Futures: SHFE aluminium 2601 night session closed at RMB 22,120 per tonne, down 0.11per cent, fluctuating rangebound overall. MA5 (22,117) and MA10 (22,113.50) formed short-term support, with the price currently above the moving average system; however, MACD (DIF 2.1396, DEA 1.3982) red bars narrowed, indicating weakened upward momentum. MA5 trading volume was 134 lots, with moderate activity; the core trading range for SHFE aluminium is suggested at 22,000-22,300. LME aluminium closed at USD2,886.5per per tonne, down 0.48per cent. The price hovered near MA5 (USD2,884.20), but MA5-MA60 showed a bearish alignment, and MACD (DIF-0.1825, DEA -0.0926) remained below the zero axis, suggesting enhanced bearish momentum. MA5 trading volume was only 7 lots, indicating low market participation; the core trading range for LME aluminium is suggested at USD2,860-2,920.
Macro front: The Political Bureau of the CPC Central Committee held a meeting to analyse and study economic work for 2026. The meeting emphasized adhering to domestic demand-driven growth, building a strong domestic market; adhering to innovation-driven development, accelerating the cultivation and expansion of new momentum; adhering to the "dual carbon" goals as guidance, promoting comprehensive green transformation; (Bullish★) The US Fed is scheduled to hold its interest rate meeting on December 9 and 10, with the market widely expecting the Fed to likely cut interest rates by 25 basis points again. (Bullish★)
Fundamentals: Domestically, some new aluminium projects began powering up pots, with operating capacity edging up and weekly production increasing slightly; overseas, Indonesia's new aluminium project is ramping up production, and supply is expected to increase M-o-M. Regarding the proportion of liquid aluminium, last week's SMM weekly proportion of liquid aluminium recorded 76.6per cent, down 0.26 percentage points w-o-w. As the off-season deepens, downstream operating rates showed a marginal decline trend, with aluminium billet enterprises expected to implement more production cuts in December. Inventory-wise, according to SMM statistics, this Monday's primary aluminium ingot inventory in mainstream domestic consumption areas recorded 595,000 tonnes, destocking 1,000 tonnes compared to last Thursday. On one hand, aluminium ingot transportation in Xinjiang faces seasonal resistance with tight transport capacity, likely causing some accumulation in Xinjiang; on the other hand, high absolute prices reduced downstream purchase willingness, and warehouse withdrawals are expected to be affected.
Primary aluminium market: In the morning session, the SHFE aluminium 12 contract's trading centre shifted downward. East China market trading was sluggish, with high absolute prices making downstream purchases cautious; amid wide premiums and discounts, some traders' willingness to sell decreased, with actual transaction prices hovering around SMM average prices at discounts of RMB 20-10 per tonne. This Monday, the East China market selling sentiment index was 2.61, down 0.09 w-o-w; the purchasing sentiment index was 2.58, down 0.04 w-o-w. SMM A00 aluminium closed at RMB 21,920 per tonne, down RMB 170 per tonne from the previous trading day, at a discount of RMB 90 per tonne against the December contract, down RMB 10 per tonne from the previous trading day. Trading activity in the central China market was relatively sluggish on Monday this week. With premiums and discounts being too wide, holders' willingness to sell weakened significantly. Meanwhile, downstream enterprises saw reduced operating rates, leading to weaker raw material demand. Most purchases were made by traders for hedging purposes, with a weak willingness to hold prices firm. The actual transaction prices continued to weaken, hovering between a premium of 10 per tonne to the central China price and a discount of RMB 10 per tonne to the central China price. The sales sentiment index in the central China market was 2.88 on Monday this week, down 0.01 M-o-M; the purchasing sentiment index was 2.76, down 0.01 M-o-M. SMM central China price closed at RMB 21,770 per tonne, down RMB 170 per tonne from the previous trading day, at a discount of RMB 240 per tonne against the December contract, down 10 per tonne from the previous trading day. The price spread between Henan and Shanghai was -RMB 150 per tonne, flat from the previous trading day.
Recycled aluminium raw materials: Spot primary aluminium prices fell on Monday this week compared to the previous trading day, with SMM A00 spot aluminium closing at RMB 21,920 per tonne, and the aluminium scrap market followed the decline collectively. Entering December, downstream demand for aluminium scrap showed significant divergence. Demand for scrap used in cast aluminium alloys remained stable with a slight increase, providing more support for consumption. In Henan, intensified year-end environmental protection inspections and transportation restrictions affected delivery efficiency. Meanwhile, some scrap utilisation enterprises reported high inventories of extrusion scrap accumulated during the peak season, lacking sufficient orders on hand to hedge against raw material inventories, thus temporarily slowing the procurement pace for extrusion scrap. On Monday this week, baled UBC was quoted at RMB 16,350-16,850 per tonne (ex-tax), and shredded aluminium tensile scrap (priced based on aluminium content) was quoted at RMB 18,300-18,850 per tonne (ex-tax).
Baled UBC fell 100 per tonne MoM, while clean tapping aluminium wire, mixed aluminium extrusion scrap free of paint, mechanical casting aluminium scrap, scrap motorcycle wheel, and mixed aluminium tensile scrap dropped RMB 100-200 per tonne MoM. In terms of the price difference between A00 aluminium and aluminium scrap, the price difference between A00 aluminium and shredded aluminium tensile scrap closed at RMB 1,761 per tonne on December 5, and the price difference between A00 aluminium and bare bright aluminium wire in Jiangsu was RMB 876.0 per tonne. The aluminium scrap market is expected to hover at highs next week, with shredded aluminium tense scrap (priced based on aluminium content) mainly ranging RMB 18,500-19,200 per tonne (ex-tax). The tight supply situation is hard to change, with import and recycling constraints persisting, providing a floor for prices. Demand side, the year-end push for annual targets in the secondary aluminium sector and the high-price suppression effect are intertwined, making extrusion and rolling scrap utilisation enterprises cautious about purchasing due to high prices. Primary aluminium price trends serve as the core guidance, coupled with the impact of environmental protection-driven production restrictions and transportation constraints in central China, market sentiment remained cautious. Overall, the tug-of-war between sellers and buyers continues, and it is necessary to closely track fluctuations in primary aluminium, environmental protection policies, and downstream procurement pace, while staying alert to high-price correction risks.
Secondary aluminium alloy: In the futures market, the most-traded cast aluminium alloy futures contract 2602 opened at RMB 21,070 per tonne on Monday this week, hit a high of RMB 21,175 per tonne, a low of RMB 20,910 per tonne, and finally closed at RMB 21,135 per tonne, down RMB 55 per tonne or 0.26per cent from the previous close. Trading volume was 5,056 lots, open interest was 17,202 lots, and bearish positions dominated the futures. Currently, the price spread between AD and AL remains above RMB 1,000 yuan. Spot side, on Monday, SMM A00 aluminium spot prices fell RMB 170 per tonne to RMB 21,920 per tonne, while ADC12 prices dropped RMB 100 per tonne to RMB 21,600 per tonne. The pullback in aluminium prices from highs pressured down aluminium scrap costs, and the spot market showed a broad decline. Demand side, short-term intensified aluminium price fluctuations dampened downstream procurement pace; some die-casting enterprises faced squeezed profits due to cost pressures, even falling into losses, leading to lower operating rates. However, year-end end-user rush demand still supported the industry. Overall, short-term ADC12 prices are expected to continue fluctuating at highs. Import side, driven by aluminium scrap shortages, current ADC12 offers in Southeast Asia rose quickly to USD2,640–2,660per tonne, and the immediate import loss widened to over RMB 400 per tonne, further suppressing import window activity.
Aluminium market summary: On the macro front, positive sentiment continued to strengthen. China's Politburo meeting set the tone for next year's economic work, emphasising domestic demand, innovation, and green transition, providing solid policy support for aluminium's medium and long-term demand in areas like new energy and green consumption. Combined with widespread expectations for another US Fed interest rate cut in December, the prospect of global liquidity easing continued to boost metal market sentiment. Fundamentals side, this year's Chinese New Year break falls later, so the weakening in aluminium demand in December was limited; new aluminium capacity production release still requires some time, limiting December production growth. Additionally, aluminium ingot transportation in Xinjiang is expected to face some seasonal obstacles, so aluminium ingot inventory performance is expected to be relatively favourable, providing some fundamental support for aluminium price rises. In summary, strong macro expectations built a solid bottom support for aluminium prices, but seasonal fundamental pressures are gradually emerging. Under the interplay of these factors, upside room for aluminium prices is constrained by weakening spot fundamentals and downstream fear of highs, warranting caution against high-level pullback risks.
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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