Futures: In yesterday's night session, the most-traded SHFE aluminium 2511 contract opened at RMB 20,790 per tonne, with the highest price at RMB 20,840 per tonne, the lowest price at RMB 20,750 per tonne, and closed at RMB 20,800 per tonne, up RMB 20 per tonne or 0.10per cent from the previous close. Trading volume was 48,000 lots, and open interest was 219,000 lots. On the LME, aluminium opened at USD 2,660.5 per tonne, reached a high of USD 2,668 per tonne, a low of USD 2,658 per tonne, and closed at USD 2,663 per mt.
Primary aluminium market: SHFE aluminium mainly fluctuated with adjustments in the early session, with the price centre hovering around RMB 20,760 per tonne. In east China, futures prices strengthened, and as downstream users had completed some stockpiling earlier, trading weakened on Thursday, with actual transactions at a discount of RMB 10 per tonne to parity against the SMM average price. The East China market selling sentiment index was 3.70 on Thursday, up 0.04 w-o-w; the purchasing sentiment index was 3.60, down 0.01 w-o-w.
On Thursday, SMM A00 aluminium was quoted at RMB 20,770 per tonne, up RMB 90 per tonne from the previous trading day, at parity against the 2510 contract, unchanged from the previous day. In central China, stockpiling enthusiasm for the upcoming holiday remained, but sellers had some long-term contract delivery needs, leading to slightly tight spot supply. They refused to budge on prices and held back sales, with actual transactions concentrated at a premium of RMB 20 per tonne against the SMM central China aluminium price. The central China market selling sentiment index was 3.72 on Thursday, up 0.05 w-o-w; the purchasing sentiment index was 4.00, up 0.15 w-o-w. On Thursday, SMM central China A00 aluminium was recorded at RMB 20,800 per tonne, up RMB 110 per tonne from the previous trading day, at a premium of RMB 30 per tonne against the October contract, up RMB 20 per tonne from the previous day. The price spread between Henan and Shanghai rose RMB 20 per tonne w-o-w to RMB 30 per tonne.
Recycled aluminium raw materials: Spot primary aluminium prices rebounded on Thursday compared to the previous trading day, with SMM A00 aluminium closing at RMB 20,770 per tonne, and aluminium scrap prices generally followed the increase. With the National Day holiday approaching, enterprises in parts of Henan, Jiangxi, and Shandong reported that they had started stockpiling production raw materials in advance for the holiday. Amid the aluminium scrap shortage, overall market prices continued to hover at highs.
On Thursday, baled UBC was quoted at RMB 15,550-16,150 per tonne (ex-tax), and shredded aluminium tensile scrap (priced based on aluminium content) was quoted at RMB 17,300-17,800 per tonne (ex-tax). Baled UBC fell RMB 50 per tonne w-o-w from the previous trading day, while shredded aluminium tensile scrap (priced based on aluminium content), scrap wheel hub, and mechanical casting aluminium scrap rose RMB 100 per tonne w-o-w. In Anhui and Hubei, aluminium tensile scrap prices were unchanged on Thursday. Aluminium scrap prices are expected to hover at highs next week. On one hand, the tight supply fundamentals of aluminium scrap are difficult to alleviate in the short term, and the support from downstream pre-holiday stockpiling demand continues to ferment. On the other hand, there has been no further feedback on the implementation of domestic tax clearance policies, but in the long run, scrap utilisation enterprises still have the intention to drive down prices. Overall, the mainstream price range for shredded aluminium tensile scrap (priced based on aluminium content) is expected to fluctuate around RMB 17,300-17,800 per tonne, while baled UBC prices hover near RMB 15,600-16,100 per tonne. The market should closely monitor the sustainability of downstream stocking demand ahead of the National Day holiday, the actual implementation pace of tax policies, and further directional cues from primary aluminium prices.
Secondary aluminium alloy: On the futures front, the most-traded cast aluminium alloy futures contract 2512 opened at the day's low of RMB 20,320 per tonne on Thursday, reached a high of RMB 20,470 per tonne, and finally settled at RMB 20,385 per tonne, up RMB 55 per tonne or 0.27per cent from the previous session. Open interest stood at 11,767 lots, with trading volume at 3,950 lots, and the session was dominated by long position increases.
In the spot market, the SMM A00 aluminium price rose RMB 90 per tonne w-o-w to RMB 20,770 per tonne on Thursday, while the SMM ADC12 price increased RMB 50 per tonne to RMB 20,900 per tonne. Pre-holiday raw material stocking demand from secondary aluminium plants was constrained by tight aluminium scrap supply, highlighting procurement pressure. Demand side, as the National Day and Mid-Autumn Festival holidays overlapped this year, downstream die-casting enterprises extended their holiday breaks by 1-2 days YoY, with most companies taking 3-8 days off (a few maintained production).
Although pre-holiday stocking demand boosted transactions for manufacturers and traders, the overall increase was limited. Overall, cost support from aluminium scrap and pre-holiday stocking demand provides a floor for ADC12 prices, but extended downstream holidays, limited restocking increments, and continuous inventory buildup cap upside potential. ADC12 prices are expected to fluctuate rangebound before the holiday, with close attention needed on raw material availability, holiday inventory accumulation, and post-holiday demand recovery.
Aluminium market summary: On the macro front, the US Fed exhibited increased internal divergence over future monetary policy paths. Fed Governor Bowman stated that the focus should now shift to employment rather than inflation; this year's voting member, Kansas City Fed President Schmid, believes the balance sheet should be reduced as much as possible; Chicago Fed President Goolsbee expressed some unease about implementing too many premature interest rate cuts based on slowing employment data, while confirming whether inflation has peaked. San Francisco Fed President Daly also argued against fully shifting to a neutral stance, citing excessive risks.
Fundamentals: Supply side, recent aluminium production remained relatively stable at 847,300 per tonne per week; cost side, the domestic aluminium full cost was RMB 16,283 per tonne, down RMB 81 per tonne w-o-w, with the industry's average profit expanding RMB 71 per tonne to around RMB 4,487 per tonne. Weekly national aluminium ingot inventory destocked by RMB 21,000 per tonne, and spot premiums and discounts strengthened. Particularly in central China, supply appeared somewhat tight, and with suppliers refusing to budge on prices, the price spread between Henan and Shanghai turned positive, rising from RMB 80 per tonne to RMB 30 per tonne during the period, a gain of RMB 110 per tonne. The Mid-Autumn Festival and National Day holiday is approaching. It is reported that some aluminium extrusion enterprises in South China will have holidays lasting 6-7 days or more, which is longer than in previous years, but overall, the difference is relatively small.
In the aluminium wire and cable sector, top-tier enterprises have relatively concentrated orders and are expected to have no holiday arrangements, similar to previous years. Top-tier aluminium plate per sheet, strip and foil enterprises also basically have no holiday arrangements, but production schedules during the holiday are expected to slow down. Based on historical data for the same period and SMM's market communication, the total inventory buildup during the National Day holiday is temporarily estimated to be around 60,000-80,000 per tonne.
The specific extent of inventory buildup will depend on the pre-holiday shipment volume from aluminium plants in transit. Overall, on the macro front, increased divergence within the US Fed over future monetary policy paths has added uncertainty to the market. Domestically, sentiment around "anti-involution" in copper smelting has driven aluminium futures higher.
Fundamentals side, pre-holiday stockpiling is nearing its end, and subsequent purchase volume is expected to decrease. Aluminium ingot inventory during the holiday is expected to build by 60,000-80,000 per tonne. Combined with September destocking falling short of expectations, aluminium premiums are expected to face some pressure in the initial post-holiday period. From a fundamentals perspective, the aluminium price remains under pressure at the RMB 20,900-21,000 per tonne level. Entering October, some enterprises in the north have reported that the proportion of liquid aluminium is expected to increase, and casting ingot volume is expected to remain low, providing support for the aluminium price. Subsequent attention should be paid to aluminium ingot inventory changes around the holiday. Additionally, it is important to note that policies related to anti-involution may drive aluminium prices beyond fundamentals-based increases.
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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