7.31 SMM Aluminum Morning Meeting Minutes
Futures: The most-traded SHFE aluminum contract opened at 23,650 yuan/mt in the night session on July 30, with a high of 23,725 yuan/mt and a low of 23,630 yuan/mt, and settled at 23,720 yuan/mt, up 0.40% from the previous close. During this session, prices consolidated higher and closed with a bullish candlestick, remaining firmly above the MA5 (23,587.56), MA10 (23,462.56), MA20 (23,346.68), MA40 (23,297.85), and MA60 (23,371.70) moving-average system. The moving averages provided strong support, and the price center continued to move higher. Open interest pulled back slightly during this session, extending the pattern of bears reducing positions; the price rise was driven by bears exiting. Technically, on the 4-hour MACD, DIFF (109.33) ran above DEA (60.99), and the red histogram continued to expand, indicating ample short-term bullish momentum. LME aluminum opened at $3,181.0/mt on July 30, with a high of $3,211.5/mt and a low of $3,171.5/mt, and settled at $3,193.0/mt, up 0.52% from the previous close. Prices that day continued to consolidate at lows and recover, closing with a small bullish candlestick, holding above the short-term MA5 (3,178.34) and MA10 (3,172.71), and testing upward the resistance at MA20 (3,182.56). The MA40 and MA60 medium and long-term moving averages still capped prices above. Trading volume edged up, while open interest fell notably, mainly due to bears reducing positions; bulls showed limited willingness to launch proactive attacks. Technically, on the daily MACD, DIFF (-31.41) ran above DEA (-47.23), and the red histogram expanded slightly. The low-level recovery continued, while the rebound height was constrained by the medium and long-term moving averages.
Macro front: US economic growth in Q2 came in below expectations, but strong consumption and enterprise investment indicated that domestic demand remained resilient. Preliminary data released Thursday by the US Bureau of Economic Analysis showed that real GDP grew at an annualized rate of 1.5% in Q2, below market expectations. A decline in net exports dragged on the overall figure, but consumer spending and business investment both remained strong, offsetting external pressures to some extent. Data released Thursday by the US government showed that the US PCE price index fell 0.1% MoM in June, marking the first monthly decline since the COVID-19 outbreak in 2020, and further explaining why the US Fed chose to keep interest rates unchanged this week. The annual PCE inflation rate slowed to 3.7% from May’s three-year high of 4.1%.
Fundamentals: Supply side, the proportion of liquid aluminum in China continued to rise. Inventory side, China’s aluminum social inventory fell by 53,000 mt WoW from last Thursday to 953,000 mt, down 26,000 mt from this Monday. Destocking accelerated again at July month-end and dropped back below 1 million mt, providing strong support for aluminum prices. Exports: This week, the SHFE/LME price ratio continued to recover. As of July 30, the SHFE/LME price ratio had rebounded to 7.4, up 13.8% from the previous low of 6.5. Import losses narrowed to around 3,300 yuan/mt, more than 45% narrower than the previous peak loss of 7,604 yuan/mt. This week, the operating rate of China’s leading downstream aluminum processing enterprises came in at 60.2%, down 0.9 percentage points MoM. As the off-season effect continued to deepen and higher aluminum prices suppressed purchasing, most segments fell under pressure. Aluminum wire and cable and secondary aluminum posted the largest declines, while primary aluminum alloy, aluminum extrusion, aluminum plate/sheet and strip, and aluminum foil also weakened in tandem.
Primary aluminum market: In early trading, the center of SHFE aluminum 2608 contract trading was higher than the same period of the previous trading day. Rising aluminum prices significantly dampened market purchasing sentiment. Intraday, some suppliers quoted at premiums of parity against the SHFE aluminum 2608 contract, and market acceptance of prices remained weak. Mainstream transaction prices were mainly at discounts of 10 yuan/mt against the SHFE aluminum 08 contract to parity against the SHFE aluminum 08 contract. Today, the east China market willingness-to-sell sentiment index was 3.13, down 0.03 MoM; the purchasing sentiment index was 2.9, down 0.1 MoM. Aluminum futures rose again, keeping trading sentiment in the central China market sluggish. Suppliers tended to sell large volumes at higher prices, and spot cargo circulation was ample. However, downstream processing enterprises showed low purchase willingness, with only a small number of traders purchasing for stockpiling when discounts were low. Ultimately, the actual transaction price range in the central China market hovered at discounts of 120-160 yuan/mt against the SHFE aluminum 08 contract. Today, the central China market willingness-to-sell sentiment index was 3.18, up 0.06 MoM; the purchasing sentiment index was 2.8, down 0.02 MoM.
Aluminum scrap: Today, SMM A00 spot aluminum closed at 23,630 yuan/mt, up 230 yuan/mt MoM from the previous trading day, and aluminum scrap prices across regions generally rose by 100-200 yuan/mt. In terms of the price difference between A00 aluminum and aluminum scrap, as of July 30, the price difference between A00 aluminum and mixed aluminum extrusion scrap free of paint in Foshan was about 2,070 yuan/mt, and the price difference between A00 aluminum and shredded aluminum tense scrap was about 860 yuan/mt. Against the backdrop of the off-season, aluminum scrap suppliers generally showed low willingness to sell at low prices, and aluminum scrap prices remained firm overall. Demand side, as high-temperature holidays approached, operating rates at downstream cast aluminum alloy enterprises declined and orders shrank; operating rates at secondary aluminum plate/sheet and strip enterprises were moderate, but overall raw material demand saw a marked drop in support compared with Q2. In the short term, the tight supply of compliant, invoiced cargoes on the supply side persisted, and suppliers’ low willingness to sell at low prices provided bottom support for prices. On the import side, the lagged effects of the UAE export ban and the EU tariff policy will gradually emerge in the coming months, and port arrivals from June to August will remain at low levels. Demand side, the sluggish downstream orders are unlikely to improve in the short term. Scrap utilization enterprises will most likely continue a strategy of purchasing as needed and keeping low inventory, and the purchasing atmosphere is unlikely to see a clear improvement.
Secondary Aluminum Alloy:Spot: Today, ADC12 market quotations generally rose, with most enterprises increasing prices by 100 yuan/mt. In terms of drivers, affected by primary aluminum prices and the continued rise in futures, cost support further strengthened, and enterprises generally followed the uptrend. However, demand side, as the high-temperature holiday approached, downstream enterprises’ operating rates declined; secondary aluminum plants saw reduced orders and a slowdown in the pace of shipments, and actual transactions were relatively subdued. In the short term, the market is expected to maintain a tug-of-war between cost support and demand constraints. Subsequent price movements still need to closely track fluctuations in aluminum prices and changes in downstream procurement demand.
Overall Outlook:Recently, the macro front improved somewhat, and the marginal constraints on the nonferrous sector from expectations for US Fed interest rate hikes continued to ease. In China, the proportion of liquid aluminum continued to rise, while the Middle East geopolitical risk premium continued to build, and domestic aluminum ingot inventories continued destocking, jointly underpinning aluminum prices; short-term market confidence strengthened significantly. However, the continued commissioning of outside China aluminum forward capacity and weak traditional end-use demand in China, coupled with repeated swings in expectations for US Fed interest rate hikes outside China and disturbances from uncertainties in the Middle East geopolitical situation, meant that upside room for aluminum prices still faced some pressure. In the short term, aluminum prices maintained a consolidation pattern on a strong note.
[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 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)
