Futures market: On the previous trading day's night session, the most-traded SHFE aluminium 2509 contract opened at RMB 20,585 per tonne, with a high of RMB 20,675 per tonne, a low of RMB 20,570 per tonne, and closed at RMB 20,620 per tonne, up 0.07 per cent from the previous close. LME aluminium opened at USD 2,634 per tonne, with a high of USD 2,634 per tonne, a low of USD 2,601 per tonne, and closed at USD 2,606 per tonne, down 0.95 per cent.
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Macro: (1) The China-US economic and trade teams held in-depth exchanges on major issues, agreeing to promote the scheduled extension of the 24 per cent portion of the reciprocal tariff that the US has suspended, as well as China's retaliatory measures, and will continue to communicate to stabilise bilateral economic and trade relations. (Bullish ★)
(2) The International Monetary Fund (IMF) released its latest World Economic Outlook, significantly raising China's economic growth forecast for this year by 0.8 percentage points to 4.8 per cent, reflecting stronger-than-expected economic activity in China in the first half of the year and significantly lower actual tariff rates between China and the US than predicted in April. (Bullish ★)
(3) A central bank survey showed that entrepreneurs and bankers hold a neutral-to-cautious attitude towards the macro economy, residents feel cold about employment, and most expect prices and housing prices to remain stable. (Neutral)
Fundamentals: (1) According to SMM statistics, the daily social inventory of secondary aluminium alloy ingots in Foshan, Ningbo, and Wuxi on July 29 totalled 30,936 tonnes, an increase of 25 tonnes from the previous trading day and 2,159 tonnes from Tuesday of the previous week. (Bearish ★)
(2) According to SMM statistics, from July 21 to July 27, domestic aluminium ingot outflows from warehouses totalled 92,500 tonnes, a decrease of 15,700 tonnes M-o-M; domestic aluminium billet outflows from warehouses totalled 48,400 tonnes, a decrease of 3,600 tonnes M-o-M. (Bearish ★)
(3) According to the SMM survey, the trend of aluminium scrap imports from Southeast Asia is currently declining, which is related to local border conflicts and illegal smuggling issues. It is expected that this downward trend may continue until the end of 2025 or the beginning of 2026 and will largely depend on the policies implemented by governments in Southeast Asian countries. (Bullish ★)
Primary aluminium market: On the Monday night session, the aluminium price centre oscillated around RMB 20,690 per tonne. Yesterday morning, the SHFE aluminium price centre moved downward and then oscillated between RMB 20,600-20,650 per tonne. In the spot market, spot premiums/discounts in Shanghai and Henan showed a stabilising trend yesterday, but downstream purchases remained low in enthusiasm. Specifically, in eastern China, the spot market mainly traded at the average morning price, with a small portion at SMM-10. However, overall, suppliers showed strong reluctance to budge on prices, and spot premiums stabilised.
Yesterday, SMM A00 aluminium was reported at RMB 20,620 per tonne, down RMB 40 per tonne from the previous trading day, at parity with the 2508 contract, unchanged from the previous trading day. In the central China market yesterday morning, the market initially quoted SMM central China at parity and +10, with the transaction centre gradually shifting towards SMM central China +10. The price spread between Henan and Shanghai narrowed to RMB 180 per tonne. SMM central China reported a price of RMB 20,440 per tonne, with a discount of RMB 180 per tonne against the 2508 contract.
Recycled aluminium raw materials: Yesterday, the spot price of primary aluminium fell by RMB 40 per tonne compared to the previous trading day. SMM A00 spot aluminium closed at RMB 20,620 per tonne, and the aluminium scrap market remained generally stable. Currently, in the traditional off-season, downstream scrap utilisation enterprises are experiencing weak order releases, with procurement mainly driven by immediate needs.
Yesterday, the centralised quotes for baled UBC aluminium scrap ranged from RMB 15,300 to 15,900 per tonne (tax not included), while the centralised quotes for shredded aluminium tense scrap ranged from RMB 15,800 to RMB 17,300 per tonne (tax not included). By region, Shanghai, Jiangsu, Shandong, and other areas closely followed aluminium price movements, with price adjustments ranging from RMB 0 to 50 per tonne. Foshan, Hunan, Guizhou, and other areas lagged behind aluminium price movements, with yesterday's quotes remaining flat M-o-M. In Jiangxi, the prices of all wrought aluminium alloy scrap categories were lowered by RMB 100 per tonne yesterday, with a delay in price adjustments.
It is expected that the aluminium scrap market will continue to be in the doldrums this week, with the price centre returning to off-season levels. The bearish outlook for primary aluminium has not dissipated, coupled with the continued suppression of weak off-season demand, the upside room for aluminium scrap as a whole is limited.
However, the tight supply of raw materials still provides medium and long-term bottom support. The pattern of product differentiation continues: shredded aluminium tense scrap, supported by tight supply, has strong price resilience and fluctuates rangebound within RMB 15,600 to 17,200 per tonne (tax not included). Baled UBC, due to weak terminal demand, faces significant downward pressure, with prices possibly dropping to RMB 15,000 to RMB 15,500 per tonne (tax not included).
Secondary aluminium alloy: On the futures market, yesterday, the most-traded cast aluminium alloy futures contract 2511 opened at RMB 20,050 per tonne. By the midday close, the futures market reached a high of RMB 20,060 per tonne and a low of RMB 19,900 per tonne, closing at RMB 20,040 per tonne, down RMB 15 per tonne from the previous close, a decrease of 0.07 per cent, with bulls mainly reducing their positions.
In the spot market yesterday, the SMM A00 aluminium price fell by RMB 40 per tonne from the previous day to RMB 20,620 per tonne, while the SMM ADC12 price remained stable at RMB 20,100 per tonne. Yesterday, aluminium prices fluctuated rangebound, and the secondary aluminium market performed steadily, with prices basically remaining stable. Recently, end-use consumption has been sluggish, and actual transactions have been sluggish amid weak demand.
However, the sustained high procurement prices of aluminium scrap have provided support for prices. Overall, cost support will continue to limit the downside room for prices, while high social inventory and persistently weak actual demand will suppress the upside room for prices. It is expected that the ADC12 price will maintain a pattern of fluctuating range-bound in the short term.
Summary: Overall, in terms of macro factors, in the short term, influenced by the easing of Sino-US tariffs and the IMF's upward revision of growth expectations, market sentiment is optimistic. However, the domestic economy still faces challenges such as employment pressure and insufficient domestic demand. Domestic policies related to "combating the rat race" competition have driven up industrial metals, and the long-term tone of "promoting consumption and stabilising growth" remains unchanged.
Fundamentally, amid the release of supply increments and the suppression from the off-season demand, expectations for inventory buildup remain strong. Additionally, recent sentiment among funds toward policies such as "anti-'rat race' competition" and "high-quality development" has cooled, causing futures to jump initially and then pull back. Aluminium prices are expected to fluctuate at highs in the short term. Subsequent attention should be paid to changes in inventory and fund sentiment.
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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