Macro Sentiment Dominates Marginal Improvement in Fundamentals, Aluminum Prices Expected to Fluctuate at Highs in Short Term [SMM Aluminum Morning Meeting Minutes]

December 1 SMM Morning Meeting Minutes

Futures:During the night session on November 28, the most-traded SHFE aluminum 2601 contract opened at 21,615 yuan/mt, reached a highest price of 21,800 yuan/mt, a lowest price of 21,575 yuan/mt, and finally closed at 21,780 yuan/mt, up 0.79%. After the night session opened, prices rose rapidly, hitting a high of 21,800 yuan/mt, then fluctuated above 21,700 yuan/mt. Technical analysis showed the MA moving averages were arranged divergently (MA5: 21,587.00 > MA10: 21,505.00 < MA20: 21,514.25 < MA40: 21,604.38). The MACD 4-hour candlestick level showed expanding red bars, indicating a recovery in the golden cross state (DIFF: 6.19, DEA: -15.13). Open interest during the night session was approximately 265,000 lots, increasing slightly from the daytime session. In terms of trend, the SHFE aluminum 2601 contract was temporarily in a high-level consolidation channel. Considering recent highs and lows, the resistance level was expected to be in the 21,800-22,000 range, with support in the 21,500-21,600 range. LME aluminum opened at $2,830/mt, reached a high of $2,879.5/mt, a low of $2,826.5/mt, and finally closed at $2,865/mt, up 1.18%. Trading volume was 19,600 lots, an increase of 3,822 lots, while open interest was 702,000 lots, an increase of 1,950 lots.

Macro Front:Data released by the National Bureau of Statistics (NBS) showed the manufacturing PMI for November was 49.2%, up 0.2 percentage points from the previous month, indicating some improvement in the level of prosperity. (Bullish ★) On the local time of November 30, US Secretary of State Rubio stated after a new round of US-Ukraine negotiations held that day that the talks with the Ukrainian side were "productive," but there was still much work to be done. (Bullish ★) European Central Bank President Christine Lagarde recently stated that borrowing costs in the Eurozone are currently at an appropriate level, and the central bank's policy stance is good. (Bullish ★)

Fundamentals:Inventory: On Monday, inventory of aluminum ingots in mainstream domestic consumption areas recorded 596,000 mt, flat from last Thursday, but showed a destocking of 17,000 mt compared to last Monday. According to SMM statistics, China's metallurgical-grade alumina production in November 2025 (30 days) fell 4.44% MoM, but increased 1.36% YoY. By the end of November, China's metallurgical-grade alumina existing capacity was around 110.32 million mt, while the actual operating capacity fell 1.26% MoM, with an operating rate of 82.04%. Domestic aluminum production in November 2025 (30 days) increased 1.47% YoY, but decreased 2.82% MoM. Starting in November, aluminum gradually transitioned from the peak consumption season to the off-season. Downstream operating rates showed a declining trend, and the proportion of liquid aluminum decreased. The industry's proportion of liquid aluminum dropped 0.5 percentage points MoM to 77.3% this month.

Primary Aluminum Market:SHFE aluminum's most-traded December contract mainly fluctuated upward, with its price center slightly lifted, but showed no significant difference compared with last Thursday's morning session. In east China, holders maintained active sales for capital return. Approaching the weekend, downstream stocking increased. Last Friday's actual transaction prices were at a discount of 10 yuan/mt to the SMM average price or around the average. Last Friday, the sales sentiment index in the east China market was 2.85, down 0.07 WoW; the purchasing sentiment index was 2.75, down 0.03 WoW. On November 28, SMM A00 aluminum was quoted at 21,450 yuan/mt, down 10 yuan/mt from the previous trading day, at a discount of 40 yuan/mt against the December contract, flat from the previous trading day. Last Friday, trading in the central China market was relatively sluggish. However, as aluminum prices saw a narrow correction, purchasing sentiment slightly rebounded, and market trading volume increased. The off-season theme was evident by the end of November, with traders' transaction volumes being low. Holders were unwilling to sell at low prices, focusing mainly on long-term contract deliveries. Ultimately, transaction prices in the market ranged from a premium of 10 yuan to a discount of 10 yuan against the central China price. Last Friday, the sales sentiment index in the central China market was 2.94, flat WoW; the purchasing sentiment index was 2.82, up 0.01 WoW. SMM's central China price closed at 21,330 yuan/mt, down 10 yuan/mt from the previous trading day, at a discount of 160 yuan/mt against the December contract, flat from the previous trading day. The price spread between Henan and Shanghai was -120 yuan/mt, flat from the previous trading day.

Recycled Aluminum Raw Materials:Last Friday, spot primary aluminum prices saw a slight correction compared to the previous trading day, with SMM A00 spot aluminum closing at 21,450 yuan/mt, while the aluminum scrap market was largely stable. 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, and some scrap-consuming enterprises in Shandong reported that raw material procurement was characterized by "price without market." In contrast, 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. Last Friday, baled UBC was centrally quoted at 16,275-16,575 yuan/mt (ex-tax), and shredded aluminum tense scrap (priced based on aluminum content) was centrally quoted at 18,000-18,650 yuan/mt (ex-tax). Prices for baled UBC, clean tapping aluminum wire, mixed aluminum extrusion scrap free of paint, mechanical casting aluminum scrap, scrap motorcycle wheel, and mixed aluminum tense scrap were stable WoW. Regarding the price difference between primary aluminum and scrap: the price difference between A00 aluminum and mixed aluminum extrusion scrap free of paint in Foshan was 2,386 yuan/mt; the price difference between A00 aluminum and bare bright aluminum wire in Jiangsu was 863.8 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 pattern in the aluminum scrap market is difficult to change in the short term. However, as primary aluminum prices fluctuate at highs, market fear of high prices may intensify, and the willingness of aluminum scrap prices to follow the rise in some regions may weaken. Overall, the market is expected to continue the tug-of-war between sellers and buyers at high levels, and it is advisable to closely track the price trend of primary aluminum and the procurement strategy adjustments of downstream enterprises.

Secondary Aluminum Alloy:Last Friday, the most-traded cast aluminum alloy futures contract 2601 opened at 20,630 yuan/mt, hit a high of 20,785 yuan/mt, and by the midday close, it closed at 20,770 yuan/mt, up 90 yuan/mt or 0.44% from the previous close. Trading volume was 2,707 lots, and open interest was 4,720 lots, with bears mainly reducing their positions. In the spot market, last Friday, the SMM A00 aluminum spot price edged down 10 yuan/mt from the previous trading day to 21,450 yuan/mt, while the ADC12 price held steady at 21,350 yuan/mt. This week, the fluctuation range of aluminum prices narrowed, aluminum scrap prices followed with minor adjustments, and prices of auxiliary materials such as silicon remained stable, resulting in limited marginal changes in comprehensive costs. However, the core tight supply situation for aluminum scrap has not seen substantial improvement. On the demand side, as price trends stabilized, downstream procurement sentiment improved somewhat. Additionally, automakers' push for annual targets at year-end boosted demand, and secondary aluminum enterprises reported full order books in the automotive sector, effectively supporting the resilience of secondary aluminum market demand. Overall, the effects of year-end demand pushes and front-load orders due to policy changes continue to manifest, coupled with support from high raw material costs. It is expected that secondary aluminum alloy prices will maintain narrow fluctuations in the short term, with price resilience remaining. On the import front, the current overseas ADC12 quotation range remains at $2,600–2,630/mt, with the immediate import loss holding steady around 500 yuan/mt, and the import window remains closed.

Aluminum Market Summary:On the macro front, macro sentiment both domestically and overseas tilted favorable. Expectations heated up that Trump would nominate a dove for Fed Chairman, boosting market optimism for a December interest rate cut. Simultaneously, after the US federal government ended a record 43-day shutdown, the backlog of economic data was gradually released, also alleviating market concerns about the uncertainty from missing data. Foreign institutions widely predict that the Chinese economy will maintain steady growth next year with policy support, enhancing market confidence. Fundamentally, previous aluminum price suppression on consumption led to some demand being postponed. Last week, the weekly operating rate of leading domestic aluminum processing enterprises increased slightly by 0.3% WoW to 62.3%, with operating rates in aluminum extrusion, aluminum wire and cable, and primary and secondary aluminum alloy segments showing varying degrees of improvement. Overall, fundamentals provide some support for prices. Recently, aluminum prices were mainly influenced by macro sentiment fluctuations. Overseas, the progress of production cuts at the Iceland aluminum plant remains a key focus. SMM expects the pattern of aluminum prices fluctuating at highs to remain unchanged in the near term.

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