Futures: SHFE aluminium closed at RMB 22,175 per tonne in the night session, up 0.82 per cent. The price stood above all major moving averages, with MA5 (22,174) and MA10 (22,168.5) forming a bullish alignment, indicating a strong short-term structure. The MACD dual lines were above the zero axis (DIF 4.2787, DEA 3.3368), with the histogram expanding to 1.8839, showing enhanced bullish momentum. Trading volume increased slightly (VOLUME 302, MA5 268), indicating a recovery in market participation. The core trading range for SHFE aluminium is suggested at USD 21,950-22,100.
LME aluminium closed at USD 2,895 per tonne, up 1.14 per cent. The price rebounded near MA5 (USD 2,896.2) but remained suppressed by MA60 (USD 2,898.99), with the moving average system still bearish. The MACD dual lines were below the zero axis (DIF -0.7280, DEA -0.6449), with the negative histogram narrowing to -0.1662, indicating weakening bearish momentum. The core trading range for LME aluminium is suggested at USD 2,850-2,920.
Macro front: The Central Economic Work Conference was held in Beijing, setting the tone for next year's economic work. It emphasised continuing to implement more proactive fiscal policies, maintaining necessary fiscal deficits, total debt, and expenditure levels, and prioritising resolving local fiscal difficulties.
It stressed adhering to innovation-driven development, deepening and expanding "AI+", intensifying efforts to curb ‘involutionary’ competition, accelerating the construction of a new-type energy system, and expanding the application of green electricity. (Bullish ★)
Mexico will impose tariffs ranging from 5 per cent to 50 per cent on some products from China and other Asian countries starting next year. A spokesperson for the Ministry of Commerce expressed hope that Mexico would correct its mistaken practices early.
To safeguard the interests of relevant Chinese industries, the Ministry of Commerce initiated an investigation into Mexican trade and investment barriers in accordance with the law at the end of September, and the investigation is currently ongoing. (Bearish ★)
Fundamentals: Supply side, domestic operating aluminium capacity currently stands at 44.39 million tonnes. Despite high profits, operating capacity increased only slightly, with the overall change being relatively small.
Demand side, although December is a traditional consumption off-season, consumption in sectors like automotive, power, and electronics showed strong resilience without exhibiting weakness beyond seasonal patterns; the proportion of liquid aluminium also remained high. Combined with delayed shipments of aluminium ingots from Xinjiang and resilient consumption of aluminium semis, the social inventory of aluminium ingots has not yet entered a phase of sustained inventory buildup.
According to SMM statistics, as of December 11, mainstream social inventory of aluminium was 584,000 tonnes, a decrease of 11,000 tonnes from this Monday, remaining at a relatively low level, providing some support for aluminium prices.
Primary aluminium market: In the early session, the SHFE aluminium 2601 contract's trading centre rose. Due to shipment disruptions in Xinjiang, aluminium ingots accumulated in the region, leading to destocking in the social inventory of aluminium ingots. Spot market supply tightened, spot transactions recovered, and discounts narrowed.
Trading activity in the East China market rebounded, with some traders purchasing to fulfil long-term contracts. Suppliers held prices firm and were reluctant to sell, with actual transactions mainly at a premium of about RMB 10 per tonne against the SMM average price, and spot discounts narrowed. On Thursday, the selling sentiment index in the east China market was 2.82, up 0.11 W-o-W; the buying sentiment index was 2.73, up 0.1 W-o-W.
SMM A00 aluminium closed at RMB 21,890 per tonne, up RMB 120 per tonne from the previous trading day, at a discount of RMB 120 per tonne against the 2601 contract and RMB 60 per tonne against the 2512 contract.
On Thursday, in the central China market, major suppliers held prices firm and were reluctant to sell, spot supply was tight, traders' buying sentiment was high, creating a situation of nominal prices without actual transactions, and offers continued to rise. After market prices rose to RMB 50 per tonne, major suppliers started selling, easing the scramble for goods.
Ultimately, actual transaction prices ranged from a premium of RMB 20 to 50 against the central China price. On Thursday, the selling sentiment index in the central China market was 2.61, down 0.17 W-o-W; the buying sentiment index was 2.78, down 0.01 W-o-W.
SMM central China closed at RMB 21,820 per tonne, up RMB 160 per tonne from the previous trading day, at a discount of RMB 190 per tonne against the 2601 contract and RMB 130 per tonne against the 2512 contract. The price difference between Henan and Shanghai was RMB 70 per tonne, up RMB 40 per tonne from the previous trading day.
Recycled aluminium raw materials: On Thursday, spot primary aluminium prices rose compared to the previous trading day, with SMM A00 spot closing at RMB 21,890 per tonne, and the aluminium scrap market followed the increase collectively. Some scrap utilisation enterprises reported high inventories of wrought aluminium alloy scrap collected during the peak season, lacking sufficient orders on hand to hedge raw material inventories, thus temporarily slowing the procurement pace for such scrap.
Additionally, environmental protection-driven production restrictions in Chongqing affected alloy enterprises' operating rates, leading to a slight weakening in downstream demand for aluminium scrap. In the imported aluminium scrap market, raw materials were tight, and traders mostly maintained low inventories. However, a narrow mid-week correction in aluminium prices led to a decline in aluminium scrap prices. Some aluminium scrap suppliers held prices firm and were reluctant to sell, while downstream alloy enterprises also faced tight recycled aluminium raw materials.
On Thursday, baled UBC was concentratedly offered at RMB 16,350-16,850 per tonne (ex-tax), shredded aluminium tense scrap (priced based on aluminium content) was concentratedly offered at RMB 18,200-18,750 per tonne (ex-tax). Prices for baled UBC, clean tapping aluminium wire, mixed aluminium extrusion scrap free of paint, mechanical casting aluminium scrap, scrap motorcycle wheel, and mixed aluminium tense scrap were raised by RMB 100 per tonne W-o-W.
Regarding the price difference between A00 aluminium and aluminium scrap, on December 11, the price difference between A00 aluminium and shredded aluminium tense scrap closed at RMB 1,946 per tonne, and the price difference between A00 aluminium and bare bright aluminium wire in Jiangsu was RMB 900.6 per tonne.
The aluminium scrap market is expected to hover at highs this week, with the mainstream range for shredded aluminium tense scrap (priced based on aluminium content) at RMB 18,500-19,200 per tonne (ex-tax). The tight supply pattern is difficult to change, with constraints on imports and recycling still present, providing a floor for prices. Demand side, the year-end push for annual targets in secondary aluminium and the inhibitory effect of high prices are intertwined, leading extrusion and rolling scrap utilisation enterprises to be cautious about purchasing due to high prices.
The primary aluminium price trend served as the core guidance, coupled with the impact of environmental protection-driven production restrictions and transportation constraints in central China, leading to a cautious market sentiment. The overall tug-of-war between sellers and buyers continued, requiring close monitoring of primary aluminium fluctuations, environmental protection policies, and downstream procurement pace, while remaining vigilant against the risk of a pullback from high levels.
Secondary aluminium alloy: Futures: On Thursday, the most-traded cast aluminium alloy futures contract, 2602, opened at RMB 20,920 per tonne and quickly surged, reaching an intraday high of 21,050 yuan/mt. By 14:00, it closed at RMB 20,970 per tonne, up RMB 40 per tonne or 0.19 per cent from the previous trading day, marking a second consecutive day of gains. The futures market showed a trend dominated by bulls, increasing their positions.
Spot Market: On Thursday, the SMM A00 aluminium spot price rose by RMB 120 per tonne to RMB 21,890 per tonne, while the ADC12 price rebounded by RMB 100 per tonne to RMB 21,600 per tonne, recovering yesterday's losses.
This week saw the first rebound in aluminium prices, to which the secondary aluminium market responded positively, with manufacturers generally raising their offers by RMB 100-200 per tonne. Cost Side, although aluminium scrap prices followed the aluminium price correction, leading to a slight weakening of cost support, they remained at a relatively high level due to tight supply.
Demand side showed signs of marginal weakening, and combined with the impact of sharp aluminium price fluctuations, downstream enterprises' purchase willingness turned cautious, resulting in generally moderate market activity. Comprehensive analysis of the supply-demand pattern and cost factors suggests that the ADC12 aluminium alloy price is expected to continue its sideways movement in the short term.
Imports: Currently, ADC12 offers in the Southeast Asian market have held steady at USD 2,620-2,640 per tonne. Due to the rapid rebound in domestic prices, the immediate import loss narrowed to around RMB 200 per tonne.
Aluminium market summary: On the macro front, the Central Economic Work Conference confirmed the continuation of proactive fiscal policy next year and emphasised artificial intelligence and the construction of a new-type energy system, providing a strong boost to medium and long-term demand for aluminium in high-end manufacturing and green energy sectors, constituting a core bullish support.
Although Mexico's tariff measures raised some trade friction concerns, their targeted nature and China's initiated counter-investigation have kept the impact on market sentiment relatively contained. Demand Side, during the traditional off-season, consumption in major downstream industries such as automotive and power showed unexpected resilience, with the proportion of liquid aluminium remaining high.
In summary, the positive macro policy stance and the reality of continuously declining low inventory have jointly built strong support below aluminium prices, boosting market sentiment. However, slow supply growth and potential trade friction risks also limit the pace of price increases. Aluminium prices are expected to fluctuate upward 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.
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