9.15 SMM Aluminum Morning Meeting Minutes
Futures: The most-traded SHFE aluminum 2610 contract closed at 23,990 yuan/mt, down 15 yuan from yesterday's settlement price, a decline of 0.06%. It opened at 23,995.00 yuan/mt during the day and fluctuated within a range of 23,950-24,055 yuan/mt. Prices traded below the MA5 (24,262.00), MA10 (24,295.00), and MA30 (24,048.83), but above the MA60 (23,604.42). The short-term upward structure continued to face resistance, with a narrow sideways consolidation pattern emerging, and the short-term moving averages above formed key pressure. The MACD indicator's DIF (127.6789) was below the DEA (155.8754), and the MACD green bar stood at -56.3931, indicating that bullish momentum continued to weaken. The core trading range for SHFE aluminum is suggested at 23,600-24,500 yuan/mt. The LME aluminum 3M contract closed at $3,252.50/mt, up 0.03%. It opened at $3,248.00/mt during the day and fluctuated within a range of $3,247.00-$3,252.50/mt. Prices traded below the MA5 (3,279.00), MA10 (3,294.95), and MA30 (3,267.05), but above the MA60 (3,213.12). The short-term upward structure continued to face resistance, with a narrow sideways consolidation pattern emerging, and the short-term moving averages above formed clear pressure. The MACD indicator's DIF (10.0531) was below the DEA (14.2417), and the MACD green bar stood at -8.3772, indicating that bullish momentum continued to weaken, with consolidation at highs followed by a pullback. The core trading range for LME aluminum is suggested at $3,150-$3,300/mt.
Macro front: US President Trump said he is "open" to negotiations with Iran, that the US is helping oil shipments in the Strait of Hormuz, and that countries should provide "escort compensation" to the US. Trump said Iran is "desperate" to reach a deal, and the US side is open to this prospect. Although Iran has repeatedly stated that it does not wish to negotiate with the US government on reaching an agreement, Trump once again claimed that Iran wants to reach a deal quickly. The Islamic Revolutionary Guard Corps Navy issued a statement saying that the supertanker "Al Ghaya" struck a mine while attempting to cross a prohibited zone south of the Strait of Hormuz, followed by an explosion. The statement stressed that warnings had previously been issued about the dangers of this illegal route, and that the Strait of Hormuz has been blocked and remains under Iran's intelligent control. US Treasuries suffered a new round of heavy selling, with the 10-year yield breaking above the 5% mark on Monday, hitting a new high since 2023. Inflation concerns and supply pressure formed a resonance, putting global bond markets under pressure. China's central bank will conduct a 500 billion yuan six-month outright reverse repo operation on September 15. Given that 500 billion yuan of six-month outright reverse repos mature in September, this means that this month's six-month outright reverse repos will be rolled over in equal amounts, marking the second consecutive month of equal-amount rollover.
Fundamentals: Outside China, aluminum production resumptions continued to ramp up, and expectations of easing supply in the long term persisted. However, LME inventory stood at only 245,000 mt last week, an extremely low historical level. Combined with surging oil prices driving up costs and shipping disruptions in the Strait of Hormuz, geopolitical supply risk premiums rebounded. In China, the "September peak season" saw broad-based recovery across sectors, with social inventory continuing to destock. On the inventory side, the destocking trend in aluminum ingot social inventory continued during the week. As of Monday this week, aluminum ingot inventory in major consumption areas in China stood at 776,000 mt, down 20,000 mt from last Thursday and down 26,000 mt WoW from last Monday.
Primary aluminum market: SHFE aluminum futures fell from the previous trading day today, with market purchasing sentiment clearly improving. Combined with strong warehouse withdrawals, suppliers raised their spot premium quotes. Today, spot A00 aluminum ingot transactions against the SHFE aluminum 2610 contract were concluded between parity and a premium of 20 yuan/mt. With the mismatch between September peak season expectations and sluggish reality, downstream processing enterprises in the central China market maintained a cautious procurement pace of buying only small volumes as needed amid high absolute aluminum prices, focusing on reducing in-factory inventory. Only trading firms engaging in both spot and futures market purchased in large volumes, while major suppliers showed poor willingness to sell due to the large discounts. Ultimately, actual transaction prices in the central China market were concentrated in the range of a discount of 150-180 yuan/mt against the 09 contract. Today, aluminum prices continued to fall sharply, and the spot market stabilized. With prices already well below the monthly average clearly limiting one-way outflows, and arrivals falling short of expectations while inventory continued to decline, suppliers firmly held prices and held back from selling at lows, with quotes showing almost no discount and actual circulation remaining tight. The price decline prompted downstream buyers to steadily replenish inventory. Although the procurement pace was not urgent, the foundation was relatively solid, which in turn drove traders to increase market participation in purchasing for delivery. Overall demand improved, and transactions were moderate.
Aluminum scrap: Today, SMM A00 aluminum prices closed at 24,080 yuan/mt, down 160 yuan/mt from the previous trading day, while aluminum scrap market prices followed with declines of 100-150 yuan/mt. On the price difference front, as of September 14, the price difference between A00 aluminum and mixed aluminum extrusion scrap free of paint in Foshan was approximately 2,459 yuan/mt, and the price difference between A00 aluminum and shredded aluminum tense scrap was approximately 1,238 yuan/mt. On the supply side, the tight raw material supply situation remained unchanged, with the scarcity of compliant invoiced aluminum scrap continuing to rise, constraining scrap utilization enterprises' operations and purchases. Against this backdrop, some aluminum scrap yards actively sold amid high aluminum prices while correspondingly reducing purchases and stockpiling, leading to a phased release of circulating supply. The aluminum scrap market is expected to continue consolidating on a strong note this week. With the September peak season underway, a substantive recovery in downstream end-user orders still requires observation. Scrap yards' active selling behavior may persist in the near term, but the tightness in high-quality invoiced scrap is unlikely to see substantive improvement. Shredded aluminum tense scrap (priced based on aluminum content) is expected to trade mainly within the range of 20,700-21,300 yuan/mt, with close attention needed on the pace of downstream order recovery and the sustainability of scrap yard selling activity.
Secondary aluminum alloy:Spot: Today, ADC12 market prices were mainly slightly lower, with the SMM ADC12 price down 100 yuan/mt from the previous trading day to 24,200 yuan/mt. The price weakness was mainly driven by the decline in aluminum prices and futures, with some enterprises adjusting quotes in line with the market, but the overall extent of price cuts was relatively limited, reflecting that enterprises still hold some expectations of cost-side support and are not strongly inclined to make significant voluntary price concessions. On the demand side, downstream procurement overall maintained a just-in-time pace. Although some purchasing demand was released after prices pulled back, a clear restocking-on-dips trend has yet to form, and traditional peak season demand improvement remains relatively limited. Overall, ADC12 prices are expected to continue to move sideways in the short term, with close attention on raw material-side changes and whether "September peak season" demand can be further released.
Overall outlook:On the macro front, expectations of interest rate hikes and a strong US dollar are weighing on the market, with US Treasury yields surging and the US dollar index strengthening, putting pressure on the nonferrous metals sector. However, expectations for the opening of safe commercial shipping lanes in the Strait of Hormuz remain unclear. Fundamentally, China's continued destocking combined with peak season demand recovery provides relatively strong support below, and the central bank's 500 billion yuan six-month outright reverse repo operation has eased expectations of domestic liquidity tightening, providing mild support to aluminum prices. Aluminum prices are expected to continue to consolidate at highs in the short term.
[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 their own independent judgment. Any decisions made by clients have no bearing on SMM.]
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