Aluminium ingot continuous destocking provides a floor; Strait of Hormuz situation disturbs aluminium market sentiment

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Futures: The most-traded SHFE aluminium 2610 contract closed at RMB 23,830 per tonne, down RMB 40 from the previous settlement, a decline of 0.17 per cent. It opened at RMB 23,760 per tonne and fluctuated within the range of RMB 23,710–23,870 per tonne during the session. Prices traded above MA5 (23,764.00), MA10 (23,796.50), MA30 (23,669.17), and MA60 (23,590.50).

Medium and long-term moving averages remained in a bearish alignment and continued to press lower; a rebound that met resistance and pulled back became evident, with the 10-day moving average above forming key resistance. The MACD indicator showed DIF (60.7360) below DEA (95.1808), with the MACD green histogram at -68.8896, indicating some weakening in bullish momentum. The suggested core trading range for SHFE aluminium was RMB 23,400–24,200 per tonne.

The LME aluminium 3M contract closed at USD 3,225 per tonne, down 0.14 per cent. It opened at USD 3,230.50 per tonne and fluctuated within the range of USD 3,223.50–USD 3,233.50 per tonne during the session. Prices traded above MA5 (3,230.70), MA10 (3,229.90), and MA30 (3,222.43), but below MA60 (3,249.64).

Medium and long-term moving averages were in a bearish alignment and gradually pressed lower; an overall retreat-from-highs consolidation and correction structure became evident, with the 60-day moving average above forming clear resistance. The MACD indicator showed DIF (-0.5481) below DEA (2.6498), with the MACD green histogram at -6.3958, indicating some weakening in bullish momentum. The suggested core trading range for LME aluminium was USD 3,200–USD 3,300 per tonne.

Macro front: The State Council Information Office held a press conference at which MIIT introduced relevant information on promoting new-type industrialisation during the “15th Five-Year Plan” period. MIIT stated that over the next five years it will accelerate the development of emerging pillar industries such as integrated circuits, aerospace, biopharmaceuticals, the low-altitude economy, new-type energy storage, and intelligent robots, and promote future industries such as quantum technology, bio-manufacturing, hydrogen energy and nuclear fusion energy, brain–computer interfaces, embodied AI, and sixth-generation mobile communications (6G) to become new drivers of economic growth.

US President Trump said that regarding when Iran was expected to return to negotiations, he had no timetable and was not in a hurry. Trump said the US was achieving very big victories, and Iran was facing severe inflation and its economy was collapsing. A spokesperson for Iran’s Islamic Revolutionary Guard Corps said the Strait of Hormuz belonged to Iran and Oman.

About a month ago, Iran and Oman began negotiations and reached an agreement acceptable to both sides. In these negotiations, all parties had reached an agreement on the share of waters in the Strait of Hormuz and the respective shares of revenue that Iran and Oman should receive.

The US obstructed this work, causing delays in the process. If the US abandoned its obstruction and resumed mutual understanding, Iran could open the Strait of Hormuz within the framework of the understandings already reached; therefore, the US must accept Iran’s conditions. If the US does not accept Iran's conditions, the Strait of Hormuz will not be open under any circumstances.

Fundamentals: Overseas, driven by new capacity and production resumptions, daily average production is expected to continue to rebound; US-Iran negotiations remain volatile, and the prospects for the reopening of the Strait of Hormuz remain uncertain.

Demand side, although the traditional peak season period is about to arrive, expectations of peak season stockpiling have yet to materialise, and the market holds a wait-and-see attitude towards peak season demand improvement. Inventory side, the destocking trend of aluminium ingot social inventory continued during the week. As of Thursday, aluminium ingot inventory in mainstream consumption areas in China stood at 852,000 tonnes, down 8,000 tonnes from Monday and down 23,000 tonnes W-o-W.

Primary aluminium market: SHFE aluminium futures rose today, with overall transaction sentiment declining somewhat. SHFE aluminium spot transactions for cargoes with invoices dated this month ranged from a discount of RMB 10 per tonne to a premium of RMB 10 per tonne, while those with invoices dated next month ranged from a discount of RMB 20 per tonne to parity.

The night session saw a slight increase, and as it was the first day of trading for next-month invoices, buying sentiment in the central China market was low. The overall trading atmosphere was subdued, with only a few downstream processing enterprises making just-in-time procurement. Suppliers rushed to sell amid a price collapse, driving transaction prices lower. Ultimately, the actual transaction price range in central China centred around a discount of RMB 80-120 per tonne against the SHFE aluminium September contract.

Today's sharp increase in futures led to bullish-bearish divergence in the spot market in southern China. Tightening arrivals coupled with significant destocking gave sellers greater confidence, and the majority of suppliers held prices firm and sold slowly. Only some were pressured by month-end cash needs to make small concessions, and overall cargo flow remained under control without significant volume release.

On the demand side, downstream users showed low acceptance of the rapid price increase, not only unwilling to chase prices but also developing bearish sentiment, becoming cautious and purchasing less.

Fortunately, traders maintained relatively strong just-in-time procurement, and large players actively raised prices to purchase, boosting activity among intermediaries. Amidst the tug-of-war between sellers and buyers, trading was tepid. Spot transaction prices were concentrated at premiums of RMB 210-250 per tonne against the SHFE aluminium September 2609 contract.

Aluminium scrap: Today, the SMM A00 spot aluminium price closed at RMB 23,870 per tonne, up RMB 130 per tonne from the previous trading day. Domestic aluminium scrap prices broady followed the increase.

Regarding the price difference between A00 aluminium and aluminium scrap, as of August 26, the price difference between A00 aluminium and mixed aluminium extrusion scrap free of paint in Foshan was RMB 2,354 per tonne, and the price difference between A00 aluminium and shredded aluminium tense scrap was RMB 1,133 per tonne.

In terms of imports and exports, according to SMM customs data, China's aluminium scrap imports in July 2026 totalled approximately 119,600 tonnes, down M-o-M from 133,000 tonnes in June.

This was mainly due to the earlier price spread inversion between Chinese and overseas markets and shipment delays, keeping the supplement of high-quality overseas scrap at low levels. Driven by the UAE’s aluminium scrap export ban and the EU’s tariff hike, the contraction effect in European and Middle Eastern supply continues to emerge, further strengthening Southeast Asia’s position as the main complementary source.

The aluminium scrap market this week is expected to maintain its pattern of narrow sideways movement, with demand suppressing prices while costs provide support. Currently at the tail end of the traditional off-season, downstream end-use orders are unlikely to see a substantial surge.

Scrap utilisation enterprises continue to purchase as needed, procurement sentiment remains cautious, and the front-running effect ahead of the peak season is not yet significant, with subsequent order intake still requiring observation. The mainstream operating range for shredded aluminium tense scrap (priced based on aluminium content) is expected to hover around 19,900-RMB 20,700 per tonne.

Secondary aluminium alloy: Spot side: ADC12 market quotes edged up slightly overall today. The SMM ADC12 price rose RMB 50 per tonne from the previous trading day to RMB 23,950 per tonne, mainly driven by firm aluminium prices and improved market sentiment. Enterprises raised their quotes in response to cost and market movements, though the overall magnitude of price adjustments remained restrained.

Current end-use demand is still relatively weak, with downstream purchasing mostly need-based and limited acceptance of higher prices. Some enterprises chose to hold their prices steady for observation after earlier adjustments, and the overall market rise was still cautious. On balance, short-term ADC12 prices continue to receive cost support, but the demand side has not yet formed a clear upward driver. The room for further price increases and their sustainability will depend on aluminium price trends and the recovery of downstream demand.

Overall outlook: Macro sentiment is fluctuating, US-Iran negotiations are seesawing, and uncertainty persists over navigation through the Strait of Hormuz. Fundamentals side, the destocking trend in China’s aluminium ingot inventory continues, providing a floor for aluminium prices.

However, outside China, daily average aluminium production is expected to keep rebounding, driven by new capacity and production resumptions. Regarding domestic demand, the Ministry of Industry and Information Technology indicated it will accelerate the development of emerging pillar industries—including integrated circuits, aerospace, biomedicine, low-altitude economy, new-type energy storage, and intelligent robots—over the next five years, which will drive industrial aluminium semis demand in the long run.

In the short term, however, the switching period between the off-season and peak season has yet to be clearly defined, and the market remains in a wait-and-see mode regarding peak-season demand. Short-term aluminium prices are expected to consolidate on a subdued note.

Note: This article has been issued by SMM and has been published by AL Circle with its original information without any modifications or edits to the core subject/data.