7.28 SMM Aluminum Morning Meeting Minutes
Futures:The most-traded SHFE aluminum contract opened at 23,255 yuan/mt in the night session on July 27, with a high of 23,320 yuan/mt and a low of 23,230 yuan/mt, and closed at 23,275 yuan/mt, up 0.34% from the previous close. During this session, prices edged up within the consolidation range and closed with a bullish candlestick, holding above the short-term moving-average cluster of MA5 (23,240.47), MA10 (23,227.58), MA20 (23,196.05), and MA40 (23,223.35). The moving-average system provided bottom support, while prices encountered resistance at the medium and long-term MA60 (23,339.00). Support at the phase low of 22,875 remained effective, and the price center moved up steadily. Trading volume in this session was 64,858 lots, down from the previous period, while open interest was 252,000 lots, up slightly. Technically, on the 4-hour MACD, DIFF (28.9) ran above DEA (21.03); the golden cross continued, the red histogram stayed positive, and bullish momentum remained. In the short term, the market was expected to continue moving sideways, and an upside breakout still required incremental funds. LME aluminum opened at $3,164.0/mt on July 27, with a high of $3,187.5/mt and a low of $3,150.0/mt, and closed at $3,173.0/mt, up 0.25% from the previous close. On the trading day, prices moved sideways in a narrow range and closed slightly higher; prices traded close to MA5 (3,173.12) and were under pressure from MA10 (3,169.65) and MA20 (3,185.66). The medium and long-term moving averages MA40 (3,258.23) and MA60 (3,301.45) were in a bearish alignment, forming overhead resistance. Support at the phase low of 3,040 was solid, and the rebound pace was relatively slow. Trading volume that day was 9,815 lots, down from the previous period, while open interest was 591,000 lots, pulling back slightly from the previous level. Technically, on the daily MACD, DIFF (-41.03) ran above DEA (-58.79); the golden-cross structure continued, and the red histogram stayed positive. In the short term, the market maintained a pattern of consolidating at lows and repairing, with upside room constrained by macro and supply expectations.
Macro front:On July 27, the National Bureau of Statistics (NBS) released data showing that in H1, against the backdrop of steady growth in industrial production and a continued rebound in industrial products prices, operating revenue of industrial enterprises above designated size rose 6.5% YoY, accelerating by 1.5 percentage points from Q1. Akshay Singal, Citi’s global head of short-term rates trading, said the bank was receiving July US Fed meeting contracts based on “high conviction,” and the corresponding trading positions would profit if the central bank stood pat. Currently, the swap market expected the probability of a 25-basis-point rate hike by the US Fed this week to be close to 40%. According to CME “FedWatch,” the probability that the US Fed would keep rates unchanged in July was 63.7%, and the probability of a cumulative 25-basis-point hike was 36.3%. The probability of the US Fed maintaining unchanged interest rates until September stands at 18.5%, with cumulative 25-basis-point hikes at 55.7% and 50-basis-point hikes at 25.8%.
Fundamentals:Entering late July, aluminum billet processing fees in China continued to pull back from June highs, with φ120 billet fees in some major consumption areas approaching production cost levels, creating simultaneous pressure to hold prices firm and boost shipments. According to the latest SMM statistics, social inventory of aluminum billets in major consumption areas rose to 121,000 mt on July 23, marking two consecutive weeks of inventory buildup, while warehouse withdrawals dropped to 33,000 mt, showing a significant MoM decline. Against the backdrop of weakening off-season demand, increased arrivals in south China, and relatively stable aluminum price levels, whether processing fees can stabilize near cost levels has become the market's focal concern. SMM maintains its full-year 2026 forecast for China's aluminum foil exports at approximately 1.3 million mt. With H1 exports reaching 683,200 mt, H2 requires shipments of about 616,800 mt, averaging 102,800 mt monthly—a 9.7% decrease from H1's monthly average of 113,900 mt. This target faces challenges under current SHFE/LME price ratios, but considering the execution momentum of locked-in orders, the annual 1.3 million mt goal remains achievable.
Primary aluminum market:The SHFE aluminum 2606 contract's trading center in early session edged slightly higher than the previous trading day. End-use demand remained weak, with today's procurement mainly driven by essential stockpiling. Ample spot supply kept market price acceptance subdued. Mainstream transaction prices for cargoes with this month's invoices traded at parity against the SHFE aluminum August contract. East China's shipment sentiment index stood at 3.13 today, flat MoM, while the purchase sentiment index was 2.94, unchanged MoM. Trading sentiment in central China appeared mediocre, as Monday marked the first day of next-month invoice availability. Downstream processors showed limited buying interest, with only minimal essential purchases, while suppliers exhibited weak price support willingness, showing downward quotation trends. Meanwhile, active trading occurred for this-month invoice cargoes among invoice-deficient traders, but scarce invoice availability kept quotations elevated. Final transaction prices for next-month invoice cargoes in central China ranged at discounts of 100-120 yuan/mt against the SHFE aluminum August contract. Central China's shipment sentiment index registered 3.10 today, flat MoM, while the purchase sentiment index dropped 0.05 to 2.90 MoM.
Secondary aluminum raw materials:Today's SMM A00 spot aluminum price closed at 23,200 yuan/mt, unchanged from the previous trading day, with the overall aluminum scrap market remaining stable. Regarding price differences between primary and scrap aluminum, the spread for mixed aluminum extrusion scrap free of paint in Foshan was approximately 2,030 yuan/mt on July 27, while the spread for shredded aluminum tense scrap stood around 710 yuan/mt—both continuing to hover at historically extreme lows. Imports: According to customs data, China’s aluminum scrap imports totaled about 132,800 mt in June 2026, marking a third consecutive monthly decline from 152,000 mt in May. From the cumulative data for 2026, total aluminum scrap imports from January to June were about 981,800 mt. Recently, import orders into Guangdong from Southeast Asia increased. Although the import window improved compared with the previous period, most new deals were concentrated in low-priced resources, and overall spot market activity remained limited. Affected by the UAE’s ban on aluminum scrap exports and the EU’s tariff hike policy, the contraction effect of high-quality imported aluminum scrap supply is expected to become more evident in the future. It is expected that this week the aluminum scrap market will continue a sideways pattern under demand suppression and cost support. Against the backdrop of the deepening off-season, downstream end-use orders were unlikely to see any substantive improvement. Scrap utilization enterprises continued purchasing as needed, and the procurement sentiment was unlikely to improve significantly. The mainstream trading range for shredded aluminum tense scrap (priced based on aluminum content) is expected to hover between 19,800 and 20,500 yuan/mt. At present, the price difference between A00 aluminum and aluminum scrap has narrowed to a historical low, and the economic advantage of aluminum scrap versus primary aluminum has weakened sharply. If primary aluminum prices continue to decline, the substitution effect of primary aluminum replacing aluminum scrap is expected to accelerate. Close attention should be paid to the crowding-out effect of aluminum price movements on aluminum scrap demand.
Secondary aluminum alloy:Spot: Today, overall ADC12 market quotes remained stable. Cost side, compliant aluminum scrap supply remained tight, and procurement costs stayed high, supporting ADC12 prices. Demand side, as the traditional off-season continued to deepen, some downstream enterprises gradually entered the high-temperature holiday period; shrinking orders further weakened purchasing willingness. Amid the tug-of-war between cost support and weak demand, the market lacked new drivers. Most enterprises chose to keep quotes stable while waiting to see aluminum price movements and end-use order performance. In the short term, the ADC12 market is expected to maintain a sideways, steady-and-wait-and-see pattern.
Overall outlook:Recently, sentiment on the macro front improved slightly. The Middle East geopolitical risk premium continued to build, together with continued destocking of aluminum ingot in China, jointly underpinning aluminum prices. However, the continued rollout of overseas long-term aluminum capacity, weak traditional domestic end-use demand, and recurring macro-level uncertainties all put clear pressure on upside room for aluminum prices. In the short term, aluminum prices are expected to maintain a consolidation pattern.
[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.]
![July aluminum foil exports pulled back 9.3% MoM, but the full-year target of 1.3 million mt remains achievable [SMM Analysis]](https://imgqn.smm.cn/usercenter/fFkYh20251217171651.jpg)
