8.5 SMM Aluminum Morning Meeting Minutes
Futures:The most-traded SHFE aluminum 2609 contract closed at 23,745 yuan/mt, rose by 20 yuan compared to yesterday's settlement price, a gain of 0.08%, opened at 23,800 yuan/mt during the session, and fluctuated within a range of 23,715 to 23,840 yuan/mt. The price traded above MA5 (23,690.00), MA10 (23,489.00), MA30 (23,158.50), and near the MA60 (23,759.17). The medium and long-term moving averages were overall in a bearish alignment, exerting continuous downward pressure. The structure of consolidating and repairing at lows continued, with the 60-day moving average above forming a key resistance level. The MACD DIF (69.24) was above the DEA (-28.4106), and the MACD red histogram value was 195.3090. Bearish momentum continued to weaken, while bullish repairing momentum remained strong. The core trading range for SHFE aluminum was suggested to reference 23,500-24,000 yuan/mt. The LME aluminum 3M contract closed at $3,211.00/mt, fell by 0.20%, opened at $3,215.00/mt during the session, and fluctuated within a range of $3,205.00 to $3,218.00/mt. The price traded above MA5 (3,208.70), MA10 (3,189.65), MA30 (3,160.98), and below the MA60 (3,355.46). The medium and long-term moving averages were arranged in a bearish manner and gradually exerted downward pressure. An overall consolidating and repairing structure at lows emerged, with the 60-day moving average above forming a clear resistance. The MACD DIF (-14.0943) was above the DEA (-30.5426), and the MACD red histogram was 32.8965. Bearish momentum continued to weaken, and the decline pace slowed. The core trading range for LME aluminum was suggested to reference $3,150-$3,300/mt.
Macro Front:The most obvious positive signal emerged in the negotiations to resume shipping in the Strait of Hormuz. Iran had abandoned its previous stance demanding full control over two-way shipping in the Strait of Hormuz. The Iranian government was considering allowing European countries to participate in mine-clearing operations in the Strait of Hormuz, which was one of the core issues where Iran had always refused to compromise in previous negotiations. Foreign Ministry spokesperson Baghai stated that Iran was still negotiating with Oman over the Strait of Hormuz, with talks making ‘positive progress’ on technical and political levels. Philadelphia Fed President Paulson said he would keep an open mind on the direction of monetary policy, with whether core inflation could continue to pull back being the key basis for his judgment. If underlying inflation remained high, the US Fed might need to further tighten monetary policy to ensure inflation returned to the 2% target. The central bank will conduct a 500 billion yuan 3-month outright reverse repo operation on August 5. As 300 billion yuan of 3-month outright reverse repos matured in August, the central bank net injected 200 billion yuan through 3-month outright reverse repos, net injecting funds through 3-month outright reverse repos for two consecutive months.
Fundamentals:Markets outside China: Resumptions and new capacity additions at overseas aluminum smelters continued to ramp up as planned, with market expectations for the global aluminum market to shift from tightness to looseness in the long term persisting. The U.S.-Iran negotiations saw new progress, improving expectations for strait passage and easing geopolitical premiums somewhat, though uncertainties remain. The US Fed remains open regarding near-term monetary policy direction, reducing the pressure on the nonferrous metals sector. Domestically, the central bank conducted 500 billion yuan of 3-month outright reverse repo operations, with monetary policy remaining moderately accommodative, providing some support for funding liquidity. On the inventory front, aluminum ingot inventories in major consuming regions fell by 2,000 mt day-on-day yesterday, with only Gongyi seeing an inventory buildup.
Primary Aluminum Market:In early trading, the SHFE aluminum 2608 contract ran significantly higher than yesterday's center, affecting downstream purchasing sentiment. The center of aluminum prices moved up, and inventory destocking slowed. However, as it was the beginning of the month, some enterprises showed sentiment to hold prices firm. The main transaction center for SHFE aluminum spot premiums today was between 8-30 yuan/mt and 08-10 yuan/mt. The east China market selling sentiment index was 3.09 today, up 0.02 day-on-day; the purchasing sentiment index was 2.80, down 0.13 day-on-day. Aluminum futures rose again. Today, the trading atmosphere in the central China market remained sluggish, with downstream processing enterprises' purchase willingness staying at low levels, while traders tended to buy in large quantities at low discounts to capture price spreads, leading to heated buying sentiment among traders. Ultimately, the actual transaction price range in central China centered around discounts of 190-210 yuan/mt against the SHFE aluminum August contract, with a firming trend. Today, the central China market selling sentiment index was 3.20, unchanged day-on-day; the purchasing sentiment index was 2.91, up 0.06 day-on-day. Today, aluminum prices surged again, putting the spot market under pressure and weakening it. On one hand, the sharp rise in absolute prices stimulated accelerated unilateral selling for liquidation; on the other hand, the basis remained relatively high compared to the previously large discounts, giving warrant holders ample room to sell and liquidate. Moreover, unfavorable factors such as longer storage times and smaller tonnage for warrants severely impacted circulation. Suppliers shifted from attempting to hold prices firm to lowering their offers, with quotes mainly at discounts of -30 to 0. Downstream buyers were unable to chase high prices, leading to weakened purchasing demand. Traders only pushed for lower prices and bought at discounts on a need-to basis, rarely entering the market. Transactions were oversupplied.
Aluminum Scrap:Today, the SMM A00 spot aluminum price closed at 23,730 yuan/mt, up 230 yuan/mt from the previous trading day. Scrap aluminum prices in most regions generally followed the rise, while some regions and varieties remained cautious and waited. Regarding the price difference between A00 aluminum and scrap: on August 4, the price difference between A00 aluminum and mixed aluminum extrusion scrap free of paint in Foshan was about 2,160 yuan/mt, and the price difference between A00 aluminum and shredded aluminum tense scrap was about 950 yuan/mt. Against the backdrop of the consumption off-season, aluminum scrap suppliers' willingness to sell at low prices was generally low, and aluminum scrap prices remained firm overall. Demand side, as the high-temperature holiday approached, downstream cast aluminum alloy enterprises saw their operating rates drop and orders shrink; secondary aluminum plate/sheet and strip enterprises had moderate operations, but overall raw material demand support significantly weakened compared to Q2. In the short term, supply side, the tight supply pattern of compliant and invoiced goods persisted, and suppliers' low willingness to sell provided bottom support for prices. Import side, the lagging effects of the UAE export ban and EU tax hike policies will gradually emerge in the coming months, with port arrivals from June to August remaining low. Demand side, the downturn in downstream orders is difficult to reverse in the short term, scrap utilization enterprises likely continue the strategy of purchasing as needed and maintaining low inventory, and the procurement atmosphere is unlikely to see significant improvement.
Secondary Aluminum Alloy:Spot: Today, ADC12 market quotes showed an overall slight rebound, with the market generally rising by 100 yuan/mt. Driven mainly by a rebound in aluminum prices and enhanced cost support. However, this round of price increases was more of a correction of previous declines; market demand improvement was not yet evident; some downstream enterprises gradually went on high-temperature holidays; orders showed weakness; and procurement remained primarily need-based. Therefore, although current ADC12 prices have rebounded with cost support, weak demand still constrains the upside room for prices, and in the short term, the market continues a consolidation pattern where cost support and weak demand coexist.
Comprehensive Outlook:Recently, the macro front has improved, with the marginal constraint of unchanged rate hike expectations on the nonferrous metals sector weakening; the proportion of liquid aluminum in China has continued to rise, jointly supporting aluminum prices. However, the continuous deployment of forward aluminum capacity outside China, weak end-use demand in China during the traditional off-season, and uncertainties in the Middle East geopolitical situation are expected to lead aluminum prices to consolidate on a strong note.
[The information provided is for reference only. This article does not constitute direct investment, research, or decision-making advice. Clients should make decisions cautiously and not use this as a substitute for independent judgment. Any decisions made by clients are not related to SMM.]
