Capital Inflows Drive Up SHFE Aluminum Futures, Most-Traded SHFE Aluminum Contract Breaches 22,000 Mark [SMM Aluminum Price Weekly Review]

SMM November 13 News:

On the macro front, a favorable atmosphere is strong. Domestically, the Ministry of Commerce pointed out that more detailed measures should be introduced in 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 co-construction of the "Belt and Road." The National Bureau of Statistics announced that in October, policies to expand domestic demand continued to show effects, coupled with the boost from the National Day and Mid-Autumn Festival long holidays, CPI rose 0.2% MoM and 0.2% YoY; core CPI, excluding food and energy prices, increased 1.2% YoY, marking the 6th consecutive month of expansion. Overseas, the US announced a suspension of the implementation of export control penetration rules from November 10, 2025, to November 9, 2026. The Ministry of Commerce responded, noting this as an important move by the US to implement the consensus reached during the Sino-US Kuala Lumpur economic and trade consultations. Mexico's plan to impose tariffs on China has been postponed again, with the earliest review scheduled for December in Congress. Additionally, the US Treasury Secretary stated in an interview that real incomes in the US are expected to rebound in the first and second quarters of next year. The government is discussing a plan to provide a "$2,000" tariff dividend to households with annual incomes below $100,000, but no final decision has been made. He reiterated that a "substantial" tax refund will be issued at the beginning of 2026.

Fundamentals side, domestic aluminum supply remains stable. Overseas, an Icelandic aluminum plant announced production cuts due to electrical equipment failure, and a Mozambican aluminum plant faces the risk of production cuts or shutdowns due to a lack of agreement on energy contracts. These events have led to expectations of tightening aluminum supply, affecting market sentiment. Regarding the proportion of liquid aluminum, SMM's weekly ratio of liquid aluminum recorded 77.25%, down 0.5 percentage points MoM. On one hand, some sectors are transitioning from peak to off-season, leading to a marginal weakening in operating rates. On the other hand, with aluminum prices surging, processing fees are under pressure, causing some processing enterprises to cut production, while enterprises supplying liquid aluminum increase casting ingot production. This week, some aluminum rod enterprises experienced concentrated production cuts due to inventory accumulation, falling processing fees, and capital occupation pressures.

In summary, currently, the macro perspective is highly positive, and overseas supply expectations are tightening, providing bullish momentum. A large influx of funds into SHFE aluminum futures gives further upward momentum to aluminum prices. As of the afternoon close on November 13, the total open interest of SHFE aluminum futures reached over 827,000 lots, with the most-traded SHFE aluminum contract breaking through 22,000 yuan/mt. Bearish funds remain in a wait-and-see state, not yet finding the right opportunity to enter the market. However, the domestic fundamentals do not provide sufficient support for aluminum prices to continue rising sharply. The proportion of liquid aluminum pulled back this week, and persistently high prices are expected to suppress end-use consumption. Spot procurement sentiment among downstream processors remained weak this week, and downstream operating rates will need to be closely monitored going forward. It is expected that SHFE aluminum will trade in the range of 21,700–22,400 yuan/mt next week, while LME aluminum is projected to trade between $2,850–$2,950/mt.

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