Destocking inflection point largely confirmed, aluminium prices continue LME outperforms SHFE pattern

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Futures: SHFE aluminium closed at RMB 24,440 per tonne yesterday, down 0.39 per cent, 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 aluminium is 24,200–24,700. LME aluminium closed at USD 3,643 per tonne, edging up 0.10 per cent. 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 aluminium 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 per cent effective, and that no vessel can pass through Iranian waters without US approval.

Fundamentals: Ex-China, aluminium 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 tonne Y-o-Y to 339,500 tonne. In China, aluminium ingot inventory at major domestic consumption hubs stood at 1.412 million tonne as of Thursday, down 16,000 tonne W-o-W from last Thursday. The destocking inflection point was largely confirmed, boosting market sentiment, though inventory remained at elevated levels, continuing to weigh on aluminium prices. Demand side, aluminium prices were in the doldrums during the week, with downstream sectors generally maintaining a mild recovery trend in operating rates. Specifically, the domestic aluminium extrusion industry recorded an operating rate of 57.4 per cent this week, up 0.5 per cent points W-o-W, 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 aluminium market: Yesterday morning, the SHFE aluminium 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 – RMB 10 per tonne to + RMB 10 per tonne. East China market willingness to sell index was 3.06, up 0.11 W-o-W; purchasing sentiment index was 3.06, up 0.04 W-o-W. As aluminium 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 RMB 20 and a discount of RMB 10 against the central China price. Central China market willingness to sell index was 2.84, up 0.02 W-o-W; purchasing sentiment index was 2.27, down 0.03 W-o-W.

Aluminium scrap: Recently, SMM A00 prices continued to rise, up RMB 130 per tonne from the previous trading day, and the aluminium 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 aluminium and mixed aluminium extrusion scrap free of paint in Foshan was recorded at RMB 2,706 per tonne, and the price difference between A00 aluminium and shredded aluminium tense scrap was RMB 2,330 per tonne. According to the latest customs data, China's aluminium scrap imports in April 2026 were approximately 171,000 tonne, down about 10 per cent Y-o-Y. Cumulative imports from January to April 2026 totalled 700,000 tonne. In terms of import source countries, the main sources of China's aluminium scrap imports in April were Thailand, the UK, Japan, the US, Australia, and other countries and regions, among which Thailand accounted for 20.7 per tonne of China's total imports.

Secondary aluminium alloy: Yesterday, the ADC12 market was generally stable with slight rise. SMM ADC12 price was raised by RMB 100 130 per tonne from the previous day to RMB 23,700 per tonne. The core driver came from the cost side, as aluminium 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.

Aluminium 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 aluminium prices. In the short term, aluminium prices are expected to continue with LME outperforming SHFE, fluctuating at highs.

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.