SMM Aluminum Morning Meeting Minutes, Oct 9:
Futures: The most-traded SHFE aluminum contract opened at 23,255 yuan/mt in the night session on Oct 8, hit a high of 23,365 yuan/mt and a low of 23,195 yuan/mt, and closed at 23,220 yuan/mt, down 165 yuan/mt or 0.71% from the previous close. Futures quickly dipped and weakened, with prices falling below all cyclical moving averages of 5/10/20/40/60. All moving averages turned downward to form resistance, highlighting a bearish pattern. Trading volume during the session was 74,115 lots, with open interest at 269,000 lots, down 819 lots, mainly driven by bulls cutting positions and exiting. On the technical front, the 4-hour MACD death cross continued, with DIFF well below DEA. Green bars expanded significantly, and bearish momentum continued to be released. The LME aluminum 3M contract opened at $3,125.0/mt on Oct 8, hit a high of $3,156.0/mt and a low of $3,041.5/mt, and closed at $3,042.0/mt, down $83.0/mt or 2.66% from the previous close. Futures plunged sharply, with prices falling below all cyclical moving averages of 5/10/20/40/60. All moving averages exerted downward pressure, further strengthening the bearish trend. Trading volume during the session was 29,262 lots, with open interest at 567,000 lots, down 339 lots, mainly driven by bulls cutting positions and exiting. On the technical front, the daily MACD death cross continued, with DIFF below DEA. Green bars kept expanding, and bearish momentum was released in a concentrated manner.
Macro front: St. Louis Fed President Musalem said the US Fed needs to raise interest rates again to push inflation back to the 2% target. He said monetary policy needs to be tightened further to achieve the inflation target in a "timely" manner. Musalem said if "timely" means about 18 months, rates may need to be raised further at appropriate times over the next 6 to 9 months. Data released by the US Labor Department on Thursday showed that initial jobless claims in the US fell by 2,000 WoW to a seasonally adjusted 197,000 in the week ended Oct 3, below market expectations of 200,000, and remained near a 57-year low for the fourth consecutive week. Meanwhile, September nonfarm payrolls released last Friday increased by only 29,000, far below market expectations, indicating a clear cooling in hiring demand. According to CME "FedWatch": The probability of the Fed keeping rates unchanged in October is 82.3%, and the probability of a cumulative 25bp hike is 17.7%. The probability of the Fed keeping rates unchanged in December is 18.7%, the probability of a cumulative 25bp hike is 67.6%, and the probability of a cumulative 50bp hike is 13.7%.
Fundamentals: According to SMM statistics, total aluminum production outside China fell 2.4% YoY in September 2026, mainly due to lower YoY load at aluminum plants in the Middle East. Daily average production outside China rebounded 2.2% MoM, with production resumptions in the Middle East and production ramp-up at new projects in Indonesia, Vietnam, and India continuing to drive the rebound in daily average production. Benefiting from accelerated production resumptions at Middle Eastern aluminum smelters, total operating capacity of aluminum in the Middle East has recovered to around 4.5-5 million mt, and total operating capacity of aluminum outside China has recovered to around 29.65 million mt. Looking ahead to October 2026, production resumptions in the Middle East are expected to continue advancing. New projects in Indonesia and India that started production earlier are expected to continue ramping up production, but some projects originally planned to start production in Q4 have experienced varying degrees of delays, and production growth is expected to gradually slow down. On the inventory side, as of October 8, SMM data showed aluminum inventory in the Shanghai Bonded Zone at 89,600 mt and Guangdong Bonded Zone inventory at 25,000 mt, totaling 114,600 mt, down 3,500 mt from September 30. Inventory of 6063 aluminum billet in major domestic consumption areas stood at 187,500 mt, up 38,000 mt from September 30.
Primary aluminum market: On October 8, SHFE aluminum 2610 contract futures prices trended lower compared with the same period before the holiday, and market purchasing sentiment was moderate. However, due to the inventory buildup after the holiday, traders found it difficult to hold firm on higher premiums. SMM A00 aluminum ingot transactions were mainly concluded at premiums of 30-50 yuan/mt. On the first day of work resumption after the National Day holiday, trading activity in the central China market was sluggish, with traders making only sporadic small-volume purchases, while downstream processing enterprises showed some restocking interest at lower prices, modestly supporting premiums. Early on, affected by the decline in futures prices, market quotes were on the high side, but as trading sentiment turned cold, quotes gradually weakened. Ultimately, actual transaction prices in the central China market were concentrated in the range of discounts of 30-60 yuan/mt against the SHFE aluminum October contract. In the South China market, aluminum prices fell sharply on October 8, and the spot market was weak. Arrivals and inventory buildup during the National Day holiday were relatively limited, and sellers generally held prices firm in early trading. However, as the backwardation structure of SHFE aluminum widened and the actual spot-futures price spread remained high, firm offers drew little response, prompting sellers to gradually shift toward lowering prices and selling more to realize cash, increasing the availability of discounted spot cargoes. After the holiday, absolute prices were low, and restocking demand provided some support to the market. However, overall concerns about the high spot-futures price spread persisted, and aside from purchases to fulfill delivery obligations, there was almost no flexibility, with weak demand from intermediate segments and poor transaction activity. Spot transaction prices were concentrated at premiums of 230-270 yuan/mt against the SHFE aluminum 2610 contract.
Aluminum scrap: On October 8, SMM A00 aluminum prices closed at 23,760 yuan/mt, down 270 yuan/mt from the previous trading day, and the aluminum scrap market generally followed with declines of 100-200 yuan/mt. In terms of price differences, the price difference between A00 aluminum and mixed aluminum extrusion scrap free of paint in Foshan was about 2,492 yuan/mt, and the price difference between A00 aluminum and shredded aluminum tense scrap was about 1,326 yuan/mt. After the National Day holiday, the aluminum scrap market continued to hold up well. On the supply side, aluminum scrap yards have all briefly resumed operations, and the release of cargoes has increased somewhat. However, recycling policies continue to constrain liquidity, and the tight supply of invoices is unlikely to ease in the short term. Tight supply will continue to provide support for prices. Demand side, as the traditional peak consumption season for cast aluminum alloy gradually kicks off, enterprises are accelerating their order-taking and procurement pace. Under the tight supply-demand situation for aluminum tense scrap, price support is expected to strengthen further. Demand for wrought aluminum alloy remains moderate, with relatively ample in-factory inventory. However, aluminum scrap supply is expected to decline under tax inspection restrictions, gradually opening an upward price channel. That said, the release of peak-season demand remains relatively mild for now, and actual post-holiday order fulfillment still needs close tracking.
Secondary aluminum alloy: On October 8, ADC12 market quotes were broadly weak. SMM ADC12 price fell by 100 yuan/mt from the last trading day before the holiday to 24,400 yuan/mt. The price weakness was mainly driven by the post-holiday pullback in aluminum prices and futures, along with rising sentiment to follow the market lower. Some enterprises chose to adjust quotes in line with market conditions. However, the decline in aluminum scrap raw material prices was relatively limited. Against the backdrop of tight compliant raw material supply, the cost side still provided some support to spot prices, so some enterprises kept their quotes unchanged for the time being. From the demand side, downstream procurement largely resumed after the holiday, but overall performance was relatively stable, with limited improvement in market transactions. Overall, ADC12 prices are expected to continue moving sideways in the short term. Futures and aluminum price trends will cause some disturbance to market sentiment, but cost support still limits further downside. Attention should be paid to the recovery of downstream demand after the holiday and changes in aluminum scrap raw material prices.
Comprehensive outlook: On the macro front, high US Treasury yields and a strong US dollar continue to weigh on the valuation of the nonferrous metals sector, while fluctuating expectations for US Fed interest rate hikes this year repeatedly disturb market sentiment. On the industry front, China's aluminum ingot inventory has built up after the holiday, weakening price support. Coupled with weaker liquid aluminum demand and a rebound in casting ingot output, as well as adjustments in capital open interest around the long holiday, the tug-of-war between longs and shorts in the market has clearly intensified. Overall, short-term aluminum prices face intertwined bullish and bearish factors and are expected to consolidate on a weak note.
[The information provided is for reference only. This article does not constitute direct investment research decision-making advice. Clients should make decisions prudently and not use this as a substitute for independent judgment. Any decisions made by clients have nothing to do with SMM.]
