U.S. and Mexico Temporarily Suspend Sanctions Against China, Multiple Positive Factors Support Short-Term Strength in Aluminum Prices [SMM Aluminum Morning Meeting Minutes]

SMM Aluminum Morning Conference Minutes 11.12

Futures:From a technical perspective, the SHFE aluminum 2601 contract rose slightly by 0.28% to 21,750 yuan/mt during the night session on November 11, showing an overall pattern of fluctuating upward within a narrow range. The moving averages (MA5, MA10, MA30, MA60) were densely distributed in the range of 21,731-21,737, with the price slightly above the moving averages, indicating a short-term bullish bias but limited momentum. In the MACD indicator, the DIF (1.8998) was higher than the DEA (1.0469), and the histogram was positive (1.7058), showing mild upward momentum but insufficient strength. The trading volume was 77,905 lots, accompanied by an increase in open interest of 8,954 lots, reflecting a slight inflow of funds. Referencing the night session's low of 21,635 and high of 21,780, short-term support is expected at 21,700-21,730 (the MA dense area and previous low), while resistance is seen at 21,780-21,800 (previous high and psychological resistance). The overall market is in a tug-of-war between longs and shorts, and the direction of the breakout needs to be watched.

Macro Front:The U.S. announced the suspension of the export control rule of penetration from November 10, 2025, to November 9, 2026. The Ministry of Commerce responded, stating that this is an important measure by the U.S. to implement the consensus from the China-U.S. Kuala Lumpur economic and trade consultations. Arrangements after the one-year suspension will continue to be discussed. (Bullish ★) According to foreign media reports, Mexico's plan to impose tariffs on China has been postponed again and is scheduled for deliberation in Congress as early as December. Against the backdrop of certain countries arbitrarily imposing tariffs, China and Mexico should strengthen communication and coordination to jointly uphold free trade and multilateralism. (Bullish ★) Minister of Commerce Wang Wentao pointed out that more detailed measures will be introduced in areas such as vigorously boosting consumption, steadily expanding institutional opening-up, actively expanding autonomous opening-up, promoting innovative development of trade, expanding two-way investment cooperation, and high-quality joint construction of the "Belt and Road," along with high-quality compilation of a series of special plans for the commerce sector. (Bullish ★)

Fundamentals:According to SMM statistics, domestic aluminum production in October 2025 (31 days) increased by 1.13% YoY and 3.52% MoM. The traditional peak season continued in October. Although the "October peak season" was somewhat 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, rising 1.4 percentage points MoM to 77.7% this month. Based on SMM data on the proportion of liquid aluminum, domestic aluminum casting ingot volume in September decreased by 13.5% YoY and 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, with extrusion enterprises generally reporting a decrease in orders on hand, and operating rates showing a pullback trend. Last week, China's aluminum extrusion operating rate recorded 52.6%, down 0.9 percentage points WoW. Operating performances across other downstream sectors also showed varying degrees of weakness. According to SMM statistics, on Monday this week, primary aluminum ingot inventories in major domestic consumption areas recorded 627,000 mt, with an inventory buildup of 5,000 mt WoW from last Thursday. SMM expects domestic aluminum ingot inventory trends to stabilize with slight increases in the first half of November, operating around 600,000-650,000 mt.

Primary Aluminum Market:SHFE aluminum mainly fluctuated with adjustments in the morning session, hovering around 21,600 yuan/mt. In east China, spot cargo availability decreased WoW, partly due to the widening price spread between futures contracts, which increased traders' position-rolling activities, and partly because suppliers, optimistic about price trends, reduced shipments. Overall, market trading sentiment rebounded on Tuesday this week, with actual transactions at parity to a premium of 10 yuan/mt against the SMM average price. On Tuesday, the east China market selling sentiment index was 3.02, up 0.04 WoW; the purchasing sentiment index was 2.89, up 0.05 WoW. On Tuesday, SMM A00 aluminum closed at 21,620 yuan/mt, up 130 yuan/mt from the previous trading day, at a discount of 20 yuan/mt against the November contract, up 10 yuan/mt from the previous trading day. In the central China market on Tuesday, suppliers maintained selling sentiment, holding a bullish outlook and releasing goods in small, multiple batches. Downstream enterprises made just-in-time procurement, mainly based on long-term contracts, while trader buyers saw cold trading with few deals. After 9:30 a.m., unilateral dumping occurred, and market transactions continued to weaken. Final actual transaction prices ranged from a discount of 10 yuan/mt to a premium of 10 yuan/mt against the central China price. SMM central China closed at 21,510 yuan/mt, up 130 yuan/mt from the previous trading day, at a discount of 130 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, flat from the previous trading day.

Recycled Aluminum Raw Materials:On Tuesday, spot primary aluminum prices rose compared to the previous trading day, with SMM A00 spot aluminum closing at 21,620 yuan/mt. Aluminum scrap market prices followed the upward trend of aluminum prices. As the traditional peak season ended, downstream demand showed clear divergence: demand for scrap used in cast aluminum alloys remained stable, providing more consumption support, while demand for scrap used in wrought aluminum alloys began to show signs of weakening. However, tight market supply remained the main theme, keeping procurement prices high, though the sustainability of these high levels needs further observation. On Tuesday, baled UBC was quoted in a range of 16,350-16,850 yuan/mt (ex-tax), and shredded aluminum tense scrap (priced based on aluminum content) was quoted in a range of 17,800-18,450 yuan/mt (ex-tax). Baled UBC prices rose 50 yuan/mt WoW, while clean tapping aluminum wire, shredded aluminum tense scrap (priced based on aluminum content), scrap wheel hub, mechanical casting aluminum scrap, and aluminum shavings prices increased 50-150 yuan/mt WoW on Tuesday. Aluminum spot prices rose on Tuesday, with scrap aluminum prices in Shanghai, Zhejiang, Jiangsu, and Tianjin following suit, increasing by 50-150 yuan/mt. In terms of the price difference between A00 aluminum and aluminum scrap, the spread for mechanical casting aluminum scrap in Shanghai widened by 130 yuan to 2882 yuan/mt MoM, while the spread for mixed aluminum extrusion scrap free of paint in Foshan expanded by 120 yuan to 2409 yuan/mt MoM. The scrap aluminum 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 shifting up to 17900-18400 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 scrap aluminum 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, which may suppress prices; second, the implementation of environmental protection-driven production restrictions in central China and the potential risk of a pullback after a rapid rise in primary aluminum prices. If these risks materialize, the scrap aluminum market will face pressure to correct. Overall, the future scrap aluminum market will continue to exhibit a complex tug-of-war between sellers and buyers, and 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: In the spot market, SMM A00 aluminum spot prices rose by 130 yuan/mt to 21620 yuan/mt on Tuesday; in the secondary aluminum market, ADC12 prices increased by 50 yuan/mt to 21500 yuan/mt. Today, as aluminum prices rebounded, the quotations in the secondary aluminum market showed a divergent trend: some enterprises, driven by cost pressure and low inventory, actively followed the increase by 100 yuan/mt, while others maintained their quotations, mainly due to the suppression of downstream purchase willingness by high prices. Currently, the tight supply of scrap aluminum, coupled with the high prices of auxiliary materials such as copper, provides strong support on the cost side, and ADC12 prices still have upward momentum in the short term. Although there is resilience in end-use consumption, downstream procurement remains cautious given the high aluminum prices. In the short term, ADC12 prices will maintain a strong hold, and subsequent attention should be paid to the improvement in scrap aluminum supply, the effectiveness of relevant policy implementations, and changes in the procurement pace of downstream enterprises.

Summary of the Aluminum Market: The US suspension of export control penetration rules and Mexico's postponement of its plan to impose tariffs on Chinese goods have, to some extent, eased the external trade environment, which is conducive to boosting the export expectations for aluminum semis and related downstream products. Meanwhile, the Ministry of Commerce has clearly stated that more detailed measures will be introduced to boost consumption and expand openness, indicating that domestic aluminum consumption, especially in key policy-supported areas such as NEVs and green home appliances, has the potential to be further stimulated. Fundamentally, entering November 2025, winter environmental protection restrictions are expected to affect the operations of individual enterprises, but considering that electrolysis pot production cannot immediately drop to zero after shutdowns, the change in production is expected to be relatively small. Regarding the proportion of liquid aluminum, some enterprises reported that end-user demand is expected to weaken next month, and the proportion of liquid aluminum is projected to pull back, particularly in the second half of November, where expectations for a decline in the proportion of liquid aluminum are strengthening. Currently, aluminum prices are fluctuating at highs, compounded by severe smog in central China, leading to the gradual issuance of environmental protection-driven production restriction policies, which are somewhat suppressing demand. According to SMM statistics, domestic electrolytic aluminum ingot inventories in major consumption areas recorded 627,000 mt this Monday, up 5,000 mt WoW from last Thursday. SMM expects domestic aluminum ingot inventory trends to stabilize with a slight increase in the first half of November, operating around 600,000-650,000 mt. Overall, positive signals from a macro perspective have strengthened market optimism regarding the fundamentals of the aluminum market, with expectations for improved domestic and international demand jointly driving short- to medium-term price increases. However, the emergence of off-season characteristics in demand and marginal inventory buildup will limit the upside room for aluminum prices, and the pattern of short-term high volatility in aluminum prices is expected to persist.

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