During the night session on November 20, the most-traded SHFE aluminium contract opened at RMB 21,545 per tonne, reached a highest price of RMB 21,650 per tonne and a lowest price of RMB 21,540 per tonne, and finally closed at RMB 21,550 per tonne, down 0.14 per cent. The night session mainly fluctuated downward.
Technically, the daily candlestick remained near the middle Bollinger Band; the MACD daily candlestick showed expanding green bars; the RSI 14 indicator stayed around 50. In the short term, SHFE aluminium is expected to enter a high-level consolidation phase. Combined with the latest highs and lows (monthly low of 21,175, high around 22,160), resistance is projected in the 21,800-22,000 range, and support in the 21,200-21,400 range.
Macro Front: The U.S. Bureau of Labour Statistics released the September non-farm payroll report on Thursday, which was originally scheduled for last month. U.S. non-farm payrolls increased by 119,000 in September, with the unemployment rate at 4.4 per cent (Neutral★). According to the People's Daily, China's consumer market maintained steady growth in October, with consumption potential continuing to be released. Specifically, merchandise consumption grew steadily, with retail sales of goods up 2.8 per cent. Sales of trade-in related products maintained rapid growth, and demand for upgraded goods remained robust (Bullish★).
From November 18 to 20, He Lifeng, Member of the Political Bureau of the CPC Central Committee and Vice Premier of the State Council, conducted surveys in Hubei and Hunan provinces, emphasizing the need to continuously improve the quality and efficiency of foreign trade, enhance the construction of high-standard logistics systems, strengthen support for high-quality development of the manufacturing industry, accelerate the establishment of a unified national market, and further facilitate the dual circulation of domestic and international markets (Bullish★).
Fundamentals: On Thursday, the national aluminium ingot inventory totalled 621,000 tonnes, a destocking of 25,000 tonnes from Monday. Cost side, the average cost in the aluminium industry recorded RMB 16,081 per tonne on Thursday, down RMB 4 per tonne M-o-M, while the average industry profit expanded by RMB 24 per tonne to RMB 5,489 per tonne.
Supply side, as of Thursday, weekly operating capacity for aluminium remained stable, with the proportion of liquid aluminium down 0.2 percentage points to 77.05 per cent. Yesterday, there were reports of an explosion during busbar lifting at a 600KA aluminium pot in a smelter, but the news has not been clearly confirmed. Demand side, off-season characteristics in the aluminium processing industry further deepened, with significant structural divergence across segments amid weakening demand. Aluminium wire and cable stood out as a bright spot, with operating rate edging up to 62.4 per cent, supported by power grid orders. Benefiting from a brief boost after the lifting of environmental protection-driven production restrictions in Henan, the operating rate for aluminium plate, sheet, and strip slightly rose to 66.0 per cent, while most other segments faced downward pressure.
Primary aluminium Market: The SHFE aluminium December contract fluctuated, with its price centre hovering around RMB 21,500 per tonne. In East China, weekly destocking of aluminium ingots gave sellers confidence to hold prices firm. Futures prices did not fall further, and procurement sentiment among end-users rebounded. Although large-scale restocking did not occur, overall trading sentiment recovered, with actual transactions mainly at parity to a premium of RMB 10 per tonne against the SMM average price.
On Thursday, the East China market selling sentiment index was 3.11, flat w-o-w; the buying sentiment index was 3.09, up 0.03 w-o-w. SMM A00 aluminium closed at RMB 21,570 per tonne, up RMB 20 per tonne from the previous trading day, at a discount of RMB 10 per tonne against the December contract, up RMB 10 per tonne from the previous trading day. Although aluminium prices saw a slight correction on Thursday, trading sentiment in the downstream market remained favourable. As futures prices rose, premiums and discounts in the central China market adjusted downward. However, with prices below the monthly average, large enterprises showed clear willingness to hold prices firm.
Final transaction prices ranged from parity to a premium of RMB 20 per tonne against the central China price. On Thursday, the central China market selling sentiment index was 2.94, up 0.01 w-o-w; the buying sentiment index was 2.99, up 0.01 w-o-w. SMM central China closed at RMB 21,480 per tonne, up RMB 30 per tonne from the previous trading day, at a discount of RMB 100 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 90 per tonne, up RMB 10 per tonne from the previous trading day.
Recycled aluminium raw materials: On Thursday, spot primary aluminium prices rose slightly from the previous trading day, with SMM A00 aluminium closing at RMB 21,570 per tonne, while the aluminium scrap market held steady overall. Entering late 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 Thursday, baled UBC was quoted at RMB 16,200-16,700 per tonne (ex-tax), and shredded aluminium tensile scrap (priced based on aluminium content) was quoted at RMB 18,000-18,500 per tonne (ex-tax). Baled UBC rose RMB 50 per tonne w-o-w, while clean tapping aluminium wire, shredded aluminium tense scrap (priced based on aluminium content), scrap wheel hubs, mechanical casting aluminium scrap, and aluminium shavings held flat w-o-w. The price difference between A00 aluminium and aluminium scrap showed divergent trends.
On November 20, the price difference between A00 aluminium and mechanical casting aluminium scrap in Shanghai narrowed to RMB 2,113 per tonne from RMB 2,119 per tonne at the beginning of the week, while the price difference between A00 aluminium and mixed aluminium extrusion scrap free of paint in Foshan widened to RMB 2,584 per tonne from RMB 2,506 per tonne at the beginning of the week. Next week, the aluminium scrap market is expected to hover at highs, 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 balance in the aluminium scrap market is difficult to change in the short term. However, as primary aluminium prices fluctuate at highs, fear of high prices may intensify, and the willingness to follow price increases in some regions may weaken. Overall, the market will continue the tug-of-war between sellers and buyers at high levels, and it is recommended to closely track primary aluminium price trends and procurement strategy adjustments of downstream enterprises.
Secondary aluminium alloy: aluminium prices edged up slightly this Thursday, with the SMM A00 aluminium spot price quoted at RMB 21,570 per tonne, up RMB 20 per tonne from the previous day. ADC12 prices held steady at RMB 21,450 per tonne, mainly due to limited price fluctuations in raw materials and mediocre market trading, leaving enterprises with little motivation to adjust prices. In the short term, ADC12 may continue to fluctuate narrowly, while the tight supply of aluminium scrap persists, keeping cost support firm; the demand side remains resilient, with rigid purchases providing a floor for prices.
Aluminium market summary: Overall, macro front news was mixed. Fundamentally, market sentiment continues to focus on production cuts at overseas aluminium plants in Iceland and Mozambique, maintaining expectations for tightening overseas supply; however, domestically, the market is gradually transitioning from the peak season to the off-season, though demand has not yet weakened significantly.
On the inventory front, aluminium faces the risk of inventory buildup during the off-season, but after aluminium prices pulled back, buying sentiment improved, leading to destocking of aluminium ingots mid-week. In summary, 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 do not provide sufficient momentum for aluminium prices to continue rising sharply, yet the pace of demand weakening is slower than previously expected. Aluminium prices 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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