Futures: Based on the SHFE aluminium 2601 contract, the technicals from Friday's night session showed: The price settled at RMB 21,555 per tonne, down 0.46 per cent, below all key moving averages (MA5=21,557, MA10=21,558.5, MA30=21,558.33, MA60=21,558.5), indicating a short-term bearish bias; In the MACD indicator, the DIF was -0.4165, DEA was 0.0742, and the MACD histogram was -0.9815, confirming strengthening bearish momentum; Trading volume was 86,468 lots, with daily position change at -6,648 lots, indicating selling on the decline and significant selling pressure. Referencing recent highs and lows (high 21,710, low 21,535), near-term resistance is expected around the MA5 near the 21,557-21,580 range, with support at 21,535; a break below could test 21,300-21,400. Overall technicals are weak, suggesting a focus on the effectiveness of the 21,535 support; any rebound needs to break above 21,600 to alleviate downward pressure.
Macro front: The National Bureau of Statistics (NBS) reported that in October, policies such as expanding domestic demand continued to take effect, coupled with the boost from the National Day and Mid-Autumn Festival holidays, the CPI rose 0.2 per cent m-o-mand 0.2 per cent YoY, while the core CPI excluding food and energy prices rose 1.2 per cent YoY, marking the sixth consecutive month of widening growth. (Bullish ★) The US federal government shutdown has lasted 40 days. US Treasury Secretary Besant told the media that if the shutdown persists, US economic growth in Q4 this year "will be halved." US Senate Majority Leader John Thune stated that a potential agreement to end the government shutdown "is gradually being reached." (Neutral ★)
Fundamentals: According to SMM statistics, China's aluminium production in October 2025 (31 days) increased 1.13 per cent y-o-y and 3.52 per cent MoM. The traditional peak season continued in October; although the "October peak season" was somewhat less robust than expected, as downstream processing plants supporting aluminium smelters commenced operations and raised production, the proportion of liquid aluminium at domestic aluminium smelters rebounded more than expected, with the industry's proportion of liquid aluminium rising 1.4 percentage points m-o-m to 77.7 per cent this month. Based on SMM's proportion of liquid aluminium data, domestic aluminium casting ingot volume in September decreased 13.5 per cent y-o-y and 2.6 per cent m-o-m to around 834,000 tonnes.
Cost side, although the real-time cost for aluminium edged higher W-o-W, the strong aluminium price left the high profit margins of aluminium smelters unaffected, rising about RMB 72 per tonne w-o-w to RMB 16, RMB 115 per tonne as of last Thursday; the immediate theoretical profit for aluminium increased RMB 87 per tonne m-o-m to RMB 5,244 per tonne. Demand side, entering November, the industry is in a transition phase between peak and off-seasons, coupled with persistently high aluminium prices, downstream procurement is primarily for rigid demand; extrusion enterprises generally reported a decrease in orders on hand, and operating rates showed a pullback trend. Last week, China's aluminium extrusion operating rate recorded 52.6 per cent, down 0.9 percentage points W-o-W.
Other downstream sectors also showed varying degrees of weakening in operating performance. Inventory-wise, according to SMM statistics, domestic primary aluminium ingot inventory in major consumption areas recorded 622,000 this Thursday, down 5,000 tonnes from this Monday, but up 3,000 tonnes from last Thursday. SMM expects domestic aluminium ingot inventory to stabilise with a slight increase in the first half of November, fluctuating around 600,000-650,000 tonne.
Primary aluminium market: Last Friday, SHFE aluminium fluctuated in early trading, hovering around RMB 21,570 per tonne. In East China, high absolute prices led to poor buying sentiment among end-users, with sporadic transactions at a small discount to the SMM average price. However, as the price spread between futures contracts widened slightly, traders showed moderate purchasing enthusiasm, with good transactions at parity to the SMM average price and sporadic transactions at a small premium to the SMM average price. Last Friday, the East China market selling sentiment index was 2.97, up 0.10 W-o-W; the buying sentiment index was 2.87, up 0.09 W-o-W. Last Friday, SMM A00 aluminium closed at RMB 21,540 per tonne, up RMB 180 per tonne from the previous trading day, at a discount of about RMB 30 per tonne against the 2511 contract, flat from the previous trading day.
With aluminium prices at high levels, trading in the central China market was relatively sluggish last Friday. Pre-market offers were mostly at a premium of RMB 10 yuan to the central China price, but downstream fear of high prices was significant, resulting in limited purchases. Actual transaction prices mainly ranged from parity to a premium of RMB 10 yuan against the central China price. Last Friday, the central China market selling sentiment index was 2.89, flat W-o-W; the buying sentiment index was 2.87, down 0.01 W-o-W. SMM central China closed at RMB 21,420 per tonne, up RMB 180 per tonne from the previous trading day, at a discount of RMB 150 per tonne against the November contract, flat from the previous trading day. The Henan-Shanghai price spread was -RMB 120 per tonne, flat from the previous trading day.
Recycled aluminium raw materials: This Friday, spot primary aluminium prices rose significantly compared to the previous trading day, with SMM A00 spot closing at RMB 21,540 per tonne. Aluminium scrap market prices followed aluminium higher. As the traditional peak season ended, 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, though the sustainability of these high levels remains to be seen. This Friday, baled UBC was quoted at RMB 16,100-16,600 per tonne (ex-tax), and shredded aluminium tensile scrap (priced based on aluminium content) was quoted at RMB 17,700-18,200 per tonne (ex-tax). Prices for baled UBC, clean tapping aluminium wire, shredded aluminium tensile scrap (priced based on aluminium content), scrap wheel hub, and mechanical casting aluminium scrap rose RMB 100-150 per tonne w-o-w today. The domestic aluminium scrap market is expected to hold up well this week, with the mainstream price range for shredded aluminium tensile scrap (priced based on aluminium content) likely shifting up to RMB 17,900-18,400 per tonne.
Positive signals continue to be released from the macro environment, both domestically and internationally, and the improvement trend in orders for downstream casting alloy processing on the demand side is expected to continue, providing ongoing support for aluminium scrap prices. However, two major risks require vigilance: first, against the backdrop of high aluminium prices, enterprises mostly adopt an "on-demand purchasing" strategy, reducing raw material inventory hoarding, which may suppress prices; second, the implementation of environmental protection-driven production restriction plans in central China and the potential risk of primary aluminium prices retreating after a rapid rise. If these risks materialise, the aluminium scrap market will face pullback pressure. Overall, the aluminium scrap market will continue to experience a complex tug-of-war between sellers and buyers; market participants are advised to closely track primary aluminium price trends, changes in downstream demand, and developments in environmental protection policy.
Secondary aluminium alloy: This Wednesday, the SMM A00 aluminium spot price fell by RMB 140 per tonne to RMB 21,300 per tonne. In the secondary aluminium market, the ADC12 price was down by RMB 50 per tonne to 21,350 per tonne. Against the backdrop of aluminium prices pulling back from highs, market quotations diverged: some enterprises quickly followed with a RMB 100 per tonne decrease, while others maintained their quotes, adopting a wait-and-see approach. Due to intensified price volatility recently, downstream procurement has become more cautious, focusing mainly on restocking for rigid demand. Raw material supply remains tight, procurement costs for secondary aluminium plants stay high, and, coupled with support from the supply side, ADC12 prices are expected to remain firm in the short term.
Aluminium market summary: Overall, on the macro front, the continued rebound in China's October CPI indicates a mild recovery in domestic consumption and industrial activity, which helps boost consumption expectations for aluminium semis in end-use sectors such as construction, home appliances, and automobiles, providing intrinsic support for aluminium prices. However, the prolonged US government shutdown could severely drag on its Q4 economic growth, increasing uncertainty in the global economic outlook. From a fundamental perspective, entering November 2025, winter environmental protection restrictions are expected to affect the operating rates of individual enterprises, but considering that aluminium production cannot immediately drop to zero shortly after pot shutdowns, the change in production is expected to be relatively small.
Regarding the proportion of liquid aluminium, some enterprises reported that downstream end-user demand is expected to weaken next month, and the proportion of liquid aluminium is expected to pull back, particularly in the second half of November, where expectations for a pullback have strengthened. Currently, aluminium prices are fluctuating at highs, and coupled with the issuance of environmental protection-driven production restriction policies in central China due to severe smog, demand is somewhat suppressed. According to SMM statistics, domestic aluminium ingot inventory in mainstream consumption areas recorded 627,000 this Monday, an inventory buildup of 5,000 tonnes W-o-W. SMM expects the domestic aluminium ingot inventory trend to turn stable with a slight increase in the first half of November, operating around 600,000-650,000 tonnes. Overall, although the fundamental drivers are limited, the macro front remains optimistic both domestically and overseas, and aluminium prices continue to fluctuate 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.
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