7.21 SMM Aluminum Morning Meeting Minutes
Futures: SHFE aluminum closed at 23,030 yuan/mt, down 0.78%. The price was below all key moving averages (MA5=23,035; MA10=23,135; MA30=23,359.83; MA60=23,399.08). The moving-average system was in a bearish alignment, and the weak pattern continued. MACD indicators showed DIF=-196.09 and DEA=-260.78; the golden cross remained, but the histogram narrowed sharply to 129.39 (181.64 the previous day), indicating rapid fading of bullish momentum and insufficient rebound strength. Trading volume expanded to 91,400 lots, but overall remained at a low level, with market divergence increasing. The suggested core trading range for SHFE aluminum was 22,800-23,300. LME aluminum closed at $3,138.5/mt, edging up 0.08%. The price was below all key moving averages (MA5=3,154.2; MA10=3,158.85; MA30=3,233.43; MA60=3,417.72). The moving averages were in a bearish alignment, and weakness continued. MACD indicators showed DIF=-62.31 and DEA=-78.14; the golden cross remained, but the histogram narrowed to 31.66 (38.31 the previous day), with bullish momentum weakening. The suggested core trading range for LME aluminum was 3,100-3,160.
Macro front: The US military launched a new round of strikes against Iran. US President Trump posted on social media, hinting that the US military would carry out tough retaliatory actions against Iran after casualties occurred in recent days. Iran’s Islamic Revolutionary Guard Corps said it struck US military targets in Bahrain and Kuwait in three phases. A senior Iranian source said mediators had proposed a 10-day ceasefire to discuss a plan to revive the temporary agreement between Iran and the US. Iranian Foreign Ministry spokesperson Baghaei confirmed receipt of the mediators’ proposal, saying whether talks could be held with the US would depend on whether the negotiations served Iran’s national interests.
Fundamentals: Supply side, last week the proportion of liquid aluminum in China’s aluminum rose 0.37 percentage points MoM, mainly because aluminum billet processing fees performed well, lifting the share of direct supply of liquid aluminum, while casting ingot output of aluminum ingot further contracted. Outside China, with ramp-up production of new projects and resume production projects continuing to advance, aluminum supply was expected to keep increasing. Overall, however, the short-term global destocking trend for aluminum ingot was expected to be difficult to reverse. Demand side, downstream processing was in the traditional consumption off-season. Performance diverged across segments, but was mainly under pressure. The operating rate of leading downstream aluminum processing enterprises recorded 61.3%, down 0.6 percentage points MoM. As the SHFE/LME price ratio recovered, downstream export profits shrank; as orders on hand were digested, exports were expected to provide weaker support to demand. Inventory side, this week China’s aluminum social inventory continued the destocking trend. As of this Monday, China’s social inventory of aluminum ingot fell 2,000 mt WoW from last Thursday to 1.022 million mt, down 25,000 mt WoW from last Monday.
Primary Aluminum Market:In early trading, the center of SHFE aluminum 2606 contract trading was higher than the same period of the previous trading day. Affected by aluminum ingot supply-side factors, some sellers raised their offers. However, due to the off-season, market purchasing sentiment remained relatively weak, while circulating cargo in the market was still relatively ample. Transaction prices continued to move lower, with mainstream deals falling from on par with the SHFE aluminum 08 contract to a discount of 20 yuan/mt against the SHFE aluminum 08 contract. Today, the shipment sentiment index in the east China market was 3.16, up 0.05 MoM; the purchasing sentiment index was 2.92, up 0.02 MoM. Today, aluminum futures rose on disruptions from certain market news, but in the central China market, downstream processing enterprises showed sluggish purchasing sentiment, which clearly weighed on transaction sentiment; meanwhile, suppliers’ willingness to hold prices firm was notable, and market offers were relatively high. As the absolute price rose again after the market opened, traders lowered their quotes somewhat. Ultimately, the actual transaction price range in the central China market hovered around a discount of 120-150 yuan/mt against the SHFE aluminum 08 contract. Today, the shipment sentiment index in the central China market was 3.03, up 0.04 MoM; the purchasing sentiment index was 3, down 0.03 MoM.
Secondary Aluminum Scrap:Today, SMM A00 spot aluminum prices closed at 23,190 yuan/mt, edging down 30 yuan/mt MoM from the previous trading day, while the aluminum scrap market overall held steady. In terms of the price difference between A00 aluminum and aluminum scrap, as of July 20, the price difference between A00 aluminum and mixed aluminum extrusion scrap free of paint in Foshan was 2,012 yuan/mt, and the price difference between A00 aluminum and shredded aluminum tense scrap was 698 yuan/mt, still at an extremely low level. Supply-side constraints continued to intensify, the impact of the reverse invoicing policy further deepened, and the scarcity of compliant, invoiced aluminum scrap continued to increase. On the import side, China’s aluminum scrap imports in June 2026 were about 133,000 mt, down 16.9% YoY and down 12.5% MoM, marking three consecutive months of declines. Cumulative imports from January to June 2026 totaled 982,000 mt. As overseas aluminum scrap quotes continued to pull back, orders in Guangdong for importing aluminum scrap from Southeast Asia increased compared with earlier, and the import window further improved versus the previous period. However, new deals at present were still mainly concentrated in some low-priced resources and long-term cooperative clients, and spot market trading activity remained relatively limited. It is expected that the aluminum scrap market will maintain a high-level sideways pattern within a narrow range. Supply side, the constraints from the reverse invoicing policy will be difficult to reverse in the short term, and the tightness of invoiced aluminum scrap will persist; on the import side, the compounded effect of multiple bearish factors will gradually emerge over the coming months, and supplementation from high-quality overseas scrap will remain at low levels. Demand side, amid the deepening off-season, downstream operating rates will remain low, end-user orders will be unlikely to see any substantive improvement, and scrap utilization enterprises will continue purchasing as needed, making it difficult for the purchasing atmosphere to improve materially. The price difference between A00 aluminum and aluminum scrap has narrowed to a historical low, significantly weakening aluminum scrap’s relative economic advantage versus primary aluminum; if aluminum prices continue to move lower, the substitution effect will accelerate.
Secondary Aluminum Alloy: Spot: Today, ADC12 market prices overall continued to hold steady, with the SMM ADC12 quotation unchanged from the previous trading day at 24,100 yuan/mt. The secondary aluminum alloy market remains in the off-season, with limited release of downstream orders. End-user procurement stayed at rigid demand, overall trading activity was relatively weak, and the demand side provided insufficient support for a price rise. Meanwhile, aluminum prices moved sideways within a narrow range, aluminum scrap prices saw limited fluctuations, and the cost side showed no significant changes, likewise providing weak impetus for enterprises to adjust prices. Under a pattern of both weak supply and weak demand, the market lacks new directional factors, and enterprises mostly adopted strategies of following the market and shipping at stable prices. Considering that aluminum scrap supply remains tight and cost support still exists, while demand improvement still needs to wait for the arrival of the traditional peak season, the ADC12 market is expected to continue to move sideways within a narrow range in the short term, with prices mainly stable. Going forward, close attention should be paid to aluminum price trends, aluminum scrap circulation conditions, and the pace of downstream order recovery.
Overall Outlook: The Middle East situation has been recurring, market concerns over interest rate hikes persist, and supply continues to recover, but the destocking pattern is difficult to reverse in the short term. Amid the tug-of-war between longs and shorts, aluminum prices are expected to consolidate with adjustments in the short term. Going forward, close attention should be paid to the progress of production resumptions in the Middle East and trends in geopolitical conflicts, LME aluminum ingot inventory changes, and downstream processing order conditions in China.
[The information provided is for reference only. This article does not constitute direct advice for investment research decision-making. Clients should make decisions prudently and should not use this as a replacement for independent judgment. Any decisions made by clients are unrelated to SMM.]
