8.18 SMM Aluminum Morning Meeting Minutes
Futures: The most-traded SHFE aluminum contract opened at 24,015 yuan/mt in the night session on August 17, with a high of 24,015 yuan/mt and a low of 23,870 yuan/mt, and settled at 23,935 yuan/mt, down 0.33% from the previous close. Prices rebounded to test the MA5 and MA10, then pulled back under pressure, consolidating and closing with a small bearish candlestick. The MA20 formed short-term resistance, while the MA40 and MA60 provided support below. During the session, open interest fell sharply, indicating long liquidation. Technically, the 4-hour MACD maintained a bearish crossover, with the green histogram expanding, and bears dominating in the short term. LME aluminum opened at $3,245.0/mt on August 17, with a high of $3,286.0/mt and a low of $3,245.0/mt, and settled at $3,259.5/mt, up 0.45% from the previous close. After pulling back to the MA20 (3,245.43) and finding support, prices bottomed out and closed with a small bullish candlestick, regaining the short-term moving averages of MA5 and MA10, while the MA40 and MA60 remained above prices and continued to cap gains. Trading volume shrank on the day, while open interest edged up, showing characteristics of long additions. Technically, on the daily chart, MACD DIFF (15.03) ran above DEA (7.33), the red histogram narrowed slightly, and bullish momentum weakened at the margin.
Macro front: On Monday local time, US Treasury yields broadly moved higher. The 30-year Treasury yield, typically more sensitive to geopolitical events, rose more than 4 bps to 5.311%, the highest level since June 2007. According to CCTV News, on August 17 local time, US President Trump explicitly stated that he was not seeking to extend the memorandum of understanding with Iran, and said there was “no timetable” for resolving the Iran issue and that he was “not in a hurry.” Iran issued a tough response in tandem. US Energy Secretary Wright said the US would “fight a long war” with Iran, and Treasury Secretary Bessent hinted that new economic sanctions were about to be introduced. According to CME FedWatch: the probability that the US Fed would keep rates unchanged through September was 65%, and the probability of cumulative rate hikes of 25 bps was 35%. The probability that the US Fed would keep rates unchanged through October was 51.4%, the probability of cumulative rate hikes of 25 bps was 41.3%, and the probability of cumulative rate hikes of 50 bps was 7.4%.
Fundamentals: With the off-season effect yet to fade and Asian demand showing no clear improvement, ex-China aluminum ingot premiums were likely to remain in the doldrums, and Japan’s MJP premium still had downside room. On inventories, on Monday, aluminum ingot inventory in major consumption areas fell 500 mt MoM, with only Gongyi posting an inventory buildup.
Primary aluminum market: In early trading, the SHFE aluminum 2608 contract continued to trade at elevated levels. Today was the last trading day for the SHFE aluminum 2608 contract, and the price spread between near-month SHFE aluminum contracts was contango 20–contango 50 yuan/mt. Today, SHFE aluminum spot premiums were mainly traded in the range of 09-10 yuan/mt to 09+10 yuan/mt. Today, the east China market shipment sentiment index was 3.15, up 0.01 MoM; the purchasing sentiment index was 3.4, up 0.06 MoM. Today, aluminum futures rebounded slightly again. As it was the first day of the week, downstream processing enterprises in the central China market showed low stockpiling sentiment. Overall purchasing sentiment declined WoW from last Friday, and overall market trading was sluggish. Ultimately, the actual transaction price range in the central China market hovered at a discount of 90-110 yuan/mt against the SHFE aluminum 09 contract. Today, the central China market shipment sentiment index was 3.09, unchanged MoM; the purchasing sentiment index was 2.9, down 0.07 MoM. Today, aluminum prices stopped falling and surged, and the spot market showed strong resilience. In the morning, a sharp rebound in the outright price prompted some one-way profit-taking at higher levels, with proactive price cuts to sell weighing somewhat on the market. However, on the one hand, the spot-futures price spread had weakened to a relatively low level, while ongoing destocking in the physical market prompted most suppliers to firmly hold prices firm and sell slowly; actual circulation gradually became controllable and tightened slightly. On the other hand, there were some instances of rush to buy amid continuous price rise and make just-in-time procurement on the downstream side. Traders’ attempts to push for lower prices when purchasing failed to fully meet demand, and they gradually accepted buying cargo with firmer prices. Quotes stabilized and edged up within -10 to +10, and transactions improved.
Aluminum scrap: Today, the SMM A00 spot aluminum price closed at 24,070 yuan/mt, up 200 yuan/mt MoM from the previous trading day, and aluminum scrap prices in China rose in tandem. Against the backdrop of continuously rising primary aluminum prices, aluminum scrap fluctuated within a relatively limited range, and the price transmission mechanism was impeded, mainly constrained by two factors: first, marginal weakening in demand for secondary aluminum alloy downstream. High-temperature holidays, coupled with the traditional consumption off-season, led to a continued decline in the operating rate of cast aluminum alloy enterprises and a contraction in order volumes; second, high inventories of wrought aluminum alloy scrap raw materials for doors and windows in Henan and other regions weakened the upside elasticity of aluminum scrap prices. In addition, supply-side constraints from the “reverse invoicing” policy continued, and the scarcity of compliant, invoiced aluminum scrap provided a floor for aluminum scrap prices. As the high-temperature holiday had not yet ended, downstream cast aluminum alloy enterprises kept operating rates at low levels, and order recovery still required time. Scrap utilization enterprises were highly likely to continue purchasing as needed and maintaining low inventories, and a concentrated restocking rally still needed to wait. Notably, the price difference between A00 aluminum and shredded aluminum tense scrap had gradually widened, and aluminum scrap’s economic advantage relative to primary aluminum recovered somewhat. It was expected that in the short term, the aluminum scrap market would continue to move sideways at elevated levels, with weak end-use demand remaining the core factor suppressing prices.
Secondary aluminum alloy: Spot market: Today, ADC12 market quotes were generally firm, with most enterprises raising prices by 100 yuan/mt, mainly supported by the rebound in futures and elevated raw material costs; some enterprises also sought to recoup earlier declines. However, end-use demand is still in the off-season, with procurement mainly driven by rigid demand, and upward momentum on the spot side is relatively limited. Overall, the market continues to show a pattern of strong cost support while demand constrains upside room.
Comprehensive Outlook: On the macro front, US July inflation data pulled back as expected, and July retail sales data weakened sharply. A string of weaker-than-expected economic data significantly lowered market expectations for US Fed interest rate hikes in September, with the probability of a September hike falling markedly, and the market beginning to price in expectations for the terminal rate. The US dollar index was under pressure and weakened, providing macro support for LME metals. The fundamental supply gap persisted, aluminum ingot inventory continued to draw down, and on the outside China supply side, UAE’s EGA disclosed progress on production resumptions at the Al Taweelah aluminum smelter. Currently, 18% of the plant’s 1,262 pots have restarted, with the pace of resumptions accelerating versus the market’s previous expectations, and the previously priced-in tight-supply premium facing pressure to pull back. In the short term, aluminum prices are expected to consolidate on a strong note, but upside room will be somewhat capped by expectations for production resumptions.
[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 to replace their own independent judgment. Any decisions made by clients are unrelated to SMM.]
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