Futures: During the night session on December 3, the most-traded SHFE aluminium contract 2601 opened at RMB 21,935 per tonne, reached a high of RMB 22,055 per tonne, touched a low of RMB 21,930 per tonne, and finally closed at RMB 22,010 per tonne, up RMB 70 per tonne or 0.32 per cent from the previous close. Technically, the MA moving averages showed a differentiated arrangement (MA5: 21,917.00 > MA10: 21,782.00 > MA20: 21,615.50 < MA40: 21,664.5), while the MACD 4-hour K-line continued to show a red bar, indicating a golden cross state (DIFF: 103.48, DEA: 53.92). In terms of open interest, the night session open interest was approximately 250,000 lots, an increase from the daytime session. LME aluminium opened at USD2,869.5 per tonne, hit a high of USD2,903.5 per tonne, touched a low of USD2,865 per tonne, and finally closed at USD2,897 per tonne, up 1.17 per cent. Trading volume was 26,000 lots, an increase of 6,253 lots, while open interest was 701,000 lots, a decrease of 218 lots.
Macro front: US Treasury Secretary Besant stated that certain areas of the US economy have shown signs of weakness, necessitating an interest rate cut. (Bullish ★) US: November ADP employment decreased by 32,000, the lowest level since March 2023, compared with an estimated increase of 5,000 and a previous increase of 42,000. (Bullish ★)
Fundamentals: Inventory side, this Thursday, the inventory of aluminium ingots in major domestic consumption areas recorded 596,000 tonnes, flat w-o-w and flat from this Monday. According to SMM, one aluminium producer offered its first CIF Japan main ports aluminium ingot premium for Q1 2026 at USD190 per tonne, up from the Q4 2024 offer. In terms of industry growth momentum, global ESS battery cell production is entering a period of rapid growth: production reached 363 GWh in 2024, is projected to climb to 540 GWh in 2025, up 48.8 per cent y-o-y; even with a larger base, the growth rate in 2026 is expected to remain at a relatively high level of 35.2 per cent, with global ESS battery cell production expected to reach 730 GWh by then.
Primary aluminium market: In the morning session, the SHFE aluminium December contract mainly fluctuated upward. In East China, market trading remained sluggish, with high absolute prices leading to poor downstream buying sentiment; some traders were optimistic about future aluminium prices, controlling shipments, with shipment sentiment slightly rebounding. This Wednesday, actual transaction prices were at a discount of RMB 10 per tonne to parity against the SMM average price. This Wednesday, the shipment sentiment index in the East China market was 2.82, up 0.01 W-o-W; the purchase sentiment index was 2.69, flat w-o-w. SMM A00 aluminium was quoted at RMB 21,800 per tonne, up RMB 90 per tonne from the previous trading day, at a discount of RMB 50 per tonne against the December contract, flat from the previous trading day.
Recycled aluminium raw materials: This Wednesday, trading activity in the central China market recovered. Downstream enterprises were bullish on aluminium prices, leading to a rebound in purchasing sentiment, which prompted traders to make substantial purchases. However, due to the high absolute price of spot aluminium, the increase in premiums and discounts was relatively small. Market circulation of spot cargo was limited, and buyers preferred to purchase at large discounts, while holders held prices firm and were reluctant to sell. Ultimately, the actual transaction prices hovered between a discount of RMB 10 per tonne to the central China price and a premium of RMB 20 per tonne to the central China price. This Wednesday, the selling sentiment index in the central China market was 2.96, up 0.01 w-o-w; the purchasing sentiment index was 2.85, up 0.03 w-o-w.
The SMM central China price closed at RMB 21,680 per tonne, up RMB 100 per tonne from the previous trading day, at a discount of RMB 170 per tonne against the December contract, up RMB 10 per tonne from the previous trading day. The Henan-Shanghai price spread was -RMB 120 per tonne, up RMB 10 per tonne from the previous trading day. This Wednesday, the spot price of primary aluminium increased compared to the previous trading day, with the SMM A00 spot price closing at RMB 21,800 per tonne, while the aluminium scrap market held steady collectively. Entering December, downstream demand for aluminium scrap showed significant divergence. Demand for scrap used in cast aluminium alloys remained robust with a slight increase, providing more support for consumption.
Furthermore, some scrap-consuming enterprises in Shandong reported that raw material procurement was characterised by nominal prices without actual transactions, with tight market supply remaining the main theme, keeping purchase prices high. This Wednesday, the concentrated offer price for baled UBC was RMB 16,300-16,800 per tonne (ex-tax), and for shredded aluminium tensile scrap (priced based on aluminium content) was RMB 18,200-18,700 per tonne (ex-tax). The price for baled UBC increased by RMB 50 per tonne w-o-w, while prices for clean tapping aluminium wire, mixed aluminium extrusion scrap free of paint, mechanical casting aluminium scrap, scrap motorcycle wheel, and mixed aluminium tense scrap remained flat w-o-w. This Wednesday, many regions, including Jiangxi, Anhui, Hubei, Foshan, Henan, and Guizhou, chose to hold steady and adopt a wait-and-see approach, without adjusting prices. Regarding the price difference between A00 aluminium and aluminium scrap, the price difference between A00 aluminium and mixed aluminium extrusion scrap free of paint in Foshan closed at RMB 2,501 per tonne, and the price difference between A00 aluminium and shredded aluminium tensile scrap closed at RMB 1,749 per tonne.
The aluminium scrap market is expected to continue fluctuating at highs this week, with the mainstream range for shredded aluminium tensile scrap (priced based on aluminium content) at RMB 18,000-18,500 per tonne (ex-tax). The tight supply situation is difficult to change in the short term, as constraints from the recycling end and import end persist, limiting the downside room. Fluctuations in primary aluminium prices remain the core influencing factor. Coupled with intensified year-end environmental protection crackdowns and transportation restrictions, market sentiment is relatively cautious. Overall, the tug-of-war between sellers and buyers continues, requiring close tracking of primary aluminium trends, environmental protection policies, and import supplements, while remaining vigilant against high volatility risks.
Secondary aluminium alloy: This Wednesday, the most-traded cast aluminium alloy futures contract 2602 opened at RMB 21,145 per tonne, reached a high of RMB 21,190 per tonne, a low of RMB 21,030 per tonne, and finally closed at RMB 21,145 per tonne, up RMB 50 per tonne from the previous close, a gain of 0.24 per cent. The trading volume was 3,997 lots, and the open interest was 15,983 lots, with the increase mainly driven by bulls. On Wednesday, aluminium prices edged up slightly, with the SMM A00 aluminium spot price rising by RMB 90 per tonne to RMB 21,800 per tonne, while the ADC12 price held steady at RMB 21,500 per tonne, widening the price inversion between the two. Recent strength in aluminium prices has boosted aluminium scrap traders' willingness to sell, improving market liquidity, but elevated prices continue to provide support on the cost side.
Demand side presents a mixed picture: while year-end rush to deliver orders from end-users lends resilience to the market, high prices are dampening downstream procurement, coupled with seasonal demand softening, which may constrain consumption. In December, the supply side is unlikely to see significant increases due to raw material constraints, and low industry inventory continues to underpin prices.
Overall, ADC12 prices have limited downside room, but a breakthrough to the upside would require further cost-driven increases or stronger-than-expected demand releases. In the near term, prices are expected to fluctuate at highs in a narrow range, with close attention on the pace of aluminium scrap supply improvements, actual policy implementation, and changes in downstream enterprises' procurement pace. On the import front, overseas ADC12 quotations currently range between USD2,600–2,630 per tonne, with immediate import losses holding around RMB 400 per tonne.
Aluminium market summary: On the macro front, sentiment both domestically and overseas has turned favourable, as markets await key US economic data ahead of the US Fed's policy meeting next week. Recent data indicating a gradual cooling of the US economy, along with dovish signals from Fed policymakers, has strengthened expectations for a 25-basis-point interest rate cut at next week's meeting, with traders pricing in an 89 per cent probability. Foreign institutions widely predict that China's economy will maintain steady growth next year with policy support, boosting market confidence. On the fundamentals, supply side, some new aluminium projects are expected to start production between the end of 2025 and early 2026, and operating aluminium capacity is forecast to increase slightly in December M-o-M.
Demand side, although December falls into the traditional consumption off-season and overall downstream consumption sentiment has weakened, a sharp decline has not materialised, highlighting continued demand resilience. Operating data show that last week, operating rates for aluminium extrusion, aluminium wire and cable, and both primary and secondary aluminium alloy segments improved to varying degrees, with the overall operating rate rising 0.4 percentage points w-o-w to 62.3 per cent. On the inventory side, entering early December, warehouse withdrawals slowed due to aluminium prices hitting secondary highs, limiting downside room for inventory.
Overall, recent aluminium price gains have been buoyed by macro sentiment, while marginal improvements in the supply-demand pattern—limited supply increases coupled with resilient demand—have also provided substantive support. Based on this, SMM expects aluminium prices to maintain their pattern of fluctuating at highs in the near term.
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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