Futures Market: Last night, the most-traded SHFE aluminium 2508 contract opened at RMB 20,340 per tonne, with a high of RMB 20,380 per tonne, a low of RMB 20,325 per tonne, and closed at RMB 20,345 per tonne. Trading volume was 42,000 lots, and open interest was 253,000 lots. Last night, LME aluminium opened at USD 2,567 per tonne, with a high of USD 2,569 per tonne, a low of USD 2,565 per tonne, and closed at USD 2,566 per tonne.
Macro: (1) On Wednesday, as Trump announced that the US would hold talks with Iran next week, risk-aversion sentiment eased, and the market generally expected the US Fed to soon resume its interest rate cut cycle. The US dollar index ultimately closed down 0.27 per cent at 97.71 points. The benchmark 10-year US Treasury yield closed at 4.2920 per cent, and the 2-year US Treasury yield closed at 3.7930 per cent. (Bearish ★) (2) Fed Chairman Powell stated that there is currently a high degree of uncertainty in the economic situation, and he hopes to rely on actual data rather than making overly confident predictions. He does not want to provide excessive forward guidance. The US economy is performing better than other countries, which means interest rates will be higher than in other countries. At some point, the Fed will resume interest rate cuts. (Neutral ★) (3) As the deadline set by US President Trump for re-imposing "reciprocal" tariffs on July 9 approaches, EU leadership is on high alert. The EU has stated that if Trump maintains the basic tariffs on EU goods, the EU plans to impose retaliatory tariffs on US products, with the civil aviation sector being the first to be affected. (Bearish ★)
Fundamentals: (1) According to SMM statistics, as of June 26, the inventory of electrolytic aluminium ingots in major domestic consumption areas was 463,000 tonnes, an increase of 14,000 tonnes from last Thursday and a decrease of 1,000 tonnes from Monday. (Bullish ★) (2) According to SMM statistics, as of June 25, the aluminium ingot inventory in Guangdong was 150,000 tonnes; in Wuxi, it was 113,000 tonnes; and in Gongyi, it was 63,000 tonnes. The total inventory in these three regions was 326,000 tonnes, a decrease of 500 tonnes from the previous trading day. (Bullish ★)
Primary Aluminium Market: Yesterday morning, the center of the front-month SHFE aluminium contract climbed slightly above RMB 20,400 per tonne. In east China, selling remained the main theme. With the arrival of goods from south China and other regions in the early stage, the off-season atmosphere became more pronounced. Spot premiums were weak during the day, with transactions occurring at a discount of RMB 10 per tonne against the SMM average price. Yesterday, SMM A00 aluminium was reported at RMB 20,530 per tonne, a decrease of RMB 10 per tonne from the previous trading day, with a premium of RMB 140 per tonne against the 07 contract, a decrease of RMB 10 per tonne from the previous trading day. In the central China market, under the off-season atmosphere, aluminium processing enterprises are increasingly cutting production, and the market is basically dominated by long-term contract transactions. However, as discounts in central China expanded earlier, some supplies were redirected to Shandong, Hebei, Jiangsu, and other regions. The spot market premiums in the local area recovered somewhat, with transactions concluded at the SMM average price. SMM A00 in central China recorded a price of RMB 20,360 per tonne against the SHFE aluminium 2507 contract, unchanged from the previous trading day. The price difference between Henan and Shanghai was RMB 170 per tonne, narrowing by RMB 10 per tonne from the previous trading day, with a discount of RMB 30 per tonne against the 2507 contract.
Secondary aluminium raw materials: Yesterday, the spot price of primary aluminium fell by RMB 10 per tonne from the previous trading day. SMM A00 spot aluminium closed at RMB 20,530 per tonne, with aluminium scrap market prices generally unchanged from the previous day. Amid the traditional off-season, downstream scrap utilisation enterprises are experiencing weak order releases, with procurement mainly driven by immediate needs. Yesterday, the centralised quoted price for baled UBC aluminium scrap ranged from RMB 15,200 to 15,700 per tonne (tax-exclusive), while the quoted price for shredded aluminium tense scrap ranged from RMB 15,800 to 17,300 per tonne (tax-exclusive). Regionally, Shanghai, Jiangsu, Shandong, and other regions closely followed aluminium price movements, with price adjustments ranging from 0 to RMB 50 per tonne. Jiangxi province showed a clear stance of refusing to budge on prices, with no price adjustments observed this week. In terms of products, since last Thursday, baled UBC aluminium scrap has followed the downward trend of aluminium prices, with a cumulative price reduction of RMB 150-200 per tonne. Considering the actual difficulty in shipping goods, aluminium scrap suppliers have adopted a cautious and wait-and-see attitude towards price adjustments amid the high-level fluctuations of aluminium prices.
Secondary aluminium alloy: In the spot market, the SMM ADC12 price continued to stabilise at RMB 19,900-20,100 per tonne yesterday. Suppressed by the ongoing traditional off-season, demand-side performance remained weak, with sluggish market transactions. The lack of growth in terminal orders has constrained the upward movement of ADC12 prices, exacerbated by the impact of low-priced supplies intensifying market competition. However, the cost side remained relatively firm, providing some support to prices. With short-term consumption unlikely to improve and the off-season effects deepening, it is expected that ADC12 prices will remain in the doldrums. Close attention should be paid to changes in raw material circulation and signs of marginal improvement in demand. In the import market, the CIF price of imported ADC12 remained at USD 2430-2470 per tonne, with the imported spot price hovering around RMB 19,200 per tonne, and the immediate import loss still within the RMB 700-800 per tonne range. The local tax-exclusive quoted price for ADC12 in Thailand was concentrated at 82-83 Thai baht per kg.
Summary: On the macro front, the marginal easing of the Middle East situation, coupled with the alleviation of concerns over the shipping capacity of the Strait of Hormuz, has raised hopes for the resolution of the energy crisis, thereby weakening the cost support for electrolytic aluminium. The intensification of trade frictions between Europe and the United States may suppress global industrial product demand, dampening expectations for aluminium semis exports. On the fundamental front, domestic electrolytic aluminium operating capacity remained stable, with the proportion of liquid aluminium maintaining a high level, and the market supply of casting ingots remaining tight. On the demand side, overall, most downstream sectors are in the traditional off-season, with significant feedback on production cuts from downstream enterprises in central China. Local spot transactions have weakened, with sustained large discounts appearing in market transaction prices. The weakening of off-season demand in the PV and home appliance sectors cannot be ignored, with a noticeable decline in the operating rates of related sectors. The cable sector has experienced a decline in operating rates due to the completion of the previous delivery period and high aluminium prices. Inventory side, as of Thursday this week, there was no further replenishment of inventory, and it is necessary to continuously observe whether the destocking inflection point has officially formed. Overall, the latest social inventory of aluminium ingots has not shown further inventory buildup and remains at a low level, still providing support to the futures market. In the medium term, macro policies (such as domestic consumption stimulus and expectations for US Fed interest rate cuts) may boost demand. It is expected that aluminium prices will mainly fluctuate at highs in the short term, and subsequent focus should be on changes in inventory and demand.
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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