Expectations for US Fed Interest Rate Cuts Rise Again, Aluminum Prices Hover at Highs [SMM Aluminum Morning Meeting Minutes]

SMM Morning Meeting Minutes for 11.25

Futures: On the night session of November 24, the SHFE aluminum 2601 contract opened at 21,415 yuan/mt. After a slight dip below 21,385 yuan/mt, prices quickly rebounded, hitting a high of 21,430 yuan/mt, and finally closed at 21,405 yuan/mt, up 0.12%. In terms of fluctuation pace, night session prices did not fall below the daytime session low of 21,295 yuan/mt, indicating strong support at that level. Meanwhile, the daytime session high of 21,455 yuan/mt formed a short-term resistance, which the night session failed to break through, showing rangebound fluctuations. LME aluminum opened at $2,802.5/mt, reached an intraday high of $2,817.5/mt, fell to a low of $2,796/mt, and closed at $2,813/mt, up 0.18% from the previous close. Trading volume was 14,800 lots, and open interest increased by 830 lots to 695,000 lots.

Macro Front: The central bank announced that to maintain ample liquidity in the banking system, the People's Bank of China will conduct a 1,000 billion yuan MLF operation on November 25, 2025, with a 1-year term, using a fixed quantity, interest rate tender, and multiple price bidding method. (Bullish ★) On the evening of November 24, President Xi Jinping spoke with US President Trump by phone. Xi elaborated on China's principled stance on the Taiwan issue, emphasizing that Taiwan's return to China is an important part of the post-war international order. China and the US once fought side by side against fascism and militarism, and should now jointly safeguard the outcomes of WWII victory. Trump stated that China played a significant role in the WWII victory and that the US understands the importance of the Taiwan issue to China. (Neutral) Fed Governor Waller said he advocates for an interest rate cut in December and indicated that September employment data might be revised downward. (Bullish ★)

Fundamentals: Inventory-wise, according to SMM statistics, the combined inventory of aluminum ingots in three domestic regions totaled 461,000 mt on November 24, up 3,500 mt from the previous period. Meanwhile, the combined inventory of aluminum billets in two regions was 90,000 mt, destocking 3,000 mt from the previous period.

Primary Aluminum Market: The SHFE aluminum 12 contract mainly fluctuated during the early session, with the price center hovering around 21,360 yuan/mt. In east China, aluminum ingot destocking continued over the weekend. Holders quoted at parity to a premium of 10 yuan/mt against the SMM average price around the opening, but amid the off-season atmosphere, downstream purchasers preferred discounts. Actual transactions were mainly at parity against the SMM average price, with subsequent transactions slightly weakening, and sporadic deals occurred at discounts of 10~5 yuan/mt. This Monday, the east China market selling sentiment index was 3.09, down 0.02 WoW; the purchasing sentiment index was 3.06, down 0.04 WoW. SMM A00 aluminum was quoted at 21,360 yuan/mt, down 20 yuan/mt from the previous trading day, at parity against the December contract, unchanged from the previous trading day. Trading in the central China market remained sluggish on Monday this week. Before the market opened, large holders sold off substantial volumes, but downstream buying sentiment was weak, and traders faced poor sales. Prices continued to decline from parity against the central China price before opening to a discount of 20 yuan against the central China price, with trading volume showing no improvement. The selling sentiment index in the central China market on Monday this week was 2.97, up 0.01 WoW; the purchasing sentiment index was 2.92, down 0.02 WoW. SMM central China price closed at 21,260 yuan/mt, down 30 yuan/mt from the previous trading day, at a discount of 100 yuan/mt against the December contract, down 10 yuan/mt from the previous trading day. The Henan-Shanghai price spread was -100 yuan/mt, down 10 yuan/mt from the previous trading day.

Recycled Aluminum Raw Materials:Spot primary aluminum prices fell on Monday this week compared to the previous trading day, with SMM spot A00 aluminum closing at 21,360 yuan/mt, while the aluminum scrap market overall held steady. Entering late November, downstream demand for aluminum scrap showed significant divergence: demand for scrap used in cast aluminum alloys remained robust with a slight increase, providing more support for consumption, while demand for scrap used in wrought aluminum alloys began to show signs of weakening. However, tight market supply remained the dominant theme, keeping procurement prices high. On Monday this week, baled UBC scrap was mainly quoted in the range of 16,000-16,500 yuan/mt (tax excluded), and shredded aluminum tense scrap (priced based on aluminum content) was mainly quoted in the range of 18,000-18,500 yuan/mt (tax excluded). Clean tapping aluminum wire, shredded aluminum tense scrap (priced based on aluminum content), scrap wheel hubs, mechanical casting aluminum scrap, and aluminum shavings held steady WoW, while baled UBC in South China rose 100 yuan/mt WoW. In terms of the price difference between A00 aluminum and aluminum scrap, the price difference between A00 aluminum and mixed aluminum extrusion scrap free of paint in Foshan was 2,501 yuan/mt, and the price difference between A00 aluminum and bare bright aluminum wire in Jiangsu was 881.3 yuan/mt. The aluminum scrap market is expected to hover at highs this week, with the mainstream price range for shredded aluminum tense scrap (priced based on aluminum content) likely fluctuating between 17,800-18,600 yuan/mt. Supply side, the tight supply-demand pattern in the aluminum scrap market is difficult to change in the short term, but as primary aluminum prices fluctuate at highs, fear of high prices may intensify, and the willingness to follow price increases in some regions may weaken. Overall, the market will continue the high-level tug-of-war between sellers and buyers, and it is recommended to closely track primary aluminum price trends and procurement strategy adjustments of downstream enterprises.

Secondary Aluminum Alloy:The most-traded aluminum alloy futures contract 2601 opened at 20,690 yuan/mt on Monday this week, fluctuated upward in the morning session to hit the intraday high of 20,690 yuan/mt, then dropped back slightly, and closed the morning session at 20,535 yuan/mt, up 75 yuan/mt or 0.36% from the previous trading day, with the futures movement mainly driven by short covering. The current market maintains a consolidation pattern, with the previous upward trend unchanged. In the short term, focus on the support level at 20,535 yuan/mt and the resistance level at 20,690 yuan/mt, waiting for further rebound signals. On Monday, the domestic aluminum market showed a narrow-range adjustment trend. The SMM A00 aluminum spot price was quoted at 21,360 yuan/mt, down 20 yuan/mt from the previous trading day. In the secondary aluminum market, ADC12 prices held steady at 21,350 yuan/mt, while most aluminum scrap prices on the raw material side remained flat, with stable trading activity in the market. In the short term, ADC12 prices have limited downside room supported by costs and supply, but the decline in aluminum prices and cautious demand are suppressing rebound momentum. ADC12 is expected to move sideways in the range of 21,200–21,500 yuan/mt in the near term. On the import side, overseas ADC12 quotations remained flat in the range of $2,600–2,630/mt, with immediate import losses widening to above 500 yuan/mt, keeping the import window closed.

Aluminum Market Summary:Overall, on the macro front, the US Fed's monetary policy showed divergence, with overseas macro sentiment leaning cautious; the central bank conducted a 1,000 billion yuan MLF operation, providing favorable domestic macro conditions. Previous aluminum price levels had suppressed consumption, delaying some demand, while fundamentals provided some support for prices. Overseas, the progress of production cuts at the Icelandic aluminum plant remains a key focus. Aluminum prices are expected to hover at highs in the short term.

[The information provided is for reference only. This article does not constitute direct investment research or decision-making advice. Clients should make decisions cautiously and not use this to replace independent judgment. Any decisions made by clients are unrelated to SMM.]