Destocking Inflection Point Largely Confirmed, Aluminum Prices Continue LME Outperforms SHFE Pattern [SMM Aluminum Morning Meeting Minutes]

5.22 SMM Morning Meeting Minutes

Futures:SHFE aluminum closed at 24,440 yuan/mt yesterday, down 0.39%, settling at the MA5 (24,440) level but below the MA10 (24,547), MA20 (24,674), MA30 (24,780), and MA60 (24,675), with the moving average system in a bearish alignment. The MACD indicator showed DIF = -88.7, DEA = -54.09, with the death cross continuing and the negative histogram expanding to -69.21, indicating persistently strengthening bearish momentum. The suggested key trading range for SHFE aluminum is 24,200–24,700. LME aluminum closed at $3,643/mt, edging up 0.10%. The price held firmly above all moving averages (MA5 = 3,611.2, MA10 = 3,609.35, MA30 = 3,573.55, MA60 = 3,458.82), with the moving averages in a bullish alignment. The MACD indicator showed DIF = 37.66, DEA = 35.79, maintaining a golden cross with a positive histogram (3.74), though the value was small, suggesting weak upward momentum. The suggested key trading range for LME aluminum is 3,610–3,660.

Macro Front:US President Trump stated that the US is still in negotiations with Iran, but whether through a deal or military means, the US will prevent Iran from becoming a nuclear-armed state. On the issue of Strait of Hormuz "transit fees," Trump reiterated that the US has full control over the Strait of Hormuz, that the US maritime blockade on Iran is 100% effective, and that no vessel can pass through Iranian waters without US approval.

Fundamentals:Ex-China, aluminum exhibited a rigid supply gap amid the Middle East conflict, driving continued destocking of LME inventory. As of Wednesday, LME inventory fell by approximately 7,000 mt YoY to 339,500 mt. In China, aluminum ingot inventory at major domestic consumption hubs stood at 1.412 million mt as of Thursday, down 16,000 mt WoW from last Thursday. The destocking inflection point was largely confirmed, boosting market sentiment, though inventory remained at elevated levels, continuing to weigh on aluminum prices. Demand side, aluminum prices were in the doldrums during the week, with downstream sectors generally maintaining a mild recovery trend in operating rates. Specifically, the domestic aluminum extrusion industry recorded an operating rate of 57.4% this week, up 0.5 percentage points WoW, showing characteristics of weak repair and marginal improvement. Construction extrusion saw a steady recovery in operating rates driven by infrastructure project orders, while industrial extrusion maintained a stable and positive trend supported by rigid downstream manufacturing demand.

Primary Aluminum Market:Yesterday morning, the SHFE aluminum 2606 contract fluctuated upward, with the overall price center moving higher compared to the previous trading day. Some downstream players began to stockpile, and overall buying sentiment in the market recovered somewhat. Influenced by destocking, some sellers held prices firm with prevailing bullish sentiment, while others held back from selling. The mainstream spot cargo quotations in the market ranged from SMMA00 -10 yuan/mt to +10 yuan/mt. East China market willingness to sell index was 3.06, up 0.11 WoW; purchasing sentiment index was 3.06, up 0.04 WoW. As aluminum futures prices rose consecutively, suppliers in central China saw a notable increase in willingness to sell at highs, and major holders showed poor willingness to hold prices firm. However, due to high absolute prices and premiums, downstream processing enterprises adopted a wait-and-see attitude with poor buying sentiment, and overall market transaction atmosphere remained sluggish. Ultimately, the actual transaction price range in the central China market hovered between a premium of 20 yuan and a discount of 10 yuan against the central China price. Central China market willingness to sell index was 2.84, up 0.02 WoW; purchasing sentiment index was 2.27, down 0.03 WoW.

Aluminum scrap:Recently, SMM A00 prices continued to rise, up 130 yuan/mt from the previous trading day, and the aluminum scrap market collectively followed the uptrend, making up for the previous day's gains. Price spread side, on May 21, the price difference between A00 aluminum and mixed aluminum extrusion scrap free of paint in Foshan was recorded at 2,706 yuan/mt, and the price difference between A00 aluminum and shredded aluminum tense scrap was 2,330 yuan/mt. According to the latest customs data, China's aluminum scrap imports in April 2026 were approximately 171,000 mt, down about 10% YoY. Cumulative imports from January to April 2026 totaled 700,000 mt. In terms of import source countries, the main sources of China's aluminum scrap imports in April were Thailand, the UK, Japan, the US, Australia, and other countries and regions, among which Thailand accounted for 20.7% of China's total imports.

Secondary aluminum alloy:Yesterday, the ADC12 market was generally stable with slight rise. SMM ADC12 price was raised by 100 yuan/mt from the previous day to 23,700 yuan/mt. The core driver came from the cost side, as aluminum scrap fluctuated at highs, compliant supply sources were tight, and supply contracted on a phased basis, providing strong price support. However, downstream demand remained weak, with end-users only maintaining rigid restocking, which constrained upside room for prices. Overall, the current market remains caught in a tug-of-war between "strong cost support" and "weak demand suppression," and prices are expected to continue to move sideways in the short term.

Aluminum market summary:Macro front, the US and Iran plan to sign a letter of intent to formally end hostilities and initiate 30-day negotiations, with geopolitical risk trajectory still to be observed; the US Fed meeting minutes were far more hawkish than expectations, with most policymakers supporting policy tightening, and tightening liquidity expectations are overall bearish for metal prices. Recently, the heads of state of both the US and Russia have visited China in succession, which is expected to yield preliminary results in economic and trade areas. Fundamentals side, overseas supply gaps and low inventory still provide bottom support, but high domestic inventory remains the core factor suppressing significant price rallies. Coupled with weak spot market transaction performance, this further limits upside room for aluminum prices. In the short term, aluminum prices are expected to continue with LME outperforming SHFE, fluctuating at highs.

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