Futures: During the night session on November 18, the most-traded SHFE aluminium contract opened at RMB 21,485 per tonne, reached a highest price of RMB 21,560 per tonne and a lowest price of RMB 21,435 per tonne, and finally closed at RMB 21,510 per tonne, up 0.05per cent. The night session mainly showed fluctuating operations, with the centre hovering around RMB 21,510 per tonne. From a technical perspective, SHFE aluminium open interest shrank to over 679,000 lots; according to the Bollinger Bands indicator, the daily candlestick pulled back below the middle band; on the daily candlestick MACD, the green bars expanded, and prices are expected to shift into fluctuations in the short term. Combined with the latest highs and lows (the monthly low near 21,160, the high near 22,160), resistance is expected in the 21,800-22,000 range, and support in the 21,200-21,400 range.
Macro front: According to data released by ADP Research, private sector employers cut an average of 2,500 jobs per week in the four weeks ending November 1. (Neutral ★) On November 18, the Beijing Branch of the People's Bank of China and 11 other departments issued the "Implementation Plan for Financial Support to Boost and Expand Consumption in Beijing," aiming to support the construction of an international consumption center city, strengthen financial supply for commodity and service consumption in Beijing, better meet financial service needs in the consumption sector, and promote vigorous consumption boosting. (Bullish ★) On November 18, the National Financial Regulatory Administration held a symposium with foreign-funded financial institutions in Haikou. Li Yunze, Party Secretary and Director of the National Financial Regulatory Administration, stated that efforts will be made to create a market-oriented, law-based, and international business environment, promote more financial reform and opening-up measures to be piloted in Hainan first, and fully support making Hainan Free Trade Port an important gateway leading China's opening-up in the new era. (Bullish ★)
Fundamentals: Inventory side, total aluminium ingot inventory in major consumption areas was 492,500 tonnes on Tuesday, with an inventory buildup of 1,500 tonnes w-o-w. Cost side, the average cost in the primary aluminium industry recorded RMB 16,086 per tonne on Tuesday, down RMB 4 per tonne w-o-w, and the average industry profit narrowed by RMB 166 per tonne to RMB 5,374 per tonne. Supply and demand side, as aluminium prices fell, purchasing sentiment among downstream enterprises for primary aluminium recovered, processing fees for aluminium products improved, and demand saw a slight rebound. However, the overall market is still gradually transitioning into the off-season, and there is a risk of inventory buildup in the primary aluminium sector during the off-season.
Primary aluminium market: The most-traded SHFE aluminium December contract mainly fluctuated downward during the morning session, with the operating centre lowering to around RMB 21,450 per tonne. In East China, as the absolute price fell further, purchasing sentiment further rebounded, but downstream wait-and-see sentiment increased, and large-scale restocking behaviour has not yet emerged. Actual transactions were mainly around parity with the SMM average price. This Tuesday, the selling sentiment index in the east China market was 3.1, up 0.02 w-o-w; the purchasing sentiment index was 3.01, up 0.1 w-o-w. The SMM A00 aluminium price was reported at RMB 21,460 per tonne, down RMB 170 per tonne from the previous trading day, at a discount of RMB 30 per tonne against the December contract, flat from the previous trading day. As aluminium prices retreated, both supply and buying sentiment in the central China market improved significantly on Tuesday, with slight restocking demand from downstream enterprises driving transactions in the trader market. However, as aluminium prices fell below the monthly average, suppliers showed a clear willingness to hold prices firm, resulting in actual transaction prices ranging from a premium of RMB 10 per tonne to RMB 20 per tonne over the central China price.
On Tuesday, the supply sentiment index in the central China market was 2.92, flat w-o-w, while the buying sentiment index was 2.95, up 0.02 w-o-w. The SMM central China price closed at RMB 21,340 per tonne, down RMB 150 per tonne from the previous trading day, at a discount of RMB 150 per tonne against the December contract, up RMB 20 per tonne from the previous trading day. The price spread between Henan and Shanghai was -RMB 120 per tonne, up RMB 20 per tonne from the previous trading day.
Recycled aluminium Raw Materials: On Tuesday, spot primary aluminium prices continued to decline compared to the previous trading day, with the SMM A00 spot price closing at RMB 21,460 per tonne, while aluminium scrap prices generally followed the downward trend. Entering mid-November, downstream demand showed clear divergence: demand for scrap used in cast aluminium alloys remained robust, providing solid consumption support, while demand for scrap used in wrought aluminium alloys began to show signs of weakening. Nevertheless, tight market supply remained the dominant theme, keeping procurement prices elevated. On Tuesday, baled UBC was quoted in a concentrated range of RMB 16,300–16,800 per tonne (ex-tax), while shredded aluminium tensile scrap (priced based on aluminium content) was quoted in a concentrated range of RMB 18,000–18,500 per tonne (ex-tax).
Prices for baled UBC, clean tapping aluminium wire, shredded aluminium tensile scrap (priced based on aluminium content), scrap wheel hubs, mechanical casting aluminium scrap, and aluminium shavings fell by RMB 100 per tonne w-o-w. Prices in Jiangxi, Hunan, Hubei, and Guizhou dropped by RMB 100 per tonne, while prices in Henan fell by RMB 200 per tonne on Tuesday, catching up with the decline. The aluminium scrap market is expected to hover at highs this week, with the mainstream price range for shredded aluminium tensile scrap (priced based on aluminium content) likely fluctuating between 17,800 and RMB 18,600 per tonne. Supply side, the tight supply-demand balance in the aluminium scrap market is unlikely to change in the short term. However, as primary aluminium prices fluctuate at highs, fear of high prices remains prevalent. Overall, the market will continue to experience a tug-of-war between sellers and buyers at high levels. It is advisable to closely monitor primary aluminium price trends, changes in environmental protection policies, and adjustments in downstream procurement strategies, while remaining cautious of potential corrections at highs.
Secondary aluminium alloy: On Tuesday, aluminium prices continued to fluctuate downward, with the SMM A00 aluminium spot price falling RMB 170 per tonne to RMB 21,460 per tonne. In the secondary aluminium market, the ADC12 price dropped another RMB 100 per tonne to RMB 21,450 per tonne. Price adjustments were somewhat divergent: some enterprises lowered their offers in response to the continued weakness in aluminium prices, while others, constrained by difficulties in raw material procurement and cost pressures, kept prices temporarily stable, with a strong wait-and-see sentiment prevailing. Overall, ADC12 prices are expected to fluctuate rangebound in the short term, with cost support remaining relatively solid. The tight supply of aluminium scrap is unlikely to ease in the near term, and raw material prices are more likely to rise than fall. Demand side, there is a certain degree of resilience, coupled with low industry inventory, and just-in-time procurement will provide a floor for prices.
Aluminium market summary: Overall, the macro front is favourable. Fundamentally, market sentiment continues to focus on production cuts at aluminium plants in Iceland and Mozambique, with expectations of tightening overseas supply. However, domestically, the market is gradually transitioning from the peak season to the off-season, though demand has not yet significantly weakened. Inventory side, aluminium faces the risk of inventory buildup during the off-season. Overall, driven by previous macro tailwinds and capital flows, aluminium prices surged, but domestic fundamentals lack sufficient momentum to support a continued rally. Prices have pulled back to around RMB 21,500 per tonne and are expected to hover at highs going forward.
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.
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