7.22 SMM Aluminum Morning Meeting Minutes
Futures: SHFE aluminum closed the daytime session at 23,185 yuan/mt, up 0.56%. The price was slightly above MA5 (23,151.7) and MA10 (23,148.5), but still below MA30 (23,329.33) and MA60 (23,960). Short-term moving averages provided support, while mid-term moving averages continued to cap prices under bearish pressure. MACD: DIF = -167.78, DEA = -240.52, maintaining a golden cross; the histogram rebounded to 145.48 (129.39 the previous day), indicating a recovery in bullish momentum but with limited strength. Trading volume shrank sharply to 49,200 lots, reflecting weak market participation. The suggested core trading range for SHFE aluminum is 23,000-23,500. LME aluminum closed at $3,169.5/mt, up 0.25%. The price was slightly above MA5 (3,162.1) and MA10 (3,164.25), but still far below MA30 (3,223.38) and MA60 (3,411.38). Short-term moving averages provided support, while mid-term bearish pressure was evident. MACD: DIF = -55.49, DEA = -73.32, maintaining a golden cross; the histogram rebounded to 35.65 (31.66 the previous day), with bullish momentum slightly strengthening. The suggested core trading range for LME aluminum is 3,150-3,200.
Macro front: Several senior US officials said US President Trump is expected to decide in the coming days whether to expand military action against Iran and resume “full-scale combat operations.” If Trump decides to resume full-scale combat operations against Iran, the intensity and scope would far exceed the recent US attacks on Iran, and Israel is likely to be involved. US Trade Representative Jamieson Greer hinted in a media interview that the US federal government will soon introduce new tariff policies to replace the 10% global import tariff that is about to expire. Greer said it is not possible to provide a specific timeline for the rollout of the new tariff policies at present, and the policies still need to be communicated to Congress and other stakeholders before being formally announced.
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, amid continued progress in ramp-ups at new projects and the advancement of resume production projects, aluminum supply is expected to keep increasing. Overall, however, the global destocking trend for aluminum ingot is expected to be difficult to reverse in the short term. Demand side, downstream processing is in the traditional consumption off-season. Performance diverged across segments, but was mainly under pressure. The operating rate of leading downstream aluminum processing enterprises was 61.3%, down 0.6 percentage points MoM. The SHFE/LME price ratio has been repaired, downstream export profits have narrowed, and as orders on hand are digested, exports are expected to provide weaker support to demand. Inventory side, China’s aluminum social inventory continued destocking this week. As of this Monday, China’s aluminum ingot social inventory fell by 2,000 mt from last Thursday to 1.022 million mt, down 25,000 mt from last Monday.
Primary aluminum market:In early trading, the center of SHFE aluminum 2606 contract trading was below the level at the same time of the previous trading day. Affected by the off-season, market purchasing sentiment remained weak; coupled with still ample circulating cargo, the downside in aluminum prices failed to lift purchasing demand or price acceptance. Mainstream transaction prices were at a discount of 10-20 yuan/mt against the SHFE aluminum 08 contract. Today, the east China market shipment sentiment index was 3.08, down 0.08 MoM; the purchasing sentiment index was 2.9, down 0.02 MoM. Today, aluminum futures were notably weaker MoM versus yesterday’s early-session open, and traders’ quotes in the central China market rose again. However, constrained by factors including low purchase willingness among downstream processing enterprises and the monthly average price of long-term contract being below the current price, spot circulating volume remained high, slightly capping actual transaction premiums. Ultimately, the actual transaction price range in the central China market hovered at a discount of 110-140 yuan/mt against the SHFE aluminum 08 contract. Today, the central China market shipment sentiment index was 3.05, up 0.02 MoM; the purchasing sentiment index was 3, flat MoM.
Aluminum scrap:Today, SMM A00 spot aluminum prices closed at 23,080 yuan/mt, continuing to fall by 110 yuan/mt MoM from the previous trading day, while the aluminum scrap market was broadly steady. For the price difference between A00 aluminum and aluminum scrap, as of July 21, the price difference between A00 aluminum and mixed aluminum extrusion scrap free of paint in Foshan was 2,021 yuan/mt, and the price difference between A00 aluminum and shredded aluminum tense scrap was 707 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 rise. On imports, 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 for aluminum scrap imports from Southeast Asia into Guangdong increased versus earlier, and the import window further improved from the previous period. However, new deals were still mainly concentrated in some low-priced resources and long-term cooperative clients, and spot market trading activity remained relatively limited. The aluminum scrap market is expected to continue moving sideways at elevated levels. Supply side, the constraints from the reverse invoicing policy will be difficult to reverse in the short term, and tightness in invoiced aluminum scrap will persist; on the import side, the combined impact of multiple bearish factors will gradually emerge over the coming months, and supplementation from high-quality scrap outside China will remain low. Demand side, amid a deepening off-season, the operating rate downstream remained low, end-user orders were unlikely to see substantive improvement, scrap utilization enterprises continued purchasing as needed, and the purchasing atmosphere was unlikely to improve materially.
Secondary Aluminum Alloy:Spot Market: Today, the ADC12 market remained in the doldrums, with the center of quotations edging down slightly. Fundamentally, the pullback in aluminum prices weakened cost support; meanwhile, the off-season effect continued to intensify, and downstream players maintained just-in-time procurement, leaving overall transactions sluggish. Under the dual pressure of weak demand and easing costs, market quotations pulled back under pressure, though some enterprises, considering costs at elevated levels, still showed wait-and-see sentiment while holding prices firm. In the short term, ADC12 prices are expected to move sideways within a narrow range. Going forward, close attention should be paid to primary aluminum price trends, fluctuations in aluminum scrap costs, and the substantive recovery of end-user orders.
Overall Outlook:With the Middle East situation repeatedly shifting and market concerns over interest rate hikes still lingering, supply continued 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 and adjust in the near term. Going forward, key focus should be placed on the progress of production resumptions in the Middle East and the trajectory of 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 their own independent judgment. Any decisions made by clients are unrelated to SMM.]
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