7.29 SMM Aluminum Morning Meeting Minutes
Futures: The most-traded SHFE aluminum contract opened at 23,190 yuan/mt in the night session on July 28, hit a high of 23,535 yuan/mt and a low of 23,130 yuan/mt, and settled at 23,445 yuan/mt, up 0.97% from the previous close. During this session, prices surged on higher volume and formed a bullish candlestick, breaking above the prior consolidation range in one move and holding firmly above the MA5 (23,317.37), MA10 (23,269.85), MA20 (23,223.10), MA40 (23,234.24), and MA60 (23,338.15) moving-average system. The moving averages provided strong support; support at the interim low of 22,875 held effectively, and the price center continued to move higher. Trading volume during this session rose markedly to 142,000 lots, while open interest increased in tandem to 260,000 lots, showing characteristics of bulls adding positions, with incremental funds pushing the market higher. Technically, on the 4-hour chart, the MACD DIFF (43.04) ran above the DEA (26.38), the red histogram continued to expand, bullish momentum strengthened, and prices held up well in the short term. LME aluminum opened at $3,169.5/mt on July 28, with a high of $3,169.5/mt and a low of $3,130.5/mt, and settled at $3,148.5/mt, down 0.77% from the previous close. Prices consolidated and pulled back on the day, forming a bearish candlestick, and fell below the MA5 (3,163.27) and MA10 (3,165.42) short-term moving averages, which shifted from support to resistance. The MA20 (3,181.95), MA40 (3,252.74), and MA60 (3,296.34) medium- and long-term moving averages were arranged in a bearish alignment, with heavy overhead pressure; short-term support was seen around 3,120. Trading volume increased somewhat on the day, while open interest pulled back slightly, showing characteristics of bulls reducing positions, with insufficient follow-through from buyers. Technically, on the daily chart, the MACD DIFF (-39.73) ran above the DEA (-54.98). The golden-cross structure remained, but the red histogram tended to converge, weakening the low-level repair momentum, and LME aluminum continued to consolidate on a subdued note.
Macro front: The market was waiting for the US and Iran to push forward peace talks, but the Strait of Hormuz dispute remained unresolved. However, crude oil prices surged again this morning. According to foreign media reports, the situation of a temporary ceasefire between the US and Iran changed again. According to CME “FedWatch”: the probability that the US Fed would keep rates unchanged in July was 69.5%, and the probability of a cumulative 25-bp hike was 30.5%. The probability that the US Fed would keep rates unchanged through September was 23.4%, the probability of a cumulative 25-bp hike was 56.4%, and the probability of a cumulative 50-bp hike was 20.2%.
Fundamentals: Since late June, the SHFE/LME price ratio rebounded rapidly, and the arbitrage window that had driven large exports of aluminum semis closed quickly. As the order-switching effect gradually faded, new orders in some segments had already declined, but fixed-price model orders taken earlier were still being executed as planned. Exports of aluminum plate/sheet and strip were expected to gradually pull back starting in July, and average monthly exports in H2 were expected to pull back to the 280,000-320,000 mt range. Given the strong performance in H1, full-year exports were still expected to rebound to 3.3-3.4 million mt. Inventory, mainstream consumption-area aluminum ingot inventory fell 0.4 MoM on Tuesday, with the main destocking areas being Guangdong and Wuxi.
Primary aluminum market:In the morning session, the center of SHFE aluminum 2606 contract trading ran below the level at the same time of the previous trading day. Affected by weak end-use demand, overall market purchasing today remained mainly for rigid-demand stockpiling. As aluminum prices moved lower, some traders became less proactive in selling, but circulating cargoes in the market were still relatively ample, and market acceptance of prices remained weak. Mainstream transaction prices were mainly at a discount of 10 yuan/mt against the SHFE aluminum 08 contract to a premium of 10 yuan/mt against the SHFE aluminum 08 contract. Today, the east China market selling sentiment index was 3.08, down 0.05 MoM; the purchasing sentiment index was 3, up 0.06 MoM. Today, trading activity in the central China market remained sluggish. With the night session rebounding, downstream processing enterprises stayed on the sidelines. With off-season demand weak and restrictions from the major safety inspection, downstream plants showed low purchase willingness; only some traders restocked in small volumes. Some traders, constrained by insufficient invoice quotas for this month, boosted prices for cargoes with invoices dated this month, but overall trading volume was limited. Ultimately, the actual transaction price range in the central China market hovered around a discount of 90-110 yuan/mt against the SHFE aluminum 08 contract. Today, the central China market selling sentiment index was 3.11, up 0.02 MoM; the purchasing sentiment index was 2.86, down 0.05 MoM.
Aluminum scrap:Today, SMM A00 spot aluminum prices closed at 23,200 yuan/mt, flat from the previous trading day, and the aluminum scrap market was generally stable. Regarding the price difference between A00 aluminum and aluminum scrap, as of July 28, the price difference between A00 aluminum and mixed aluminum extrusion scrap free of paint in Foshan was about 2,030 yuan/mt, and the price difference between A00 aluminum and shredded aluminum tense scrap was about 710 yuan/mt, continuing to run at an extremely low historical level. On imports, according to customs data, China’s aluminum scrap imports totaled about 132,800 mt in June 2026, declining for three consecutive months 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 earlier period, most new deals were concentrated in low-priced resources, and overall spot market activity remained limited. Affected by the UAE’s aluminum scrap export ban and the EU’s tariff hike policy, the tightening effect on high-quality imported aluminum scrap supply will further emerge in the future. It was expected that this week the aluminum scrap market would continue to move sideways within a narrow range, with demand pressure and cost support. Against the backdrop of a deepening off-season, downstream end-use orders were unlikely to see any substantive improvement, and scrap utilization enterprises would continue the strategy of purchasing as needed, making it difficult for the purchasing atmosphere to improve significantly. The mainstream operating range for shredded aluminum tense scrap (priced based on aluminum content) was expected to hover around 19,800-20,500 yuan/mt. At present, the price difference between A00 aluminum and aluminum scrap has narrowed to a historical low, significantly weakening aluminum scrap’s economic advantage over primary aluminum. If primary aluminum prices continue to decline, the substitution effect of primary aluminum for aluminum scrap will accelerate, and close attention should be paid to the crowding-out effect of aluminum price movements on aluminum scrap demand.
Secondary Aluminum Alloy: Spot market: Today, overall ADC12 market quotations remained stable. Cost side, aluminum scrap prices remained at elevated levels, coupled with relatively firm primary aluminum prices, providing some support for ADC12 prices; however, demand was weak. As downstream enterprises gradually entered the high-temperature holiday period, orders declined and market trading activity fell. Under the dual impact of cost support and weak demand, ADC12 prices are expected to continue moving sideways in a narrow range in the short term. The market is watching subsequent end-use demand recovery and changes in raw material prices.
Overall outlook: The continued addition of the Middle East geopolitical risk premium and ongoing destocking of aluminum ingot in China jointly underpinned aluminum prices; however, the continued rollout of forward capacity for aluminum outside China and weak traditional end-use demand in China, together with repeated expectations for US Fed interest rate hikes outside China and disruptions from uncertainty in the Middle East geopolitical situation, 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 replacement for their own independent judgment. Any decisions made by clients are unrelated to SMM.]
