8.6 SMM Aluminum Morning Meeting Minutes
Futures: The most-traded SHFE aluminum 2609 contract closed at 23,835 yuan/mt, up 70 yuan from the previous settlement, a gain of 0.29%. It opened at 23,785.00 yuan/mt and fluctuated within 23,740-23,905 yuan/mt during the session. Prices traded above MA5 (23,740.00), MA10 (23,542.00), and MA30 (23,191.33), and above MA60 (23,741.00). Medium and long-term moving averages remained in a bearish alignment and continued to press lower. The structure of consolidating at lows while drifting higher persisted, with the upper high-price zone forming key resistance. For the MACD indicator, DIF (93.4473) was above DEA (-3.5285), and the MACD red histogram stood at 193.9515. Bearish momentum continued to weaken, while bullish recovery momentum remained strong. The suggested core trading range for SHFE aluminum was 23,500-24,100 yuan/mt. The LME aluminum 3M contract closed at $3,253.00/mt, up 0.22%. It opened at $3,245.00/mt and fluctuated within $3,233.00-3,256.00/mt during the session. Prices traded above MA5 (3,227.70), MA10 (3,199.45), and MA30 (3,164.40), but below MA60 (3,349.41). Medium and long-term moving averages were in a bearish alignment and gradually pressed lower. Overall, a low-level consolidation-and-repair structure emerged, with the 60-day moving average above forming clear resistance. For the MACD indicator, DIF (-6.0545) was above DEA (-25.1982), and the MACD red histogram was 38.2874. Bearish momentum continued to weaken, and the rebound from lows remained intact. The suggested core trading range for LME aluminum was $3,200-3,350/mt.
Macro front: Iranian Foreign Ministry spokesperson Baghaei said Iran and Oman had reached an agreement on shipping routes through the Strait of Hormuz. If there is no third-party interference, the joint statement between the two countries has now entered the final review and drafting stage. Baghaei also stressed that an Iran-Oman agreement does not mean the Strait of Hormuz will resume safe navigation. Iranian Deputy Foreign Minister Gharibabadi said the Iran-Oman agreement on commercial vessels transiting the Strait of Hormuz was close to being finalised. At that time, both the northern channel controlled by Iran and the southern channel near Oman will be closed, and a new transit model different from the past 60 years will be established in the Strait of Hormuz. The new channel will also be temporary and is expected to be usable for 2 to 4 months. Gharibabadi said Iran had received messages from the US side, and the US side was prepared to resume fulfilling commitments in a previously signed memorandum of understanding. US Fed Governor Cook said that if the disinflation trend does not resume, she would be prepared to support rate hikes; the risk of excessively high inflation is rising and could become entrenched in the economy; there is reason to believe inflation may ease; so far, policy has not led to significant unemployment; and ultimately, the US Fed may still not need to raise rates.
Fundamentals: Geopolitical tensions in the Middle East eased further, with momentum in the geopolitical premium continuing to contract. Outside China, aluminum production resumptions and capacity ramp-up of new capacity continued. The market’s expectations that the global aluminum market will shift from tightness to looseness in the longer term persisted, continuing to cap upside room for aluminum prices. Expectations for US Fed interest rate hikes fluctuated, but near-term hike expectations converged. Coupled with the continued rise in the proportion of liquid aluminum in China, this provided some downside support for aluminum prices in the near term. On China inventory, as of this Thursday, China’s aluminum social inventory fell by 25,000 mt from Monday to 933,000 mt, and fell by 20,000 mt from last Thursday, with destocking of aluminum ingot in China resuming.
Primary aluminum market: In the morning session, the SHFE aluminum 2608 contract traded with its center slightly higher than yesterday, while downstream purchasing sentiment was weak. The price center moved up, and the pace of inventory drawdown slowed. In the SHFE aluminum night session, prices retreated after rapid rise, and there were minor divergences in market quoting attitudes. Today, the main transaction center for spot premiums of SHFE aluminum was between 8-40 yuan/mt and 08-20 yuan/mt. Today, the shipment sentiment index in the east China market was 3.1, up 0.01 MoM; the purchasing sentiment index was 2.86, up 0.06 MoM. Today, the futures center for aluminum edged down slightly versus the previous day’s morning session. In addition, with relatively wide fluctuations in overall market premiums, traders in the central China market showed a clear willingness to hold prices firm and hold back from selling, pushing market prices higher, while the shipment sentiment index continued to decline. Most transactions were hedging arbitrage by futures-spot traders, and downstream processing enterprises showed low purchasing sentiment. Ultimately, the actual transaction price range in the central China market hovered at a discount of 170-200 yuan/mt against the SHFE aluminum 08 contract. Today, the shipment sentiment index in the central China market was 2.99, down 0.2 MoM; the purchasing sentiment index was 2.94, up 0.03 MoM. Today, aluminum prices dipped slightly, and the spot market again showed resilience. Arrivals were tight and the destocking trend remained unchanged; the absolute price was also relatively resistant to pullbacks. Most suppliers regained confidence, held prices firm and sold slowly. Some still intended to monetize first, but only made slight downward adjustments, resulting in very limited low-price selling. With quotes at -10~0, circulation pressure was manageable. Downstream demand remained mediocre, with purchasing as needed; there was no intention to take more at current aluminum prices. On the positive side, traders became more active in entering the market to replenish stocks, taking more at discounts and even ultimately accepting buying at firm prices. Transactions were overall satisfactory.
Secondary aluminum raw materials: Today, SMM A00 spot aluminum closed at 23,690 yuan/mt, a slight correction of 40 yuan/mt MoM from the previous trading day, while aluminum scrap prices across regions were generally stable. For the price difference between A00 aluminum and aluminum scrap, as of August 5, the price difference between A00 aluminum and mixed aluminum extrusion scrap free of paint in Foshan was about 2,130 yuan/mt, and the price difference between A00 aluminum and shredded aluminum tense scrap was about 930 yuan/mt. Against the backdrop of the off-season in consumption, aluminum scrap suppliers were generally unwilling to sell at low prices, and aluminum scrap prices overall remained firm. Demand side, as the high-temperature holiday season approached, downstream cast aluminum alloy enterprises saw a decline in operating rates and a reduction in orders; secondary aluminum plate/sheet and strip enterprises maintained moderate operations, but overall raw material demand weakened markedly compared with Q2. In the short term, on the supply side, the tight supply of compliant, invoiced cargoes continued, and suppliers’ willingness to sell at low prices remained insufficient, providing bottom support for prices. On the import side, the lagged effects of the UAE export ban and the EU tariff hike policy were expected to gradually emerge in the coming months, and port arrivals from June to August remained at low levels. Demand side, the sluggish downstream order environment was unlikely to change in the short term; scrap utilization enterprises were likely to maintain a strategy of purchasing as needed and keeping low inventory, and the procurement sentiment was unlikely to improve significantly.
Secondary aluminum alloy: Spot market: Today, ADC12 market prices were overall stable, and the industry showed weak willingness to adjust prices. On the cost side, although aluminum prices pulled back somewhat, the decline was limited, and enterprises showed insufficient willingness to actively follow the drop; on the demand side, the market remained in the off-season, and spot prices were constrained by weak demand, leaving limited upside room. Recently, futures performed on a strong note, and the spread between futures and spot prices continued to narrow. Since late July, the spot-futures price spread was gradually compressed from high levels, and the futures-spot structure basically returned to parity. As futures rose while spot prices were limited in following, the inquiry activity of spot-futures traders rebounded somewhat. If futures continue to strengthen and the futures premium expands, spot-futures arbitrage opportunities may reopen, driving traders to procure spot cargo. In the short term, the market continued to consolidate amid the coexistence of cost support and weak demand, with prices moving sideways in a narrow range.
Overall outlook: Recently, the macro front improved somewhat. With the US Fed holding off on rate hikes in the short term, the marginal constraints on the non-ferrous sector eased. The proportion of liquid aluminum in China continued to rise, and destocking in China’s aluminum inventory resumed, jointly underpinning aluminum prices. However, the continued commissioning of outside China’s longer-term aluminum capacity and weak traditional end-use demand in China during the traditional off-season, coupled with the recent easing of Middle East geopolitical tensions, may place some pressure on aluminum prices on the upside. Aluminum prices were expected to consolidate 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 substitute for independent judgment. Any decisions made by clients are unrelated to SMM.]
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