SMM Morning Meeting Minutes for 2.26
Futures:During the night session on February 25, the most-traded SHFE aluminum 2604 contract opened at 23,845 yuan/mt, hit a high of 24,000 yuan/mt, touched a low of 23,785 yuan/mt, and finally closed at 23,980 yuan/mt, up 145 yuan/mt or 0.61% from the previous close. Technically, the MA lines showed a divergent arrangement, with SMA5 (23,786.47) > SMA10 (23,697.59) < SMA20 (23,744.29) < SMA40 (23,833.00). The MACD 4-hour candlestick turned to red bars (DIFF: -100.09, DEA: -148.92). In terms of open interest, the night session open interest was about 257,000 lots, an increase of 8,746 lots from the daytime session. LME aluminum opened at $3,106.0/mt, reached a high of $3,175.0/mt, touched a low of $3,102.0/mt, and closed at $3,174.5/mt, up 2.06% from the previous day. Trading volume was 20,907 lots, up 2,949 lots, and open interest was 676,000 lots, up 875 lots.
Macro Front:US Fed's Schmid stated that the focus of the debate on the Fed's balance sheet is the scale of reserves, expressing concerns about the duration of the Fed's balance sheet. He also mentioned that the Fed's mortgage holdings have lowered yields in that sector, and it will take years to gradually reduce the scale of its mortgage bond holdings. (Bearish ★) According to CCTV News, on February 25, US Trade Representative Jamison Greer said that the US "global import tariff" rate on certain countries, recently implemented at 10%, would rise to 15% or higher, but he did not disclose any specific trading partners or other details. (Bullish ★) On the afternoon of February 25, President Xi Jinping met with German Chancellor Merz, who was on an official visit to China, in Beijing. Xi put forward three suggestions for the next phase of China-Germany relations: first, to be reliable partners supporting each other; second, to be open and mutually beneficial innovation partners; third, to be people-to-people partners who understand and cherish each other. (Bullish ★)
Fundamentals:Inventory side, on February 25, aluminum ingot inventories in mainstream consumption areas increased by 24,000 mt MoM, affected by downstream Chinese New Year breaks, with all three regions showing inventory buildup. In the short term, high aluminum prices may continue to suppress end-use demand, coupled with the impact of downstream Chinese New Year breaks, aluminum ingots still face inventory buildup risks, and spot premiums/discounts are expected to remain under pressure. This Thursday, SMM social inventories of aluminum ingots increased by 49,000 mt WoW compared to this Tuesday.
Primary Aluminum Market:In the early session, SHFE aluminum 2602 fluctuated upward, with the price center slightly lower than the previous trading day. Influenced by the spot-futures price spread and price spreads between futures contracts, some traders entered the market to build positions, and spot premiums/discounts narrowed somewhat. Mainstream quotations were concentrated at the average price to a premium of 20 yuan/mt. On Wednesday this week, the shipment sentiment index in the east China market was 2.66, up 0.32 WoW; the purchase sentiment index was 2.62, up 0.31 WoW. SMM A00 aluminum was quoted at 23,380 yuan/mt, down 10 yuan/mt from the previous trading day, at a discount of 200 yuan/mt against the 2603 contract, up 10 yuan/mt from the previous trading day. On Wednesday this week, trading sentiment in the central China market recovered slightly. After the Chinese New Year holiday, traders and downstream processing enterprises gradually resumed work. Market trading atmosphere warmed up but overall remained relatively sluggish. Downstream enterprises tended to restock at low prices, but holders showed strong willingness to hold prices firm. Ultimately, actual transaction prices in the central China market hovered between a premium of 10 yuan/mt to the central China price and a discount of 20 yuan/mt to the central China price, with prices remaining relatively firm. On Wednesday this week, the shipment sentiment index in the central China market was 2.54, up 0.02 WoW; the purchase sentiment index was 2.16, up 0.02 WoW. SMM central China closed at 23,300 yuan/mt, down 10 yuan/mt from the previous trading day, at a discount of 280 yuan/mt against the 2603 contract, up 10 yuan/mt from the previous trading day. The Henan-Shanghai price spread was -80 yuan/mt, flat from the previous trading day.
Secondary Aluminum Raw Materials:Futures side, on Wednesday this week, the most-traded aluminum alloy 2604 futures contract opened at its daily low of 22,275 yuan/mt. The futures moved steadily higher, with the pace of gains accelerating around noon, reaching an intraday high of 22,740 yuan/mt. In the afternoon, prices pulled back from the highs, but the overall decline was limited, with prices consistently trading above the moving average. Towards the close, prices rebounded again to around 22,660 yuan/mt, closing in a relatively high region, with a daily gain of approximately 1.3%. Spot side, the A00 aluminum price edged down 10 yuan/mt from the previous trading day to 23,380 yuan/mt, while the SMM ADC12 price held steady at 23,750 yuan/mt. The futures overall showed a narrow consolidation pattern, and quotations in the secondary aluminum market were mostly stable. During the week, downstream inquiries and actual transactions showed some recovery, but the overall trading atmosphere remained relatively cautious, with market sentiment being mediocre. Fundamentally, in the first week after the holiday, the pace of enterprise production resumptions was slow, and the release of supply-side increments was limited, providing some support to prices. However, demand recovery is more likely to be gradual; before end-user orders see a significant increase, downstream procurement will mainly focus on essential restocking, making sustained large-volume purchases difficult. Cost side, it is necessary to continuously monitor price fluctuations of aluminum scrap and auxiliary materials like copper and silicon, while the trend of primary aluminum will still dominate market sentiment and the price center. Comprehensive judgment suggests that ADC12 prices are likely to continue the pre-holiday sideways movement pattern in the initial post-holiday period. The subsequent direction will still depend on the supply-demand matching degree after full production resumptions and the performance of primary aluminum. If staged restocking demand is released alongside primary aluminum holding up well, prices have some room for recovery. Conversely, if demand recovery falls short of expectations, prices may face slight pressure, but overall, sideways consolidation is expected to prevail. Imports side, overseas ADC12 offers rose $20/mt to $2,870-2,930/mt, but supported by the recent strength of the yuan against the US dollar, import arbitrage remained profitable.
Secondary Aluminum Alloy: Spot aluminum prices fluctuated rangebound on Wednesday compared with the previous day's quotes, with the SMM A00 spot price closing at 23,380 yuan/mt. Aluminum scrap market prices were generally flat on Wednesday. Baled UBC was mainly offered at 16,800-17,250 yuan/mt (ex-tax), while shredded aluminum tense scrap (priced based on aluminum content) was mainly offered at 19,100-19,800 yuan/mt (ex-tax). In terms of the price difference between A00 aluminum and aluminum scrap, the price difference between A00 aluminum and mixed aluminum extrusion scrap free of paint in Foshan stood at 3,455 yuan/mt on February 25, and the price difference between A00 aluminum and shredded aluminum tense scrap was 2,649 yuan/mt. High aluminum prices suppressed downstream demand, downstream aluminum processing enterprises had low stockpiling willingness, and stockpiling volume dropped significantly compared with previous years. Moreover, the Chinese New Year holiday period was longer than in 2025. Aluminum scrap prices are expected to hover at highs this week, while downstream demand is unlikely to recover quickly. The mainstream range for shredded aluminum tense scrap (priced based on aluminum content) is still expected to hover around 19,000-19,800 yuan/mt (ex-tax). Some aluminum scrap yards and scrap utilization enterprises have not yet ended their holidays, which constrains the recycling of new scrap, leading to tight release of material. Combined with high aluminum prices, this provides bottom support for aluminum scrap prices. Downstream demand fell WoW compared with January, and market transactions are expected to remain sluggish. In the short term, the supply-demand dynamic, characterized by weakness on both sides, persists, with transactions mainly for essential restocking. Close attention should be paid to the restart pace of downstream processing enterprises after the holiday, guarding against expectations for post-holiday resumption reigniting market sentiment and pushing aluminum prices higher, which could keep trading activity in the aluminum scrap market sluggish.
Aluminum Market Summary: Overall, from a macro perspective, rising expectations for near-term US Fed interest rate hikes boosted the US dollar, while US-Iran geopolitical tensions and tariff policies heightened risk aversion. Coupled with a slowdown in US economic resilience and a weak recovery in the Eurozone, the global macro environment showed a fragile balance with high volatility. Fundamental seasonal weakening pressure became more pronounced. Supply side, new primary aluminum projects domestically and overseas continued steady production ramp-ups. Demand side, the post-holiday restart pace of downstream enterprises warrants attention. Currently, under the influence of seasonal supply exceeding demand, the market widely expects post-holiday inventory peaks to reach 1.3 million mt, hitting a five-year high, which will be the core factor suppressing prices. Overall, aluminum prices are expected to move sideways in the near term.
[The information provided is for reference only. This article does not constitute direct investment research advice. Clients should make decisions cautiously and not use this to replace their own independent judgment. Any decisions made by clients are unrelated to SMM.]
