Futures: During the night session on October 17, the most-traded SHFE aluminium contract opened at RMB 20,935 per tonne, reached a highest price of RMB 20,960 per tonne and a lowest price of RMB 20,890 per tonne and finally closed at RMB 20,925 per tonne, down 0.2 per cent. The night session overall showed a trend of volatile adjustment, fluctuating around RMB 20,930 per tonne.
From a technical analysis perspective, the MA moving average system maintained a bullish alignment (MA5: 20,928 > MA10: 20,903 > MA30: 20,818), with the price holding above the moving averages; the MACD indicator continued its golden cross (DIF: 63.3 > DEA: 58.6); however, trading volume was 51,011 lots, down 26,366 lots WoW. Considering recent highs and lows (the monthly low around 20,600, the high around 21,200), the resistance level is expected in the 21,280-21,480 range and the support level in the 20,530-20,750 range.
Macro front: 1. There are significant differences within the US Fed regarding the interest rate cut path. New Fed Governor Milan supported a 50-basis-point interest rate cut at the October policy meeting, while Fed Governor Waller advocated maintaining a cautious pace of 25-basis-point cuts per meeting to address the weak labour market. Fed Governor Moussallem stated that if employment faces more risks and inflation is under control, he might support another interest rate cut path. (Bullish ★)
2. Trump and Putin's planned meeting in Budapest raised hopes for ending the Russia-Ukraine conflict. WTI crude oil finally closed up 0.65 per cent at USD 57.24 per barrel; Brent crude finally closed up 0.69 per cent at USD 61.26 per barrel. (Bullish ★)
3. He Lifeng held a video call with US Treasury Secretary Bessent and Trade Representative Greer. Both sides agreed to hold a new round of China-US economic and trade consultations as soon as possible. (Bullish ★)
Fundamentals: Supply side, operating aluminium capacity showed no further rise, remaining around 44.06 million tonnes. Demand side, as of last Thursday, the domestic proportion of liquid aluminium recorded 77.11 per cent, up 0.02 percentage points WoW; the weekly operating rate of leading downstream aluminium processing enterprises recorded 62.5 per cent, flat WoW.
Among them, the operating rate of primary alloy increased slightly by 0.4 percentage points, while that of secondary alloy decreased by 0.3 percentage points; the operating rates of other processing sectors remained stable.
Cost side, due to the continuous decline in raw material alumina prices, aluminium cost gradually decreased, recording RMB 16,145 per tonne as of last Friday, with the industry's average profit expanding to RMB 4,805 per tonne.
Inventory side, according to SMM statistics, aluminium ingot inventory in mainstream domestic consumption areas recorded 625,000 tonnes this Monday, destocking 2,000 tonnes WoW from last Thursday and destocking 25,000 tonnes WoW from last Monday.
SMM expects domestic aluminium ingot inventory to maintain an overall destocking trend in the second half of October.
Primary aluminium market: Last Friday, SHFE aluminium mainly fluctuated downward in the morning session, but the overall absolute price did not decline compared to Thursday morning.
In east China, high aluminium prices weakened downstream buying sentiment, with actual transactions at a discount of about RMB 10 per tonne to a premium of RMB 10 per tonne against the SMM average price.
Last Friday, the east China market selling sentiment index was 3.29, down 0.05 WoW; the buying sentiment index was 3.21, down 0.05 WoW. Last Friday, SMM A00 aluminium closed at RMB 20,950 per tonne, flat from the previous trading day, at parity with the 2511 contract, unchanged from the previous trading day.
In central China, trading sentiment continued to weaken. With high absolute prices, downstream enterprises sought discounted sources for purchase, while holders refused to budge on prices and were reluctant to sell. Actual transactions were around a discount of RMB 30 per tonne against the SMM average price.
Last Friday, the central China market selling sentiment index was 2.63, down 0.06 WoW; the buying sentiment index was 2.41, down 0.14 WoW. SMM Central China A00 was recorded at RMB 20,840 per tonne, down RMB 30 per tonne from the previous trading day, at a discount of RMB 110 per tonne against the November contract, down RMB 30 per tonne from the previous trading day.
The Henan-Shanghai price spread decreased by RMB 30 per tonne WoW to RMB -110 per tonne.
Recycled aluminium raw materials: Last Friday, spot primary aluminium prices were flat from the previous trading day, with SMM A00 spot closing at RMB 20,950 per tonne, while aluminium scrap market prices were generally unchanged.
With the traditional peak season half over, tight supply remains the main theme in the aluminium scrap market, keeping procurement prices high, but the sustainability of these high levels remains to be seen.
Last Friday, baled UBC was quoted in a range of RMB 15,900-16,500 per tonne (ex-tax), and shredded aluminium tense scrap (priced based on aluminium content) was quoted in a range of RMB 17,300-17,800 per tonne (ex-tax).
Baled UBC rose RMB 50 per tonne WoW, while shredded aluminium tense scrap (priced based on aluminium content), scrap wheel hub and mechanical casting aluminum scrap were flat WoW.
In Hubei, procurement challenges for aluminium tense scrap became prominent, with shredded aluminium tense scrap and mechanical casting aluminium scrap rising RMB 200 per tonne in a single day.
Regarding the price difference between A00 aluminium and aluminium scrap, the price difference between A00 aluminium and mechanical casting aluminium scrap in Shanghai was RMB 2,212 per tonne and the price difference between A00 aluminium and mixed aluminium extrusion scrap free of paint in Foshan was RMB 2,189 per tonne.
The aluminium scrap market is expected to hold up well this week, with the mainstream price range for shredded aluminium tense scrap (priced based on aluminium content) hovering around RMB 17,500-18,000 per tonne. The tight supply of raw materials is difficult to change in the short term, coupled with strong support for SHFE aluminium in the RMB 20,800-20,850 per tonne range. A breakthrough above the RMB 21,000 per tonne level would further transmit positive effects.
On the other hand, uncertainty from Trump's tariff threats, the underwhelming September-October peak season for downstream sectors, limited acceptance of high-priced raw materials by scrap utilisation enterprises and inventory pressure on finished products at downstream scrap utilisation enterprises will all curb procurement enthusiasm.
The market needs to focus on whether primary aluminium prices can stabilise at high levels, the post-holiday restocking pace of secondary aluminium enterprises and the sustainability of end-use demand.
Secondary aluminium alloy: Last Friday, SMM A00 aluminium price was quoted at RMB 20,950 per tonne, holding steady from the previous day, while the SMM ADC12 price also remained unchanged at RMB 21,050 per tonne, showing insufficient momentum for price adjustments.
Currently, the tight supply of aluminium scrap is difficult to alleviate in the short term, providing solid cost support. Some enterprises, constrained by material shortages or losses, have seen a decline in their operating rates.
Meanwhile, demand resilience and low plant inventories continue to support prices, though caution is warranted against the suppression of upside room from high social inventory and warrant pressure. Attention should also be paid to the impact of policy implementation on the supply side.
ADC12 prices are expected to hold up well in the near term, with a focus on raw material circulation, the pace of demand recovery, and inventory changes.
Aluminum market summary: Overall, sentiment on the macro front is positive. Internationally, expectations for US Fed interest rate cuts are favourable and last Friday, Trump softened his previously hawkish stance on rate hikes; subsequent developments warrant continued monitoring. Domestically, the positive macro atmosphere supports market confidence.
On the fundamentals side, supply-wise, operating aluminium capacity remained flat. Demand-wise, as the traditional peak season progresses further into October, the proportion of liquid aluminium is gradually increasing, with overall demand performance remaining stable.
Cost support has weakened, as alumina prices continue to decline, leading to a further overall decrease in aluminium costs. In terms of inventory, aluminium ingot stocks decreased by 2,000 tonnes MoM on Monday and it is expected that domestic aluminium ingot inventory will enter a destocking trend in the second half of October.
In summary, with both domestic and overseas macro aspects leaning optimistic, coupled with overall steady fundamental performance, aluminium prices are expected to hold up well 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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