8.19 SMM Aluminum Morning Meeting Summary
Futures: The most-traded SHFE aluminum contract opened at 23,895 yuan/mt in the night session of August 18, reached a high of 23,895 yuan/mt and a low of 23,725 yuan/mt, and closed at 23,750 yuan/mt, down 0.86% from the previous close. Futures broke below the short-term MA5, MA10, and MA20 moving averages, testing support at MA60 (23,724.84), with several short-term moving averages turning into resistance. Trading volume expanded during the session, while open interest increased simultaneously, with bears adding positions markedly. On the technical front, the 4-hour MACD death cross persisted, with green bars continuing to widen, giving short-term momentum an advantage for bears. On August 18, LME aluminum opened at $3,262.0/mt, reached a high of $3,269.5/mt and a low of $3,210.0/mt, and finally closed at $3,217.5/mt, down 1.29% from the previous close. Prices fell sharply on high volume, breaking below the short-term MA5, MA10, and MA20 moving averages, which shifted from support to resistance. Trading volume expanded that day, while open interest dropped significantly, mainly due to bulls reducing positions. On the technical front, the DIFF line of the daily MACD remained above the DEA line, but red bars contracted sharply, suggesting rapidly fading upward momentum for bulls and the risk of a death cross.
Macro Front: Premier Li Qiang recently signed a State Council decree, promulgating the State Council’s Decision on Revising the Regulations on the Administration of Housing Provident Fund, which will take effect on September 20, 2026. It was mentioned that the restriction requiring rent to exceed a prescribed percentage of family wage income for the withdrawal of housing provident fund to pay rent will be removed; new circumstances allowing the withdrawal of the housing provident fund have been added, including the decoration of self-occupied housing, payment of property management fees for self-occupied housing, and other housing-related consumption approved by the State Council. “Fed mouthpiece” Nick Timiraos: Corporate executives surveyed by the Cleveland Fed expect CPI inflation to be 3.3% over the next year, slightly down from 3.7% in Q2. They expect no significant changes in wage growth (2.8% over the next year, compared with 2.9% in last year’s survey) and employment levels. According to CME FedWatch: The probability of the US Fed keeping interest rates unchanged through September is 65%, with a 35% probability of a cumulative 25 basis point rate hike. The probability of the US Fed keeping rates unchanged through October is 51.4%, while the probabilities for a cumulative 25 bps and 50 bps rate hike are 41.3% and 7.4%, respectively.
Fundamentals: The current operating rate at leading aluminum sheet & plate enterprises stabilized at 69%. The downstream stocking sentiment for construction sheets has yet to recover, and market confidence in consumption recovery is insufficient during the August seasonal transition; orders on hand for hot-rolled downstream products such as can stock, auto body sheets, and brazing sheet are relatively stable. Following the concentrated delivery of export orders received in Q2, market demand is gradually returning to actual levels. The anticipated downstream restocking in August has not yet materialized, and the demand side lacks momentum for substantial improvement; the operating rate is expected to remain low going forward. The operating rate of aluminum foil was at the bottom of the traditional off-season. Some packaging foil enterprises saw low order completion rates in August, with mounting inventory pressure, prompting enterprises to prioritize production cuts to destock. The off-season effect for air-conditioner foil, coupled with weakening demand for packaging foil, was the dominant characteristic of the current industry. The operating rate was already at a relatively low level, and a turning point for subsequent production recovery had yet to become clear. On the inventory front, aluminum ingot stocks in major consumption areas increased by 1,000 mt MoM on Tuesday, with only Gongyi showing destocking.
Primary aluminum market: Today, the SHFE aluminum futures center declined from the previous trading day. Selling sentiment in the market was relatively evident, and overall spot cargoes shifted to transactions at discounts. A00 aluminum ingot premiums were transacted between a discount of 40 yuan/mt and parity today. In east China today, the selling sentiment index was 3.2, up 0.05 MoM; the purchasing sentiment index was 3.15, down 0.25 MoM. In central China today, the overall trading atmosphere maintained the previous day's level. The monthly average price meeting market transaction expectations prompted traders to increase their selling enthusiasm, but downstream processing enterprises' purchasing sentiment maintained the level of the previous day. Ultimately, the actual transaction price range in the central China market centered around a discount of 110-130 yuan/mt against the SHFE aluminum September contract. In central China today, the selling sentiment index was 3.13, up 0.04 MoM; the purchasing sentiment index was 2.9, unchanged MoM. Aluminum prices fell today, while the spot market stabilized with a positive trend. Influenced by multiple factors—such as destocking expectations remaining intact coinciding with falling absolute prices and a spot-futures price spread that was not yet high—most suppliers gained confidence in the outlook and chose to hold prices firm, holding back from selling, with quotes at 0 to +10 and tight circulation. Downstream users steadily increased purchases on dips as demand recovered. Traders also actively entered the market to procure non-premium cargoes, seizing suitable liquidity. Larger traders directly and strongly bid up prices to purchase and make a market. Intermediary demand was robust, driving notable transaction activity.
Aluminum scrap: Today, SMM A00 spot aluminum closed at 23,900 yuan/mt, down 170 yuan/mt from the previous trading day. Domestic aluminum scrap market prices adjusted to varying degrees—Shanghai, Zhejiang, and Jiangsu adjusted actively, while Guizhou, Anhui, and central China held steady and took a wait-and-see approach. Against the backdrop of continuously rising primary aluminum prices, aluminum scrap price fluctuations were relatively limited. The price transmission mechanism was impeded, constrained by two main factors. First, downstream demand for secondary aluminum alloy weakened marginally; the traditional consumption off-season, combined with high-temperature holidays, caused the operating rate at cast aluminum alloy enterprises to decline, reducing order volumes. Second, high inventories of wrought aluminum scrap series raw materials, such as doors and windows in Henan and other areas, weakened the upward elasticity of aluminum scrap prices. Additionally, the "reverse invoicing" policy constraint on the supply side persisted, and the scarcity of compliant, invoiced aluminum scrap provided bottom support for aluminum scrap prices. Current high-temperature holidays have not ended yet, downstream cast aluminum alloy enterprises' operating rates remain low, order recovery still needs time, and scrap utilization enterprises are likely to continue purchasing as needed and maintaining low inventory strategies, while a concentrated restocking wave still awaits. It is worth noting that the price difference between A00 aluminum and shredded aluminum tense scrap has gradually widened, and the economic advantage of aluminum scrap over primary aluminum has partly recovered. Short-term aluminum scrap markets are expected to continue a pattern of high-level sideways movement, with weak end-use demand remaining the core factor weighing on prices.
Secondary aluminum alloy: Today, ADC12 market quotes consolidated on a subdued note, with most enterprises lowering quotes by 100 yuan/mt, mainly affected by factors such as the pullback in futures and primary aluminum prices, weak end-use demand, and a slight decline on the cost side. However, the decline in aluminum scrap costs is relatively limited so far, and the cost side still provides some support. Short-term ADC12 prices are expected to continue consolidating within a range. On the one hand, high prices for compliant raw materials, low domestic operating rates compared to the same period, and a closed import window will continue to offer cost and supply-side support, limiting downside room; on the other hand, amid the high-temperature off-season, weak end-use demand and renewed social inventory buildup leave the spot market lacking demand-driven momentum for a sustained rise. Therefore, a short-term price rise still needs to wait for a material improvement in end-use consumption.
Overall Outlook: Macro front, US July inflation data pulled back as expected, coupled with a significant weakening in July retail sales data. Consecutive weak economic data cooled market expectations for a US Fed interest rate hike in September. CME showed the probability of keeping rates unchanged in September rose to 65%, but the probability of a cumulative rate hike by October remained near 50%, and the debate over the terminal rate has not yet been settled. Fundamental deficit persists, aluminum ingot inventory continued to destock, and on the overseas supply side, UAE's EGA disclosed the production resumption progress at the AlTaweelah aluminum smelter. Currently, 18% of the plant's 1,262 pots have been restarted, with the pace of production resumption accelerating compared to earlier market expectations, and the tight supply premium priced in earlier faces retracement pressure. Short-term aluminum prices are expected to mainly consolidate, with upside room somewhat capped by production resumption expectations.
[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 substitute this for independent judgment. Any decisions made by clients are not related to Shanghai Metals Market.]
