Tug-of-War Between Longs and Shorts Keeps SHFE Aluminum Strong at Highs; Loose Alumina Supply Limits Rebound Room [SMM Aluminum Futures Brief]

SMM News, August 31:

The most-traded SHFE aluminum 2610 contract closed at 24,075 yuan/mt today, up 145 yuan, or 0.61%. Trading volume was 194,986 lots and open interest was 248,527 lots. Open interest rose by 618 lots on the day, and the contract edged higher on mild position building as bulls’ willingness to enter showed some recovery. The price held above the 5-day, 10-day, 30-day and 60-day moving averages. Short-term bearish pressure continued to ease, and the low-level pattern of drifting higher extended. The price fluctuated higher intraday and closed with gains, while low-level buying support from bulls was moderate. The 5-day and 10-day moving averages turned upward, while the 30-day and 60-day moving averages still pointed downward. The medium-term downtrend has not fully reversed; overhead previous high areas formed strong medium- and long-term resistance, leaving rebound room constrained, while multiple short-term moving averages below provided solid low-level support. DIF and DEA were both above the zero axis, with DIF below DEA; bullish momentum slowed marginally, while the short-term rebound rhythm continued.

SMM comment: On the macro front, the Jackson Hole central bank symposium sent hawkish signals, Fed Chairman Warsh struck a hawkish tone in his first appearance, and European Central Bank officials leaned toward a September rate hike. Expectations of tighter global liquidity increased, macro sentiment was under pressure, and this created bearish pressure on aluminum prices. However, continued domestic destocking and the approaching "September peak season" expectations provided strong support beneath aluminum prices. With bullish and bearish factors intertwined, aluminum prices are expected to continue to consolidate at highs.

The most-traded alumina 2610 contract closed at 2,687 yuan/mt today, up 58 yuan, or 2.21%. Trading volume was 339,364 lots and open interest was 154,170 lots; open interest fell by 74,424 lots from the previous session, as profit-taking positions were cut in a concentrated wave during the rebound. The price held above the 5-day, 10-day and 30-day moving averages while still trading below the 60-day moving average. After earlier declines, the contract saw a strong rebound recovery, and low-level buying support from short-term bulls clearly strengthened. The 5-day and 10-day moving averages still pointed downward, the medium-term downtrend had not reversed, and the overhead 60-day moving average constituted strong medium- and long-term resistance, keeping rebound upside room constrained. MACD green bars disappeared and turned red; bearish momentum narrowed clearly, short-term rebound momentum was released to some extent, and downward pressure eased temporarily.

SMM comment: Alumina prices are currently trending lower, market sentiment is pessimistic, and the supply recovery has made the loose balance more pronounced. Recent production increased MoM, Guangxi continued to ramp up output, and the earlier ore shortage has eased. Shanxi production resumptions next month and new Guangxi capacity in early September are expected to keep pressuring prices. Prices outside China have also pulled back. The earlier supply mismatch logic has weakened, and lower net imports in July eased pressure outside China. Inventory buildup continued: aluminum producers increased low-price restocking, port inventories accumulated to historical highs, producer inventories rose alongside higher production, and warrants and in-transit inventories saw some destocking. Looking ahead, supply will keep increasing, prices are expected to move lower, and inventory is likely to continue building.

[The information provided is for reference only. This article does not constitute direct investment research advice. 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]