8.7 SMM Aluminum Morning Meeting Minutes
Futures: The most-traded SHFE aluminum 2609 contract closed at 23,925 yuan/mt, up 90 yuan from yesterday’s settlement price, a gain of 0.38%. It opened at 23,875.00 yuan/mt and fluctuated in a range of 23,835-23,945 yuan/mt during the session. Prices traded above the MA5 (23,794.00), MA10 (23,609.50), MA30 (23,220.67), and MA60 (23,726.42) moving averages. 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 continued, with the upper high-price zone forming key resistance. The MACD indicator showed DIF (114.4849) above DEA (19.7551), with the MACD red histogram at 189.4596. Bearish momentum continued to weaken, while bullish recovery momentum remained strong. The suggested core trading range for SHFE aluminum is 23,500-24,200 yuan/mt. The LME aluminum 3M contract closed at $3,267/mt, up 0.00%. It opened at $3,265/mt and fluctuated between $3,262-3,267/mt during the session. Prices traded above MA5 (3,244.90), MA10 (3,211.05), and MA30 (3,167.17), but below MA60 (3,343.12). Medium and long-term moving averages were in a bearish alignment and gradually moved lower. Overall, a low-level consolidation and recovery structure emerged, with the 60-day moving average above forming clear resistance. The MACD indicator showed DIF (-0.1051) above DEA (-19.9589), with the MACD red histogram at 40.1279. Bearish momentum continued to weaken, with consolidation and adjustment at lows. The suggested core trading range for LME aluminum is $3,200-3,300/mt.
Macro front: US President Trump said that an agreement on reopening the Strait of Hormuz “cannot yet be said to have been formally reached,” but that the strait is currently “open to some extent.” The US is participating in relevant negotiations, and overall progress is good. The US Navy is currently carrying out a blockade operation against Iran and controlling the relevant waters, but security risks such as sea mines may still affect the passage of commercial vessels. Salimi, a member of the Iranian parliament’s presidium, publicly disclosed preliminary text details of Iran’s proposed strategic management plan for the Strait of Hormuz, including banning hostile parties from passing through the strait. Violators would face fines of up to 20% of the value of the goods. Vessels from the US, Israel, and other countries will be prohibited from passing through the Strait of Hormuz. The draft triggered market concerns that global crude oil transportation could be disrupted, pushing international oil prices sharply higher: the most-traded WTI contract rose 4%, and the most-traded Brent contract rose more than 4%. People familiar with the matter said that if inflation data released in the coming weeks come in hot and the market further raises rate-hike expectations, Fed Chairman Wosh is ready to support raising interest rates. Wosh also acknowledged communication missteps since taking office as Fed Chairman, failing to sufficiently reinforce key messages about price stability. Sources said Trump would ask Walsh about economic forecasts and views, but did not push him to take any specific policy actions.
Fundamentals:Supply side, domestic weekly aluminum production was basically stable this week, and the proportion of liquid aluminum rose 0.19 percentage points MoM; outside China, amid continued progress in ramp-ups at newly commissioned projects and production resumptions, aluminum supply is expected to keep increasing. However, in the short term, the global destocking trend for aluminum ingot remained unchanged. Demand side, downstream processing industries were in the traditional consumption off-season, with overall operating rates under pressure; aluminum billet processing fees pulled back, and substitution demand for aluminum ingot weakened. Inventory side, domestic aluminum social inventory continued to destock this week. As of this Thursday, domestic aluminum ingot social inventory destocked 20,000 mt from last Thursday and 25,000 mt from this Monday, with the destocking magnitude narrowing further; meanwhile, aluminum billet inventory built up slightly, with inventory buildup of 4,000 mt WoW. In the short term, aluminum ingot inventory is expected to continue destocking.
Primary aluminum market:In early trading, the SHFE aluminum 2608 contract traded with its center clearly higher than yesterday. At present, prices are suppressing downstream purchasing, but with delivery approaching, some suppliers were unwilling to sell at low prices. Today’s quotes against SHFE aluminum were basically around 08-30 yuan/mt. Today, the east China market’s shipments sentiment index was 3.13, up 0.03 MoM; the purchasing sentiment index was 2.96, up 0.1 MoM. Today, the central China market’s trading atmosphere stayed at the level of the previous two days. Trading firms engaging in both spot and futures market made large purchases in an attempt to capture the price spread. Under a large discount, suppliers’ willingness to hold prices firm and hold back from selling became increasingly evident, driving market trading quotes to keep climbing. Ultimately, the actual transaction price range in the central China market was around a discount of 140-170 yuan/mt against the SHFE aluminum 08 contract. Today, the central China market’s shipments sentiment index was 2.97, down 0.02 MoM; the purchasing sentiment index was 2.96, up 0.02 MoM. Today, aluminum prices surged, and the spot market was exceptionally firm. Arrivals were tighter, inventories were drawn down sharply, and suppliers—especially those above designated size—were generally firmly bullish on the outlook and held prices firm in sales. The spike in absolute prices prompted a small number to narrow discounts first to sell, but it did not cause much impact; quotes were in the -10 to +10 range, and overall circulation was slightly tight. Downstream buyers were unable to chase the rally, and just-in-time procurement also came under pressure and weakened, but traders’ willingness to enter the market and purchase remained relatively high, gradually shifting from pushing for lower prices and buying only at discounts to making purchases even without premiums, with decent transactions.
Aluminum scrap:Today, SMM A00 spot aluminum prices closed at 23,800 yuan/mt, up 110 yuan/mt MoM from the previous trading day. In China, aluminum scrap market prices were still mainly basically stable, with a wait-and-see stance, and only some grades in parts of east China edged up. As for the price difference between A00 aluminum and aluminum scrap, on August 6, the price difference between A00 aluminum and mixed aluminum extrusion scrap free of paint in Foshan was about 2,240 yuan/mt, and the price difference between A00 aluminum and shredded aluminum tense scrap was about 1,030 yuan/mt. Secondary aluminum alloy and its downstream demand weakened at the margin. Coupled with elevated inventories of wrought aluminum alloy scrap raw materials such as doors and windows in Henan and other regions, the pass-through mechanism of aluminum scrap prices was impeded, leaving clearly insufficient momentum to follow price increases. Affected by the traditional consumption off-season, the operating rate of downstream cast aluminum alloy enterprises continued to decline, order volumes shrank, and the aluminum scrap market lacked substantive support. Looking ahead, the supply-demand mismatch pattern will be difficult to reverse in the short term. Scrap utilization enterprises are likely to maintain a strategy of purchasing as needed and operating with low inventory, and it will be hard for the market trading sentiment to see any substantive improvement. Shredded aluminum tense scrap priced based on aluminum content is expected to be dragged down next week by a stalemate in raw material prices and weak downstream demand, remaining under pressure overall. The mainstream trading range is expected to hover between 20,200-20,800 yuan/mt.
Secondary aluminum alloy: Spot: Today, overall ADC12 market quotes were mainly stable, and the pace of price adjustments remained relatively cautious. As aluminum prices rose, cost support strengthened further and enterprises’ willingness to hold prices firm increased somewhat. However, constrained by limited recovery in end-use demand, most enterprises still chose to wait and see, with relatively restrained quote adjustments. Meanwhile, futures premiums widened, and inquiry activity from spot-futures traders increased markedly recently. Some traders have begun to gradually purchase, and market trading sentiment improved compared with the previous period. In the short term, against the backdrop of relatively strong cost support and still mediocre demand, ADC12 prices are expected to remain in a narrow range.
Overall outlook: Differences over the Middle East situation persist. Although the US Fed did not raise interest rates in July, its overall stance remained hawkish. The fundamental gap continued, aluminum ingot inventory kept declining, and aluminum prices are expected to consolidate on a strong note in the short term. Going forward, close attention should be paid to the progress of production resumptions in the Middle East and updates on commissioning plans for new projects.
[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.]
![Futures fell back on position reduction, with cost support battling weak pre-holiday demand; spot cargo remained mostly stable [SMM Cast Aluminum Alloy Morning Comment]](https://imgqn.smm.cn/usercenter/yOYEC20251217171653.jpg)
