Futures: Last night, the most-traded SHFE aluminium 2509 contract opened at RMB 20,715 per tonne, with a high of RMB 20,725 per tonne, a low of RMB 20,655 per tonne, and closed at RMB 20,670 per tonne. Trading volume was 39,000 lots, and open interest was 229,000 lots. Last night, LME aluminium opened at USD 2,612.5 per tonne, with a high of USD 2,613.5 per tonne, a low of USD 2,610.5 per tonne, and closed at USD 2,612.5 per tonne.
Macro: (1) Reciprocal tariffs officially took effect, with Trump stating that billions of dollars would begin flowing into the US. (Bearish ★) (2) US Treasury Secretary Bessent said that the interview process for the new Fed Chairman had begun. Additionally, it was reported that Fed Governor Waller was considered a priority candidate for the Fed Chairman position by Trump's team. (Neutral ★)
Fundamentals: (1) On August 7, SMM statistics showed that the inventory of primary aluminium in the Shanghai Bonded Zone was 91,300 tonnes, and in the Guangdong Bonded Zone was 20,000 tonnes, totaling 111,300 tonnes. Inventory increased by 3,800 tonnes W-o-W. (Bearish ★) (2) According to data from the General Administration of Customs, China's exports of unwrought aluminium and aluminium semis reached 542,000 tonnes in July 2025, down 7.7 per cent Y-o-Y and up 10.84 per cent M-o-M. From January to July, cumulative exports reached 3.461 million tonnes, down 7.9 per cent Y-o-Y. (Neutral ★) (3) According to SMM statistics, on August 7, the inventory of primary aluminium ingots in major domestic consumption areas was 564,000 tonnes, unchanged from Monday and up 20,000 tonnes from Thursday last week. (Neutral ★)
Primary Aluminium Market: Yesterday morning, the centre of the front-month SHFE aluminium contract continued to climb to a high above RMB 20,800 per tonne, fluctuating range-bound. In east China, aluminium prices rose to around RMB 20,800 per tonne, with many market sellers, but downstream enterprises showed weak purchasing power, making it difficult to achieve premium transactions. Transactions between traders also fell from average price transactions to RMB -5 to -10 per tonne. Yesterday, SMM A00 aluminium was reported at RMB 20,690 per tonne, up RMB 60 per tonne from the previous trading day, with a discount of RMB 50 per tonne against the 08 contract, down RMB 10 per tonne from the previous trading day. In the central China market, discounts were larger in the early stage, with some cargoes shipped to east China. Additionally, after the early decline in aluminium prices, downstream consumption slightly recovered, and inventory remained at a relatively low level. However, actual downstream consumption did not show a comprehensive improvement and was still in the off-season. During the day, aluminium prices continued to rise to above RMB 20,800 per tonne, with a noticeable lack of upward momentum in central China premiums. Premiums showed a high-opening and low-closing pattern, with transactions against the SMM central China average price falling from parity to around a discount of RMB 20 per tonne. SMM central China A00 aluminium was recorded at RMB 20,580 per tonne against the SHFE aluminium 2508 contract, up RMB 40 per tonne from the previous trading day, with a price spread of RMB -110 per tonne between central China and Shanghai, expanding by RMB 20 per tonne from the previous trading day, and a discount of RMB 160 per tonne against the 2508 contract.
Recycled aluminium raw materials: Yesterday, the spot price of primary aluminium continued to rise by RMB 60 per tonne compared to the previous trading day. SMM A00 spot aluminium closed at RMB 20,690 per tonne, and the overall market price of aluminium scrap increased. Currently in the traditional off-season, downstream scrap utilisation enterprises are experiencing weak order releases, with purchases mainly driven by immediate needs. Yesterday, the centralised quoted price for baled UBC aluminium scrap ranged from RMB 15,400 to 15,900 per tonne (tax not included), while the centralised quoted price for shredded aluminium tense scrap (water price) ranged from RMB 17,100 to 17,600 per tonne (tax not included). Baled UBC aluminium scrap prices rose by RMB 50 per tonne M-o-M from yesterday, while shredded aluminium tense scrap (water price) and aluminium scrap for automobile and motorcycle wheel hubs increased by RMB 100 per tonne M-o-M from yesterday. According to feedback from producers, there are two reasons for this: firstly, the shortage of aluminium scrap intensified in August, leading to a significant increase in the difficulty of raw material procurement; secondly, the current policy adjustment period has increased procurement costs for producers. In terms of the price difference between A00 aluminium and aluminium scrap, the price difference between A00 aluminium and mechanical casting aluminium scrap in Foshan narrowed by RMB 232 per tonne M-o-M from Monday to RMB 1,736 per tonne. The price adjustment range for aluminium tense scrap raw materials far exceeded that of A00 aluminium, resulting in a rapid narrowing of the price difference between A00 aluminium and aluminium scrap in the short term.
Secondary aluminium alloy: On the futures market, yesterday, the most-traded cast aluminium alloy 2511 futures contract opened at RMB 20,160 per tonne, with a low of RMB 20,115 per tonne and a high of RMB 20,215 per tonne, eventually closing at RMB 20,135 per tonne, up RMB 60 per tonne or 0.30 per cent from the previous trading day. The open interest was 8,695 lots, and the trading volume was 1,954 lots, with bulls mainly increasing their positions during the day. In the spot market, yesterday, the SMM A00 aluminium price increased by RMB 60 per tonne from the previous day to RMB 20,690 per tonne, while the SMM ADC12 price increased by RMB 100 per tonne to RMB 20,250 per tonne. The aluminium scrap price quickly followed the rise in aluminium prices during the week, and the cost-side pressure increased, fueling market sentiment for price adjustments. In August, the secondary aluminium market remained constrained by tight aluminium scrap supply, with enterprises facing continuous cost pressure, supporting the upward trend in ADC12 prices. However, weak consumption and high social inventory levels will limit price increases, and it is expected that secondary aluminium alloy prices will remain in a narrow range with a relatively strong bias at the beginning of the month. In the short term, it is necessary to closely monitor the progress of end-use demand recovery and the improvement of aluminium scrap supply.
Summary: On the macro front, expectations for US Fed interest rate cuts have risen, and macro sentiment remains positive, providing a boost to base metals. The US has imposed a tariff hike on India, while India and Russia have signed a deepened cooperation agreement on aluminium, leading to a subtle increase in risk-averse sentiment among funds. From a fundamental perspective, there have been relatively small changes in terms of supply, with the operating production of primary aluminium showing a steady to slight increase. On the cost side, the total weekly cost for the primary aluminium industry was RMB 16,738 per tonne, with minimal changes, and the industry's high profits persist. Key focus is on demand, which remains weak under the influence of the off-season, with consumption from end-users to processed materials continuing to decline. Industries such as home appliances and PV, which previously provided strong support, have seen a slowdown in growth, and some aluminium end-use export orders have also declined. The construction industry continues to experience a super-seasonal decline. The aluminium social inventory has breached the 550,000 tonnes threshold. Although uneven arrivals caused periodic inventory fluctuations during the week, the high aluminium prices amid the off-season atmosphere may further dampen consumption, with the short-term inventory buildup trend remaining unchanged. Overall, macro optimism coupled with potential aluminium supply risks drove prices to rebound to elevated levels. However, inventory buildup pressure persists during the consumption off-season. After the bullish sentiment is digested, the price center is expected to pull back, with the RMB 21,000 per tonne level still facing pressure. Similarly, most semis processors show higher acceptance for prices below RMB 20,500 per tonne, where just-in-time procurement capacity has been partially validated.
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 information.
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