[Night Session SHFE Aluminum Rises Over 2%, Breaking Through 24,100 yuan/mt Multiple Positive Factors Support Aluminum Prices to Hold Up Well in the Short Term [SMM Aluminum Morning Conference Summary]

January 6 SMM Morning Meeting Minutes

Futures: During the night session on January 5, the most-traded SHFE aluminum 2602 contract opened at 23,560 yuan/mt, reached a high of 24,280 yuan/mt, touched a low of 23,500 yuan/mt, and finally closed at 24,165 yuan/mt, up 520 yuan/mt or 2.20% from the previous close. From a technical perspective, the MA moving averages showed a bullish alignment (MA5: 23,183.00 > MA10: 22,803.50 > MA20: 22,497.75 > MA40: 22,263.38), and the MACD 4-hour candlestick level continued to show a red bar (DIFF: 359.33, DEA: 195.19). In terms of open interest, the night session open interest was approximately 265,000 lots, an increase of 3,613 lots from the daytime session. LME aluminum opened at $3,024/mt, reached a high of $3,093/mt, touched a low of $3,023.5/mt, and finally closed at $3,090/mt, up 2.28% from the previous day. Trading volume was 38,800 lots, an increase of 17,710 lots, while open interest was 682,000 lots, a decrease of 2,431 lots.Macro Front: On the afternoon of January 5, President Xi Jinping held talks with South Korean President Lee Jae-myung, who was on a state visit to China, at the Great Hall of the People in Beijing. Xi emphasized that the Chinese and South Korean economies are closely linked, with deeply embedded industrial and supply chains, and that cooperation is mutually beneficial. He called for enhanced strategic alignment and policy coordination to expand the pie of common interests and achieve more cooperative outcomes in emerging fields such as artificial intelligence, the green industry, and the silver economy. (Bullish ★) US manufacturing activity contracted more than expected in December, remaining in contraction for the 10th consecutive month. The Institute for Supply Management (ISM) said on Monday that new orders declined again and input costs continued to rise as the manufacturing sector continued to be affected by Trump's import tariffs. (Bearish ★) The US dollar index earlier hit its highest level since December 10, but then pulled back, ending the session down 0.3% at 98.262. The dollar index fell 1.2% in December, its weakest monthly performance since August. According to calculations, traders currently expect two interest rate cuts in the US this year. (Bullish ★)

Fundamentals: According to SMM data, the average tax-inclusive full cost for China's aluminum industry in December 2025 increased 0.7% MoM but decreased 23.3% YoY. During the period, raw material costs for alumina decreased, but power costs and auxiliary material costs rose, leading to a MoM increase in total costs. The Passenger Car Association posted on the 5th that sales in China's passenger NEV market are expected to grow by about 25% in 2025. Based on comprehensive preliminary monthly association data: from December 1 to 31, national passenger vehicle producers' NEV wholesale sales reached 1.57 million units, up 4% YoY but down 8% MoM.

Primary Aluminum Market: In early trading, the SHFE aluminum 2601 contract rose significantly, with the price center higher than the previous trading day. Overall, market trading volume rose as year-end closing concluded, but the upward trend in sentiment was limited by rising SHFE aluminum prices. On Monday, mainstream transaction prices mainly ranged from a discount of 10 yuan/mt to parity against the SMM average price. The selling sentiment index in east China was 2.08, up 0.09 WoW, while the purchasing sentiment index was 2.15, up 0.04 WoW. SMM A00 aluminum was quoted at 23,310 yuan/mt, up 850 yuan/mt from the previous trading day, at a discount of 220 yuan/mt against the 2601 contract, down 10 yuan/mt from the previous trading day. On Monday, aluminum prices surged rapidly, but trading sentiment in central China remained sluggish. Downstream processing enterprises resumed operations after environmental protection-driven production restrictions ended, yet high absolute aluminum prices led to weak demand. Some companies had restocked slightly during the New Year holiday and were currently focused on consuming inventory, resulting in low trading volume. Traders purchased for hedging purposes, with buyers preferring large discounts, while major holders held prices firm on bullish views. Ultimately, actual transaction prices in central China ranged from a premium of 10 yuan/mt to a discount of 30 yuan/mt against the central China price. The selling sentiment index in central China was 2.49, down 0.18 WoW, while the purchasing sentiment index was 1.96, up 0.46 WoW. SMM central China aluminum price closed at 23,080 yuan/mt, up 840 yuan/mt from the previous trading day, at a discount of 450 yuan/mt against the 2601 contract, down 20 yuan/mt from the previous trading day. The price spread between Henan and Shanghai was -230 yuan/mt, down 10 yuan/mt from the previous trading day.

Recycled Aluminum Raw Materials:On Monday, spot primary aluminum prices rose from the previous trading day, with SMM A00 spot closing at 22,460 yuan/mt, and the aluminum scrap market followed the upward trend. Some scrap utilization enterprises reported high inventory of wrought aluminum alloy scrap accumulated during the peak season, coupled with insufficient orders on hand to hedge raw material inventory, leading to a temporary slowdown in procurement pace for related scrap. As 2026 approaches, the implementation of resource recycling policies still faces obstacles, with issues such as natural persons and invoice limits remaining unresolved. Some recycling enterprises have already chosen to pass additional tax burdens to the aluminum scrap supply side, increasing the risk of downward pressure on aluminum scrap prices. On Monday, baled UBC was quoted at 16,800-17,200 yuan/mt (ex-tax), while shredded aluminum tense scrap (priced based on aluminum content) was quoted at 18,400-18,900 yuan/mt (ex-tax). Prices in Shanghai, Zhejiang, Jiangsu, Tianjin, and Shandong increased by 200-300 yuan/mt on Monday, while prices in Guizhou, Henan, Jiangxi, and Hubei rose by 100 yuan/mt or remained largely stable. Regarding 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 3,084 yuan/mt on December 31, and the price difference between A00 aluminum and shredded aluminum tense scrap was 2,009 yuan/mt. Domestic aluminum scrap prices are expected to hover at highs around the New Year holiday, but caution is advised against potential corrections from elevated levels. Supply side, the issue of tax burden shifting further affected the market supply structure. Demand side, stocking demand from secondary aluminum alloy enterprises ahead of the Chinese New Year continued to support procurement of aluminum tense scrap, but signs of slowing demand from downstream die-casting enterprises became increasingly evident, coupled with wait-and-see sentiment due to aluminum price fluctuations, leading to a decline in overall demand support for prices. Policy-wise, uncertainty from repeated environmental protection-driven production restrictions in central China and Chongqing continued to suppress local demand in the short term. Price-wise, the center for shredded aluminum tense scrap (priced based on aluminum content) hovered at 18,200–18,700 yuan/mt (tax excluded). Short-term focus should be on signals of the easing of environmental protection-driven production restriction policies, changes in procurement pace of downstream enterprises, and the impact of tax burden shifting on price floors.

Secondary Aluminum Alloy:Futures side, on Monday, the most-traded cast aluminum alloy contract 2603 opened at the day's low of 21,875 yuan/mt. After opening, the price quickly surged to 22,695 yuan/mt, approaching a 4.97% gain at one point, then pulled back slightly and finally settled at 22,520 yuan/mt, up 665 yuan/mt or 3.04% from the previous close. Trading volume was 11,820 and open interest was 18,299, with both volume and open interest increasing simultaneously, signaling clear bullish position building. The candlestick showed a large bullish breakout pattern, with moving averages providing strong support. Spot market, on Monday, aluminum and copper prices continued to rise sharply, again hitting multi-year highs. Among them, the SMM A00 aluminum price surged 850 yuan/mt in a single day to 23,310 yuan/mt, driving up raw material costs for secondary aluminum. The SMM ADC12 price followed with a 650 yuan/mt increase to 23,100 yuan/mt. Post-holiday market activity resumed, but downstream demand remained weak in the face of sharp raw material price increases. Die-casting enterprises, squeezed by both order reductions and high raw material prices, adopted a cautious procurement approach with strong risk aversion, mainly restocking based on immediate needs, resulting in sluggish trading activity. Overall, although the secondary aluminum market has support from costs and supply, weak downstream demand coupled with market fear of high prices is likely to cap further price increases. In the short term, ADC12 prices are expected to fluctuate at highs. Import side, current overseas ADC12 offers surged to the range of $2,780–2,820/mt, with gains larger than in the domestic market, causing real-time import profits to shrink sharply to less than 100 yuan/mt.

Aluminum Market Summary:Expectations for US Fed interest rate cuts continued to dominate the logic of a monetary easing cycle, providing strong support for nonferrous metal prices; a rebound in global risk appetite further improved the macro environment, helping aluminum prices break through previous trading ranges and rise sharply. Domestically, the fiscal work conference clarified that 2026 would see expanded fiscal spending and efforts to boost domestic consumption demand, with a focus on areas related to new quality productive forces; coupled with the implementation of the 2026 national subsidy plan and the allocation of supporting funds, policy efforts are concentrated on trade-in programs for consumer goods. From a medium and long-term perspective, this is expected to continuously drive the release of downstream demand for aluminum, building a solid policy cushion expectation for industry demand. However, the demand side was significantly impacted by high-price suppression and environmental protection-driven production restrictions. In December, the operating rate of leading downstream processing enterprises declined, and the proportion of liquid aluminum dropped 0.8 percentage points MoM to 76.5%, while end-use consumption showed a seasonal weakening trend. Overall, although the reality of pressured fundamental consumption and continuously accumulating inventory has exerted some downward pressure on the sustained rise in aluminum prices, strong macro policy expectations and geopolitical risk fluctuations have provided solid support for the upward movement of aluminum prices. SMM expects aluminum prices to hold up well in the short term.

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