Futures: During the night session on November 19, the most-traded SHFE aluminium contract opened at RMB 21,620 per tonne, reached a highest price of RMB 21,635 per tonne and a lowest price of RMB 21,515 per tonne, and finally closed at RMB 21,530 per tonne, down 0.18per cent. The night session was mainly characterised by fluctuating downward movement.
Technically, the daily candlestick remained near the middle Bollinger Band; the MACD daily candlestick showed expanding green bars; the RSI 14 indicator hovered around 50. In the short term, SHFE aluminium is expected to enter a phase of high-level consolidation. Considering the latest high and low points (the monthly low near 21,160, the high near 22,160), resistance is anticipated in the 21,800-22,000 range, while support is seen in the 21,200-21,400 range.
Macro front: The US Fed released the minutes from its October monetary policy meeting, revealing significant divergence among policymakers regarding a potential interest rate cut in December. "Many" officials deemed it appropriate to keep rates unchanged, while some argued that a rate cut in December would be reasonable if the economy met expectations.
According to CME FedWatch, the probability of the Fed maintaining unchanged rates in December is 67.2 per cent, with only a 32.8per cent chance of a 25-basis-point cut. (Bearish ★) US authorities cancelled the October non-farm payrolls report and rescheduled the November report for release on December 16, meaning the Fed will lack the latest non-farm payrolls data reference during its December policy meeting. (Neutral ★) Zhang Guoqing, Member of the Political Bureau of the CPC Central Committee and Vice Premier of the State Council, conducted surveys from the 16th to the 19th in Guizhou and Chongqing, focusing on the digital and intelligent transformation and upgrading of the manufacturing industry and innovation-driven development of state-owned enterprises. He emphasised the need to accelerate the digital and intelligent transformation of manufacturing, solidly promote innovation-driven development in state-owned enterprises, persist in simultaneously optimising and upgrading traditional industries, cultivating and expanding emerging industries, and making forward-looking layouts for future industries, and develop new quality productive forces according to local conditions. (Bullish ★)
Fundamentals: On Thursday, the national aluminium ingot inventory totalled 621,000 tonnes, indicating a destocking of 25,000 tonnes compared to Monday. Cost side, the average cost for the aluminium industry recorded on Wednesday was RMB 16,085 per tonne, down RMB 1 per tonne MoM, while the average industry profit expanded by RMB 91 per tonne to RMB 5,465 per tonne. Supply and demand side, as aluminium prices declined, purchasing sentiment among downstream enterprises for aluminium recovered, processing fees for aluminium products improved, and demand saw a slight rebound. However, the market overall is still gradually transitioning into the off-season. Casting ingot volume increased M-o-M, posing a risk of inventory buildup in aluminium during the off-season.
Primary aluminium market: The SHFE aluminium 12 contract retreated after a rapid rise, reaching a high of RMB 21,585 per tonne. In East China, while the absolute price saw a slight rebound, overall levels remained lower than previous periods. Purchasing sentiment recovered, downstream restocking willingness improved, and holders attempted to support premiums and discounts. Actual transactions were mainly around parity to a premium of RMB 10 per tonne against the SMM average price. On Wednesday, the selling sentiment index in the east China market was 3.11, up 0.01 w-o-w, while the purchasing sentiment index was 3.06, up 0.05 w-o-w. SMM A00 aluminium closed at RMB 21,550 per tonne on Wednesday, up RMB 90 per tonne from the previous trading day, at a discount of RMB 20 per tonne against the December contract, an increase of RMB 10 per tonne from the previous trading day. Downstream enterprises' restocking sentiment for raw materials rebounded significantly, driving a noticeable recovery in trading sentiment among traders in the central China market.
Prices at the night session continued to decline, suppliers' willingness to hold prices firm and sell increased, SHFE aluminium prices rose after the opening, trading volume in the central China market decreased, and the momentum of premiums and discounts gradually weakened. Final transaction prices ranged from a premium of RMB 10 yuan to RMB 20 yuan against the central China price. On Wednesday, the selling sentiment index in the central China market was 2.93, up 0.01 w-o-w, while the purchasing sentiment index was 2.98, up 0.03 w-o-w. SMM central China closed at RMB 21,450 per tonne, up RMB 110 per tonne from the previous trading day, at a discount of RMB 120 per tonne against the December contract, an increase of RMB 30 per tonne from the previous trading day, with the Henan-Shanghai price spread at -RMB 100 per tonne, up RMB 20 per tonne from the previous trading day.
Recycled aluminium raw materials: On Wednesday, spot primary aluminium prices rebounded slightly from the previous trading day, with SMM A00 spot closing at RMB 21,550 per tonne, while regional disparities in aluminium scrap market quotations were evident. Entering mid-November, downstream demand showed clear divergence: demand for scrap used in cast aluminium alloys remained stable, providing more consumption support, while demand for scrap used in wrought aluminium alloys began to show signs of weakening. However, tight market supply remained the main theme, keeping procurement prices high. On Wednesday, baled UBC was quoted in a 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 range of RMB 18,000-18,500 per tonne (ex-tax).
Prices for baled UBC, clean tapping aluminium wire, shredded aluminium tense scrap (priced based on aluminium content), scrap wheel hub, mechanical casting aluminium scrap, and aluminium shavings remained flat w-o-w. By region, wait-and-see sentiment was strong in Jiangxi, Hunan, Hubei, and Guizhou, where quotations remained unchanged, while east China and central China followed aluminium prices, choosing to raise prices by RMB 50-100 per tonne on the day.
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 RMB 17,800-18,600 per tonne. Supply side, the tight supply-demand pattern in the aluminium scrap market is difficult to change in the short term, but as primary aluminium prices fluctuate at highs, the fear of high prices remains prevalent. Overall, the market will continue the tug-of-war between sellers and buyers at highs, and it is recommended to closely track primary aluminium price trends, changes in environmental protection policies, and adjustments in downstream enterprises' procurement strategies, while remaining vigilant against high-price correction risks.
Secondary aluminium alloy: On Wednesday, aluminium prices recovered slightly, with SMM A00 aluminium spot prices rising RMB 90 per tonne to RMB 21,550 per tonne. Secondary aluminium side, ADC12 prices held steady at RMB 21,450 per tonne, with overall trading sentiment remaining weak and market participants showing limited willingness to follow the upward trend. However, driven by tight aluminium scrap supply, prices in some regions or for certain varieties rose actively, while cost-side pressure persisted and enterprise raw material inventories remained low. In the short term, ADC12 prices may fluctuate rangebound, as the tight supply of aluminium scrap is unlikely to ease, providing solid cost support. Demand-side resilience persists, and just-in-time procurement will lend bottom support to prices.
Aluminium market summary: Overall, macro front news is mixed. Fundamentally, market sentiment continues to focus on production cuts at overseas aluminium plants in Iceland and Mozambique, with expectations for tighter overseas supply; however, domestically, the market is gradually transitioning from the peak season to the off-season, though demand has not yet shown significant weakening.
Inventory side, aluminium faces the risk of off-season inventory buildup, but after aluminium prices pulled back, market buying sentiment improved, leading to mid-week destocking of aluminium ingots. Overall, earlier macro tailwinds and capital inflows drove aluminium prices higher, but current absolute prices have pulled back to around RMB 21,500 per tonne. Domestic fundamentals lack sufficient momentum to support a sustained rally in aluminium prices, yet the pace of demand weakening is slower than previously expected. Subsequently, aluminium prices are expected to hover at high.
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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