Futures Market: Last night, the most-traded SHFE aluminium 2508 contract opened at RMB 20,510 per tonne, with a high of RMB 20,560 per tonne, a low of RMB 20,495 per tonne and closed at RMB 20,540 per tonne. Trading volume was 32,000 lots and open interest was 255,000 lots. Last night, LME aluminium opened at USD 2,572 per tonne, with a high of USD 2,600 per tonne, a low of USD 2,569.5 per tonne and closed at USD 2,589 per tonne.
Macro: (1) US President Trump posted on social media that tariffs would be implemented starting August 1, 2025, "and that date will not change, nor will it change in the future." A tax letter to the EU may be sent in the next two days. Additionally, Trump stated at a cabinet meeting that he is still planning to impose tariffs on specific industries, including pharmaceuticals, semiconductors and metals. (Bearish ★)
(2) According to Bloomberg, US Treasury Secretary Bentsen said on the 7th local time that he expects to meet with Chinese officials in the coming weeks to advance Sino-US consultations on trade and other issues. "I will meet with my Chinese peers sometime in the next few weeks." (Neutral ★)
Fundamentals: (1) According to SMM statistics, as of July 7th, the inventory of primary aluminium ingots in major domestic consumption areas was 478,000 tonnes, an increase of 4,000 tonnes from last Thursday and an increase of 10,000 tonnes from last Monday. (Bearish ★)
(2) According to SMM statistics, regarding the inventory of aluminium billets in two domestic locations, the inventory of aluminium billets in Guangdong was 74,100 tonnes and the inventory of aluminium billets in Wuxi was 22,800 tonne, totalling 96,900 tonnes, with a MoM increase of 400 tonnes. (Bearish ★)
Primary Aluminium Market: Yesterday morning, the centre of the front-month SHFE aluminium contract shifted down to around RMB 20,630 per tonne before slightly V-shaped reversing to around RMB 20,670 per tonne.
East China continued to experience inventory buildup, with increased market arrivals, resulting in a fully oversupplied buyer's market. Despite the downward shift in the aluminium price centre, downstream inquiries increased, but market transactions were still at a discount of RMB 20 per tonne against SMM.
Yesterday, SMM A00 aluminium was reported at RMB 20,600 per tonne, down RMB 40 per tonne from the previous trading day, at a discount of RMB 50 per tonne against the 07 contract, down RMB 20 per tonne from the previous trading day. Trading activity in the Central China market was slightly weaker than the previous trading day.
Against the backdrop of some cargo being transferred to areas surrounding Central China and large traders hoarding warrants in the market to cope with the risk of a short squeeze in the 07 contract, after experiencing several consecutive days of premium trading against the Central China average price, market activity in Central China began to pull back amid the off-season atmosphere, with transactions closing at a premium of RMB 20 per tonne against the SMM Central China average price.
SMM Central China A00 aluminium was recorded at RMB 20,480 per tonne against the SHFE aluminium 2507 contract, down RMB 30 per tonne from the previous trading day, with a price spread of RMB -120 per tonne between Henan and Shanghai, narrowing by RMB 10 per tonne from the previous trading day and at a discount of RMB 170 per tonne against the 2507 contract.
Secondary 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 20,600 per tonne and aluminium scrap market prices generally continued to decline.
Currently in the traditional off-season, downstream scrap utilisation enterprises have weak order releases, with procurement mainly driven by immediate needs. Yesterday, the centralized quoted price for baled UBC aluminium scrap ranged from RMB 15,250 to 15,750 per tonne (tax-exclusive), while the quoted price for shredded aluminium tense scrap ranged from RMB 15,900 to 17,400 per tonne (tax-exclusive).
By product, baled UBC aluminium scrap prices fell by RMB 50 per tonne MoM from yesterday, following the decline in aluminium prices.
By region, Shanghai, Jiangsu, Shandong, and other regions closely followed aluminium price movements, with price adjustments ranging from RMB 50 to 100 per tonne.
In Guizhou and Hunan, price adjustments lagged behind aluminium price movements, with quoted prices remaining unchanged from the previous trading day.
In Jiangxi, aluminium scrap prices were raised yesterday, with both wrought and aluminium tense scrap prices increasing by RMB 100 per tonne. This counter-trend increase reflects a further tightening of aluminium scrap supply.
Recently, secondary aluminium scrap utilisation enterprises in Fujian and Guangxi have seen a sharp drop in operating rates due to aluminium scrap shortages, with some even halting production for maintenance.
In terms of the price difference between A00 aluminium and aluminium scrap, the price difference between A00 aluminium and mixed aluminium extrusion scrap free of paint in Foshan increased by RMB 100 per tonne from yesterday to RMB 1,755 per tonne, while the price difference between A00 aluminium and mechanical casting aluminium scrap in Shanghai decreased by RMB 12 per tonne from yesterday to RMB 1,830 per tonne.
Secondary aluminium alloy: On the futures market, yesterday, the most-traded cast aluminium alloy futures contract 2511 opened at RMB 19,755 per tonne, reaching a high of RMB 19,895 per tonne and a low of RMB 19,735 per tonne, before closing at RMB 19,850 per tonne, up RMB 100 per tonne from the previous close, representing a 0.51 per cent increase.
Trading volume was 3,096 and open interest was 8,685, with bulls mainly increasing their positions during the day. On the spot market, SMM A00 aluminium prices fell by RMB 40 per tonne from Monday to RMB 20,600 per tonne, while SMM ADC12 prices remained stable at RMB 20,000 per tonne.
After July, factors such as the high-temperature off-season and high aluminium prices have continued to impact downstream orders, with some downstream enterprises initiating production cuts. Although futures and spot traders have been actively inquiring about prices and trading volumes for delivery brands have increased, the end-use consumption market remains sluggish, posing a key resistance to price increases.
Faced with a dual squeeze of raw material supply shortages and weak market demand, some secondary aluminium alloy manufacturers have temporarily halted production for maintenance or reduced their operating rates.
Overall, without substantial improvements in demand, prices are encountering resistance, but cost support logic remains intact. It is expected that secondary aluminium alloy prices will maintain a narrow rangebound fluctuation in the short term.
Summary: On the macro front, Trump has clearly stated that tariffs will be imposed on 14 countries (including the EU) starting August 1, targeting key industries such as semiconductors and metals, significantly raising market risk aversion.
US Treasury Secretary Bessent stated that "meetings with China will take place in the coming weeks," which, although not releasing substantive positive news, provides a buffer period for the escalation of trade frictions. Fundamentals indicate that aluminium smelters in some regions have increased casting ingot output.
Entering July, downstream sectors are in a pronounced off-season, coupled with persistently high aluminium prices further suppressing production activities. Spot aluminium transactions have been subdued, aluminium ingot inventory has continued to build up, and spot premiums/discounts have weakened significantly. The real-time cost of electrolytic aluminium continued to decline MoM.
Overall, domestic inventories of electrolytic aluminium and aluminium billets continue to accumulate, coupled with weak demand during the off-season, sluggish orders and export constraints, suppressing the upside potential for prices.
Aluminium prices are expected to face intensified downside risks at elevated levels in the near term, though the upside potential remains limited. Close attention should be paid to casting ingot output and inventory changes.
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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