Futures: On the night session before the holiday (September 30), the most-traded SHFE aluminium 2511 contract opened at RMB 20,765 per tonne, with the highest price at RMB 20,770 per tonne, the lowest price at RMB 20,680 per tonne, and closed at RMB 20,680 per tonne, down 0.43per cent from the previous close. The trading volume was 68,700 lots, and the open interest was 191,000 lots. On October 8, LME aluminium opened at USD2,743pertonne, reached a high of USD2,762pertonne, a low of USD2,737.5 pertonne, and closed at USD2,750.5 pertonne.
Primary aluminium market: SHFE aluminium traded weakly in the morning session, with the price centre falling from around RMB 20,750 per tonne to near RMB 20,700 per tonne. In East China, the holiday atmosphere was strong, trading was sluggish, and sentiment among both buyers and sellers weakened. Actual transactions were at a discount of RMB 10 per tonne to parity against the SMM average price. On September 30, the East China market selling sentiment index was 2.97, down 0.29 m-o-m; the purchasing sentiment index was 2.77, down 0.28 m-o-m.
On September 30, SMM A00 aluminium was quoted at RMB 20,790 per tonne, up RMB 30 per tonne from the previous trading day, at a discount of RMB 20 per tonne against the 2510 contract, down RMB 10 per tonne from the previous trading day. In the central China market, purchases by downstream enterprises were largely suspended, and sellers struggled to find counterparties, resulting in large discounts. Market sentiment dropped significantly, with actual transactions during the day concentrated at a discount of RMB 30-20 per tonne against the SMM central China aluminium price.
On September 30, the central China market selling sentiment index was 2.93, down 0.94 m-o-m; the purchasing sentiment index was 2.63, down 1.14 m-o-m. SMM central China A00 aluminium was recorded at RMB 20,750 per tonne, flat from the previous trading day, at a premium of RMB 10 per tonne against the October contract, down RMB 40 per tonne from the previous trading day. The price spread between Henan and Shanghai decreased by RMB 30 per tonne m-o-m to RMB 30 per tonne.
Recycled aluminium raw materials: On September 30, the spot price of primary aluminium rose slightly compared to the previous trading day, with SMM A00 spot aluminium closing at RMB 20,720 per tonne, while aluminium scrap market prices generally increased. With the National Day holiday approaching, enterprises in parts of Henan, Jiangxi, and Shandong reported that they had started stockpiling production raw materials in advance for the holiday. Amid the shortage of aluminium scrap, overall market prices remained high.
On September 30, baled UBC was quoted at RMB 15,600-16,200 per tonne (ex-tax), and shredded aluminium tensile scrap (priced based on aluminium content) was quoted at RMB 17,300-17,800 per tonne (ex-tax). Baled UBC increased by RMB 50 per tonne m-o-m, while shredded aluminium tensile scrap (priced based on aluminium content), scrap wheel hub, and mechanical casting aluminium scrap increased by RMB 100 per tonne m-o-m.
On the day before the National Day holiday, Jiangxi, Henan, and other regions accelerated their aluminium scrap stockpiling pace, simultaneously raising aluminium scrap purchase prices by RMB 100-200 per tonne. Regarding the price difference between A00 aluminium and aluminium scrap, the price difference between A00 aluminium and mechanical casting aluminium scrap in Shanghai increased by RMB 30 per tonne from the previous trading day to RMB 1,982 per tonne, while the price difference between A00 aluminium and mixed aluminium extrusion scrap free of paint in Foshan rose by RMB 40 per tonne from the previous trading day to RMB 2,020 per tonne.
Post-holiday, aluminium scrap prices are expected to hover at highs. On one hand, the tight supply fundamentals of aluminium scrap are difficult to alleviate in the short term, and the supporting effect of pre-holiday downstream stocking demand on prices continues to develop. On the other hand, there has been no further feedback on the implementation of domestic tax cleanup policies, but from a longer-term perspective, downstream scrap utilisation enterprises still maintain a mentality to drive down prices. Overall, the mainstream price range for shredded aluminium tensile scrap (priced based on aluminium content) is expected to fluctuate around RMB 17,300-17,800 per tonne, while baled UBC prices are anticipated to hover near RMB 15,600-16,100 per tonne. The market needs to closely monitor the sustainability of downstream stocking demand before the holiday, the actual implementation pace of tax policies, and further guidance from primary aluminium price trends.
Secondary aluminium alloy: On the futures market, on September 30, the most-traded cast aluminium alloy futures contract 2512 opened at RMB 20,280 per tonne, reached a high of RMB 20,370 per tonne, a low of RMB 20,205 per tonne, and finally settled at RMB 20,210 per tonne, down RMB 60 per tonne or 0.30per cent from the previous close. Open interest was 11,876 lots, with a trading volume of 1,760 lots; intraday activity was primarily characterised by short position reduction. In the spot market, on September 30, the SMM A00 aluminium price increased by RMB 30 per tonne from the previous trading day to RMB 20,720 per tonne, while the SMM ADC12 price remained stable at RMB 20,900 per tonne.
On the last trading day before the holiday, downstream enterprises had basically completed stockpiling, inquiries in the secondary aluminium market decreased, and overall trading was sluggish. Holiday arrangements for secondary aluminium enterprises this year are generally similar to last year; enterprises providing direct aluminium liquid supply continue normal production modes or adopt shift rotations and moderate production load reductions. Some enterprises plan holidays of about 3 days, with variations of 1-3 days longer or shorter compared to last year. ADC12 prices are expected to continue fluctuating range-bound manner after the holiday, with close attention needed on raw material supply conditions and the pace of demand recovery.
Aluminum market summary: Macro perspective, internationally, according to CME predictions, the probability of the US Fed keeping interest rates unchanged in October is 5.4 per cent, while the probability of a 25-basis-point rate cut is 94.6per cent; for December, the probability of unchanged rates is 0.6per cent, cumulative probability of a 25-basis-point cut is 16.0per cent, and cumulative probability of a 50-basis-point cut is 83.4per cent. (Bullish ★) Domestically, on October 9, the People's Bank of China will conduct RMB 1,100 billion in outright reverse repo operations via fixed quantity, interest rate tender, and multiple-price winning bids, with a maturity of 3 months. (Bullish ★) From a fundamental perspective, according to SMM data, domestic aluminium ingot social inventory on October 9 was approximately 649,000 tonne, up 57,000 tonne from September 29 and increasing 32,000 tonne from September 25.
On the macro front, divisions within the US Fed over the future monetary policy path have heightened uncertainty in the market going forward; domestically, the central bank conducted RMB 110 billion in 3-month reverse repo operations today. Fundamentals side, spot aluminium, pre-holiday atmosphere was strong in east China, trading was sluggish, and sentiment among both buyers and sellers weakened, with actual transactions at a discount of RMB 10 per tonne to parity relative to the SMM average price. On September 30, the East China market selling sentiment index was 2.97, down 0.29 m-o-m; the purchasing sentiment index was 2.77, down 0.28 m-o-m.
Inventory side, on October 9, the domestic social inventory of aluminium ingot stood at about 649,000 tonnes, up 57,000 tonnes from September 29. Combined with slower-than-expected destocking in September, aluminium premiums are expected to face some pressure in the initial post-holiday period. Entering October, some enterprises in northern China reported that the proportion of liquid aluminium is expected to increase, while casting ingot volume is likely to remain low, providing support for aluminium prices. Overall, given the favourable macro environment and steady fundamentals in the short term, the aluminium market is expected to mainly hover at highs in the near term. Going forward, attention should remain on post-holiday domestic consumption and macro sentiment changes both at home and abroad.
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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