Futures: Yesterday, the most-traded SHFE aluminium 2506 contract opened at RMB 19,560 per tonne, with a high of RMB 19,615 per tonne, a low of RMB 19,530 per tonne, and closed at RMB 19,570 per tonne, up 0.46 per cent. Trading volume was 48,000 lots, and open interest was 191,000 lots. LME aluminium opened at USD 2,408 per tonne yesterday, with a high of USD 2,414 per tonne, a low of USD 2,408 per tonne, and closed at USD 2,410 per tonne, down USD 2 per tonne, or 0.08 per cent.
Macro: (1) The UK and the US reached an agreement on the terms of a tariff trade deal, with the UK government agreeing to make concessions on imports of US food and agricultural products in exchange for the US reducing tariffs on UK car exports. The US will lower tariffs on UK-made cars to 10 per cent and reduce tariffs on steel and aluminium to zero. (Bullish★)
(2) The Ministry of Commerce once again responded to the high-level economic and trade talks between China and the US, stating that if the US wants to resolve issues through negotiations, it must be prepared to correct its wrong practices and cancel unilateral tariff hikes, and take action. China will not sacrifice its principles to seek any agreement. (Neutral★)
Fundamentals: (1) According to SMM statistics, on May 8, domestic mainstream consumption areas' aluminium ingot inventory was 620,000 tonnes, down 16,000 tonnes from Tuesday, and up 6,000 tonnes from before the holiday (April 30). (Bullish★)
(2) On May 8, SMM statistics showed that Shanghai Bonded Zone's aluminium inventory was 96,600 tonnes, Guangdong Bonded Zone's inventory was 19,700 tonnes, totalling 116,300 tonnes, up 6,800 tonnes W-o-W. (Bearish★)
(3) According to SMM statistics, China's aluminum plate/sheet and strip production in April 2025 was 1.186 million tonnes, with an operating rate of 67.23 per cent, down 2.31 percentage points MoM; aluminum foil production was 450,200 tonnes, with an operating rate of 70.52 per cent, down 6.05 percentage points M-o-M. (Bearish★)
Primary aluminium market: Yesterday, SHFE aluminium opened in the morning, continuing the low level of around RMB 19,400 per tonne from the night session, with downstream buying the dip being active, and social inventory destocking stimulating a rebound in the futures market. The closing price in the first trading session returned to RMB 19,630 per tonne.
In the spot market, price declines stimulated downstream buying sentiment, with discounts narrowing in east China and Gongyi markets. Specifically, trading sentiment in east China was good yesterday, with early inquiries reaching the average price in the east China market, and suppliers' sentiment to stand firm on quotes strengthened, with transactions concentrated at SMM RMB 10 per tonne, and some brands at SMM +RMB 20 per tonne.
Yesterday, SMM A00 aluminium was quoted at RMB 19,620 per tonne, up RMB 10 per tonne from the previous trading day, at a discount of RMB 10 per tonne to the 05 contract, narrowing by RMB 10 per tonne from the previous trading day.
In the central China market, supply was tight, with some hedging positions standing firm on premiums, and the futures market declined, with transactions in the central China market concentrated at SMM central China +20, +30. SMM central China A00 recorded RMB 19,600 per tonne against the SHFE 2505 contract, up RMB 40 per tonne from the previous trading day, with the Henan-Shanghai price difference at RMB 20 per tonne, narrowing by RMB 30 per tonne from the previous trading day, at a discount of RMB 30 per tonne to the 2505 contract.
Secondary aluminium raw materials: Yesterday, spot primary aluminium rose by RMB 10 per tonne from the previous trading day, with SMM A00 spot closing at RMB 19,620 per tonne. The overall price of aluminium scrap remained unchanged, and the operating rate of the secondary aluminium industry declined after the Labour Day holiday, with downstream processing enterprises' orders being weak, and purchases mainly for rigid demand.
Yesterday, baled UBC was quoted at RMB 14,800-RMB 15,400 per tonne (excluding tax), and shredded aluminium tense scrap was quoted at RMB 15,650-RMB 17,150 per tonne (excluding tax).
By region, prices in Hunan, Jiangxi, Foshan, and Hubei remained unchanged, while prices in other regions such as Shanghai, Jiangsu, and Henan followed A00 with slight adjustments, with price adjustments ranging from RMB 10-30 per tonne.
By product, shredded aluminium tense scrap, wheel hub removed from vehicle, bare bright aluminium wire, and shredded wrought aluminium alloy scrap prices remained unchanged from yesterday. In the short term, the aluminium scrap market is likely to hover at highs, but if primary aluminium experiences strong fluctuations due to macro factors (such as US Fed policy, geopolitical conflicts), or if domestic secondary aluminium enterprises collectively cut production, aluminium scrap prices may face periodic pressure.
Secondary aluminium alloy: Yesterday, SMM A00 aluminium price was adjusted up by RMB 10 per tonne to RMB 19,620 per tonne from the previous trading day, while domestic SMM ADC12 price remained stable in the range of RMB 20,200-20,400 per tonne.
In the import market, overseas ADC12 was quoted at USD 2,410-2,440 per tonne, with the immediate loss of imported ADC12 still around RMB 600 per tonne. Yesterday, aluminium prices stabilised after falling, and most secondary aluminium plants resumed stable pricing.
Entering May, the downstream of secondary aluminium is transitioning to the off-season, and market transactions are weak. However, due to slightly tight raw material circulation, cost support for prices has strengthened. In the short term, ADC12 prices will remain in the doldrums.
Summary: From a macro perspective, during the period, China agreed to engage with the US, but there is no clear result yet, and US Fed's Powell stated that there is no rush to cut interest rates, with overseas macro sentiment being bearish.
Domestically, three departments issued a package of financial policies to stabilise the market and expectations, and the central bank announced ten policy measures, with the domestic macro bullish sentiment unchanged, and the subsequent impact of policy benefits still needs to be observed.
From a fundamental perspective, the sharp pullback in aluminium prices after the holiday stimulated downstream buying sentiment, and domestic aluminium ingot social inventory shifted from buildup to destocking after the holiday, with the inventory buildup inflection point yet to come, providing support for aluminium prices.
However, it is worth noting that entering mid-to-late May, the transition between peak and off-seasons, coupled with the end of the PV installation rush and the decline in export orders, the market has a strong expectation of weakening demand, reducing the upward momentum of aluminium prices, and bearish funds entered the market.
Overall, domestically, the transmission of macro bullish policies still takes time, while the tariff war has no result yet, and bearish impacts remain; fundamentally, domestic aluminium ingot destocking provides support for aluminium prices, but the subsequent expectation of weakening demand and the weakening cost of aluminium both provide support for bears, with bears entering the market, futures market declining, and under the interweaving of bulls and bears, domestic aluminium prices are expected to fluctuate considerably in the short 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.
Responses
