aluminum prices to hover at highs. However, excessively high aluminum prices are likely to strongly suppress end-use consumption, warranting caution against the risk of a price pullback from elevated levels.

[SMM Cast Aluminum Alloy Morning Comment: AL and AD Contract Price Spread Breaks Through 1,000 Yuan Threshold, Further Widening] Yesterday, the most-traded cast aluminum contract's gains narrowed significantly compared with SHFE aluminum futures, with the AD-AL spread widening to 990 yuan/mt. Currently, registered warrants for aluminum alloy remain high, while high aluminum prices have hampered traders' sales, leading to weak destocking and weighing on futures performance. Spot side, ADC12 prices actively followed the rise by 200 yuan/mt to 21,700 yuan/mt, with the inverted spread against A00 aluminum further widening. Cost side, today aluminum scrap prices surged sharply in line with aluminum prices, while copper prices hit a new high above 91,245 yuan/mt, driving up raw material costs. The cost shares of aluminum scrap and copper auxiliary materials continued to increase, with cost remaining the main driver for ADC12 price increases. Demand side, aluminum prices hitting a year-to-date peak have suppressed downstream procurement pace in the short term. Some die-casting enterprises saw profits shrink due to cost pressure, and some fell into losses, leading to lower operating rates. However, end-user demand for pushing annual targets at year-end continues to support industry resilience. Overall, ADC12 prices are expected to maintain high fluctuations in the near term.

The weekly operating rate of leading domestic aluminum downstream processing enterprises fell 0.4 percentage points WoW to 61.9%, with the market continuing to show structural divergence. The operating rate of primary aluminum alloy remained stable at 60.2%, as long-term contract deliveries at major enterprises were steady, but high aluminum prices suppressed spot order transactions, with cautious demand side sentiment.

[SMM Analysis]Cost-Driven ADC12 Aluminum Alloy Rally Continues, High-Level Scrap Aluminum Game Warns of Correction

[SMM Aluminum Price Weekly Review: Aluminum Price Breaches the 22,000 Mark Again, Downstream Demand Marginally Weakens]