7.15 SMM Aluminum Morning Meeting Minutes
Futures:The most-traded SHFE aluminum 2608 contract closed at 23,165 yuan/mt, down 45 yuan from the previous day’s settlement price, a decline of 0.19%. It opened intraday at 23,350 yuan/mt and fluctuated within a range of 23,165-23,380 yuan/mt. The price traded above MA5 (23,107.00) and MA10 (22,967.50), but below MA30 (23,493.83) and MA60 (24,101.25). Short- to mid-term moving averages were in a bearish alignment and continued to edge lower, with a pronounced overall pattern of consolidating on a subdued note; moving averages across cycles above formed layered resistance. For the MACD indicator, DIF (-256.1830) was above DEA (-340.0955), and the MACD red histogram stood at 167.8250, indicating some easing in bearish momentum. The recommended core trading range for SHFE aluminum is 22,800-23,400 yuan/mt. The LME aluminum 3M contract closed at $3,177.00/mt, up 0.32%. The price traded above MA5 (3,171.20) and MA10 (3,144.40), but below MA30 (3,294.12) and MA60 (3,446.86). Short- to mid-term moving averages were in a bearish alignment and continued to edge lower, with a pronounced overall pattern of consolidating on a subdued note; moving averages above provided clear resistance. For the MACD indicator, DIF (-77.4920) was above DEA (-95.2152), and the MACD red histogram was 35.4463, indicating some easing in bearish momentum and a slowdown in the downward trend. The recommended core trading range for LME aluminum is $3,100-3,200/mt. The MACD indicator DIFF (-102.06) crossed above DEA (-109.89) to form a golden cross; the histogram turned from green to in positive territory, bearish momentum converged, bullish momentum officially started, and a short-term rebound trend was established.
Macro front:On July 14, the US military continued to launch strikes on multiple locations in Iran, while Iran continued to carry out strikes against US military bases. US President Trump said that trade and investment agreements to be reached between Gulf countries and the US would replace the 20% fee charged on cargo shipments through the Strait of Hormuz. The US will impose a “total blockade” on Iran, and the Strait of Hormuz will be open to all vessels except those from Iran. Iran’s military stated it would never make concessions on the Strait of Hormuz issue. Iran’s parliament proposed a bill regarding security in the Strait of Hormuz. US Central Command stated that the US military had resumed, at 16:00 Eastern Time on July 14, a maritime blockade targeting vessels entering and leaving Iranian ports and coastal areas. US inflation growth in June pulled back more than expected. Data released by the US Bureau of Labor Statistics showed that in June, US CPI rose 3.5% YoY and core CPI rose 2.6%, both falling markedly from the previous reading and coming in below market expectations. US CPI fell 0.4% MoM in June, marking the first MoM decline in six years, and the drop was far larger than the market expectation of 0.1%. After the data release, traders pushed back their bets on a US Fed rate hike to October. Kevin Warsh attended his first semiannual congressional hearing after taking office as Fed Chairman. Warsh showed a tough “hawkish” stance, stating bluntly that he had “zero tolerance” for persistently high inflation over the past five years, and explicitly refuted the market view that the fight against inflation was “mission accomplished” because June CPI fell 0.4% MoM. Facing pressure from the Trump administration to cut interest rates, Warsh refused to provide forward guidance and stressed that the US Fed would continue to make independent decisions based on economic data.
Fundamentals: Markets outside China, geopolitical tensions continued to heat up, and the management issue of the Strait of Hormuz remained unresolved. Full restoration of cargo navigation was unlikely in the short term, and the geopolitical risk premium persisted. US June CPI fell 0.4% MoM, the first MoM decline in six years, and the drop far exceeded the market expectation of 0.1%. US Fed rate hikes were delayed, but the US Fed’s “hawkish” stance remained firm and is expected to maintain the tightening trend. China, in June, exports of unwrought aluminum and aluminum extrusion remained robust, with exports reaching 711,000 mt, breaking above 700,000 mt for the first time, up 12.5% MoM from 632,000 mt in June and up 45.4% YoY from 489,000 mt a year earlier.
Primary aluminum market: In early trading, the center of the SHFE aluminum 2606 contract ran above the level at the same time of the previous trading day. Affected by higher aluminum prices, today’s market buying sentiment was weak, with just-in-time procurement remaining the mainstay. Market transactions were at a discount of 10-20 yuan/mt against the SHFE aluminum 08 contract. Today, the east China market willingness to sell sentiment index was 3.08, flat MoM; the buying sentiment index was 3.16, flat MoM. With the July off-season compounded by high temperatures, the operating rate of downstream processing enterprises in central China was not high, and buying sentiment remained sluggish. However, premiums were wide, and traders’ hedging sentiment pushed discounts higher to capture the price spread. Buying sentiment was relatively strong, and suppliers were holding prices firm with a notably stronger willingness to sell, driving market discounts higher. Ultimately, the actual transaction price range in the central China market hovered at a discount of 130-170 yuan/mt against the SHFE aluminum 08 contract. Today, the central China market willingness to sell sentiment index was 2.81, down 0.02 MoM; the buying sentiment index was 2.23, up 0.01 MoM.
Aluminum scrap: Today, SMM A00 spot aluminum prices closed at 23,270 yuan/mt, up 270 yuan/mt from the previous trading day, and the aluminum scrap market rose overall by 150-200 yuan/mt. Supply-side constraints continued to intensify, and the impact of the reverse invoicing policy further deepened. News emerged in Shandong that reverse invoicing would be suspended starting in July, and production cuts and shutdowns spread among small and mid-sized scrap utilization enterprises in Anhui, Jiangxi, Hubei, and other regions, further increasing the scarcity of compliant, invoiced aluminum scrap. Imports: Due to the earlier inversion in the price spread between Chinese and overseas markets, high-quality supply outside China became scarce. With a 1–3 month shipping lag, port arrivals from June to August remained at low levels. Meanwhile, the UAE’s ban on aluminum scrap exports and the EU’s tariff hike policy further intensified the contraction in overseas aluminum scrap supply. The aluminum scrap market was expected to continue a narrow-range, sideways pattern this week, with demand suppression and cost support. The mainstream trading range for shredded aluminum tense scrap (priced based on aluminum content) was expected to hover between 19,900 and 20,500 yuan/mt. A pullback in spot primary aluminum prices meant the price difference between A00 aluminum and aluminum scrap narrowed again, but with limited room to tighten further. The relative cost advantage of aluminum scrap versus primary aluminum was unlikely to disappear in the short term, and demand-side support for aluminum scrap prices remained. If aluminum prices continue to decline further, the substitution effect of primary aluminum replacing aluminum scrap will accelerate.
Secondary aluminum alloy: Spot: Today, pricing adjustment intentions in the ADC12 market diverged. Rising costs prompted some enterprises to attempt to follow the increase, while others still chose to keep quotations temporarily stable. As the traditional consumption off-season atmosphere intensified, downstream orders and transactions remained weak, and price increases faced some resistance. Against the backdrop of insufficient demand support, enterprises overall mainly stayed on the sidelines and shipped at stable prices. In the short term, ADC12 spot prices were expected to remain characterized by both cost support and demand suppression, with sideways movement as the main trend.
Aluminum Market Summary: Risk premiums from recurring Middle East geopolitical conflicts remained, and the June US CPI fell MoM, while expectations for US Fed interest rate hikes were delayed, supporting aluminum prices to hold up well. However, continued commissioning of overseas aluminum capacity will keep weighing on upside room, with clear pressure on the upside. Overall, in the short term, aluminum prices were expected to consolidate on a strong note while encountering resistance.
[The information provided is for reference only. This article does not constitute direct advice for investment research decisions. Clients should make decisions prudently and should not use this as a substitute for independent judgment. Any decisions made by clients are unrelated to SMM.]
