7.16 SMM Aluminum Morning Meeting Minutes
Futures: The most-traded SHFE aluminum 2608 contract closed at 23,090 yuan/mt, down 135 yuan from the previous day’s settlement price, a decline of 0.58%. It opened at 23,120 yuan/mt intraday and fluctuated within the range of 23,090–23,190 yuan/mt. Prices traded above MA5 (23,116.00) and MA10 (23,038.00), but below MA30 (23,444.33) and MA60 (24,060.67). Short- and mid-term moving averages were in a bearish alignment and continued to edge lower. The overall structure of consolidating on a subdued note was pronounced, with moving averages across cycles forming layered overhead resistance. For the MACD indicator, DIF (-236.1753) was above DEA (-319.1200), and the MACD red histogram stood at 165.8894, indicating some easing in bearish momentum. The suggested core trading range for SHFE aluminum was 22,800–23,300 yuan/mt. The LME aluminum 3M contract closed at $3,153.00/mt, up 0.00%. Prices traded above MA10 (3,149.00), but below MA5 (3,154.90), MA30 (3,276.05), and MA60 (3,440.16). Short- and mid-term moving averages were in a bearish alignment and continued to edge lower. The overall structure of consolidating on a subdued note was pronounced, with moving averages forming clear overhead resistance. For the MACD indicator, DIF (-74.6714) was above DEA (-91.4128), and the MACD red histogram was 33.4827, indicating some easing in bearish momentum and a slowdown in the downward trend. The suggested core trading range for LME aluminum was $3,100–$3,250/mt.
Macro Front: In H1 this year, China’s total GDP reached 69.57 trillion yuan, up 4.7% YoY. Among this, Q1 grew 5% and Q2 grew 4.3%. Total retail sales of consumer goods and services grew 2.7% YoY, value-added output of the services sector increased 5.2%, and value-added output of industrial enterprises above designated size increased 5.4%. In H1, China’s fixed-asset investment fell 5.7% YoY, with real estate development investment down 18% and the floor space of commercial buildings sold down 11.6%. At end-June, the area of commercial housing pending sale fell 0.9% YoY, marking declines for four consecutive months. US President Trump convened an emergency meeting to discuss plans for a large-scale attack on Iran, with the core topic being “a new plan to deliver devastating strikes on Iran’s strategic targets.” Iran’s Deputy Foreign Minister Gharibabadi said Iran had never left the negotiating table; it was the US that tore up the memorandum of understanding, and Iran would never be the first to bow its head and request negotiations with the US. US Central Command released a statement saying that at 3:00 p.m. US Eastern Time on July 15, the US military, acting on instructions from US President Trump, launched the second wave of strikes of the day against Iran, aimed at destroying relevant Iranian military facilities used to threaten freedom of navigation through the Strait of Hormuz. Fed Chairman Kevin Warsh testified before Congress for the first time since taking office. Over two days, his remarks and Q&A covered multiple areas of market concern. Warsh acknowledged that the June CPI and PPI data improved, but noted that inflation indicators cannot perfectly reflect underlying inflation conditions. Warsh declared “zero tolerance” for inflation and firmly committed to restoring price stability. Although he did not explicitly state that monetary policy would be tightened, he said options to curb inflation included using interest rates.
Fundamentals: Markets outside China: Geopolitical conflicts intensified. The US-Iran talks were currently suspended, expectations for the resumption of strait navigation slowed, and a geopolitical risk premium remained. Fed Chairman Warsh acknowledged that the June CPI and PPI data improved, but noted that inflation indicators cannot perfectly reflect underlying inflation conditions. Although he did not explicitly state that monetary policy would be tightened, he did not rule out the possibility of using interest rates later to curb inflation, and the pace of US Fed rate hikes was expected to slow. Chinese market: Although China’s GDP in H1 reached 6.957 billion yuan, up 4.7% YoY, property data remained weak, and aluminum semis on the traditional construction side remained under pressure. Domestic inventory: As of this Thursday, aluminum ingot inventory in China’s major consumption areas stood at 1.024 million mt, down 23,000 mt from Monday; down 54,000 mt from last Thursday on a WoW basis, with the mid-week destocking pace slowing.
Primary Aluminum Market: In early trading, the center of the SHFE aluminum 2606 contract was below the level at the same time in the previous trading day. Affected by the off-season, today’s market purchasing sentiment stayed weak, mainly just-in-time procurement, while circulating supply was ample. Transactions were concluded at a discount of 10-20 yuan/mt against the SHFE aluminum 08 contract. Today’s east China shipments sentiment index was 3.11, up 0.03; the purchasing sentiment index was 3, down 0.16. Today, overall trading sentiment in central China softened compared with the previous two days. Some downstream processing enterprises began purchasing small volumes today, but traders’ hedging sentiment declined significantly from recent days, procurement volume decreased, and some suppliers slightly lowered their shipment offers. In the end, the actual transaction price range in central China hovered at a discount of 150-170 yuan/mt against the SHFE aluminum 08 contract. Today’s central China shipments sentiment index was 2.8, down 0.02; the purchasing sentiment index was 2.22, down 0.01.
Secondary Aluminum Materials: Today, SMM A00 spot aluminum prices closed at 23,180 yuan/mt, down 90 yuan/mt from the previous trading day, while the aluminum scrap market was overall steady. For the price difference between A00 aluminum and aluminum scrap, on July 15, the price difference between A00 aluminum and mixed aluminum extrusion scrap free of paint in Foshan stood at 2,072 yuan/mt, and the price difference between A00 aluminum and shredded aluminum tense scrap was 758 yuan/mt. Supply-side constraints continued to tighten, and the impact of the reverse invoicing policy further deepened. News emerged in Shandong that reverse invoicing would be suspended starting in July. Production cuts and suspensions spread among small and medium-sized scrap utilization enterprises in Anhui, Jiangxi, Hubei, and other regions, further increasing the scarcity of compliant, invoiced aluminum scrap. On the import side, due to a 1-3 month shipping lag, the scarcity of high-quality overseas supply caused earlier by the inverted price spread between Chinese and overseas markets kept port arrivals at low levels from June to August. Meanwhile, the UAE’s ban on aluminum scrap exports and the EU’s tariff hike policy further strengthened the contraction effect on overseas aluminum scrap supply. The aluminum scrap market was expected to continue moving sideways within a narrow range this week, characterized by demand suppression and cost support. The mainstream trading range for shredded aluminum tense scrap (priced based on aluminum content) was around 19,900-20,500 yuan/mt. The pullback in spot primary aluminum prices led to only limited renewed narrowing in the price difference between A00 aluminum and aluminum scrap. The relative economic advantage of aluminum scrap versus primary aluminum was unlikely to disappear in the short term, and the demand side still provided price support for aluminum scrap. If aluminum prices continue to fall further, the substitution effect of primary aluminum replacing aluminum scrap will accelerate.
Secondary aluminum alloy:Spot market: Today, overall ADC12 market quotations held steady. The pullback in aluminum prices was limited, and the cost side lacked a clear driver for price adjustments. Meanwhile, downstream demand remained weak, order releases were insufficient, market trading was subdued, and wait-and-see sentiment was strong. Against the dual backdrop of limited cost support and weak demand, the market generally maintained stable pricing. In the short term, ADC12 prices were expected to continue moving sideways within a narrow range.
Overall outlook: Escalating geopolitical conflict in the Middle East, coupled with delayed expectations for US Fed interest rate hikes, supported aluminum prices holding up well. However, continued additions of overseas aluminum capacity and weak demand for construction aluminum semis in China will cap upside room in aluminum prices, with clear resistance on the upside. Overall, aluminum prices were expected to consolidate on a strong note in the short term while encountering resistance to rise.
[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.]
