China's Secondary Aluminum Ingot Inventory Down 198 MT, Foshan Sees Largest Decline

After the opening, SHFE aluminum futures experienced a slight correction. Although traders in the central China market had the intention to hold prices firm, weak purchase willingness from downstream processing enterprises suppressed overall market transactions. Only hedging traders were willing to purchase in large quantities when premiums were less negative, aiming to widen price spreads for profit. Market offers edged up but remained at relatively low levels. Ultimately, the actual transaction price range in the central China market was around a premium of -170 to -190 yuan/mt against the SHFE aluminum August contract.

[Central Bank Sends Easing Signals; Supply-Demand and Geopolitical Games Limit Aluminum Price Upside Room] Our comprehensive assessment shows that the macro front has improved recently, with the marginal constraints of interest rate hike expectations on the nonferrous metals sector continuing to ease. The proportion of liquid aluminum in China has kept rising. China’s central bank will implement accommodative monetary policies, step up counter-cyclical adjustments, and redouble efforts to expand domestic demand to steer the economy toward sustained, more favorable, and broader-based development. The persistent geopolitical risk premium in the Middle East has jointly underpinned aluminum prices, significantly boosting short-term market confidence. However, the ongoing commissioning of long-term aluminum capacity outside China, the recent softness in traditional end-use demand in China, combined with the repeated shifts in expectations for US Fed interest rate hikes and the uncertainties triggered by geopolitical turmoil in the Middle East, continue to exert certain pressure on the upside room for aluminum prices.

[SMM Cast Aluminum Alloy Morning Comment: Tight Supply of Aluminum Scrap Supports ADC12 Prices, Off-Season Caps Gains] Last Friday night, the aluminum alloy 2609 contract opened at 23,115 yuan/mt, and during the night session, it reached a high of 23,320 yuan/mt and a low of 23,115 yuan/mt, closing at 23,270 yuan/mt.