The Strait situation has marginally eased, and under the tug-of-war between sellers and buyers, aluminium prices maintain a pattern of consolidation on a subdued note

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Futures: The most-traded SHFE aluminium 2610 contract closed at RMB 23,975 per tonne, up RMB 175 from yesterday's settlement, a gain of 0.74 per cent with an intraday open of RMB 23,730 per tonne and fluctuations between RMB 23,720 and RMB 24,075 per tonne. Prices were above the MA5 (23,760.00), MA10 (23,843.50), MA30 (23,656.33), and MA60 (23,607.83) moving averages, with the medium and long-term moving averages forming a bearish arrangement and continuing to press downward, while the structure of consolidating at lows and drifting higher persisted, with the upper high-range constituting key resistance.

The MACD DI (79.9752) was below the DEA (107.2221), with the MACD green bar at -54.4938, indicating somewhat weakened bearish momentum. The key trading range for SHFE aluminium is suggested at RMB 23,500-24,300 per tonne. The LME aluminium 3M contract closed at USD 3,237.50 per tonne, down 0.20 per cent with an intraday open of USD3,241 per tonne and fluctuations between USD3,236.00 and USD3,243 per tonne.

Prices were above the MA5 (3,224.40), MA10 (3,232.00), and MA30 (3,221.10) moving averages but below the MA60 (3,257.21), with the medium and long-term moving averages forming a bearish arrangement and gradually pressing downward, revealing a structure of retreat from highs and consolidating correction, with the 60-day moving average above posing clear resistance. The MACD DIF (0.9977) was below the DEA (3.5769), with the MACD green bar at -5.1583, indicating somewhat weakened bullish momentum. The key trading range for LME aluminium is suggested at USD 3,200-USD 3,300 per tonne.

Macro front: Reports said that the US and Iran have reached a ceasefire agreement, which is expected to be officially announced in the coming days. The widely circulated agreement includes freedom of navigation in the Strait of Hormuz and the resumption of negotiations based on the Islamabad Memorandum. Neither the US nor Iran has confirmed the agreement. Meanwhile, reports indicated that US diplomatic missions in the Middle East may start allowing diplomats to return as early as this week and gradually scale back emergency measures previously taken.

Iran and Oman issued a joint statement, planning to establish a mutually agreed safe maritime corridor in the Strait of Hormuz. Iran's Deputy Foreign Minister Gharibabadi stated that the memorandum of understanding on the Strait of Hormuz between Iran and Oman does not mean the strait will resume opening from August 26.

Under the agreement, shipping lanes entering and leaving the Persian Gulf will pass through Iranian and Omani waters respectively, which Gharibabadi described as "a two-way highway" about 7 nautical miles wide. Gharibabadi pointed out that this lane is temporary, and the two sides will negotiate a permanent route within 30 to 60 days. US President Trump posted that all mines in the international waters of the Strait of Hormuz have been cleared or detonated. Iran has been notified that any vessel laying new mines will be systematically destroyed immediately.

Fundamentals: Supply side, last week, China's aluminium weekly production was stable, with the proportion of liquid aluminium pulling back slightly by 0.02 percentage points. Outside China, driven by new capacity additions and production resumptions, daily average production is expected to continue to rebound. Demand side, the traditional consumption off-season is nearing its end, but the transition period between off-season and peak season has not yet appeared, and the operating rate of the downstream processing sector is under pressure overall.

In July, aluminium stranded wire exports edged down M-o-M, but exports of 102,800 tonnes far exceeded expectations, and the resilience of aluminium stranded wire exports still existed. Inventory side, the destocking trend of aluminium ingot social inventory continued during the week. This Monday, aluminium ingot inventory in major consumption regions in China stood at 860,000 tonnes, a destocking of 15,000 tonnes from last Thursday and a destocking of 26,000 tonnes W-o-W from last Monday.

Primary aluminium market: The SHFE aluminium 2609 contract futures rose compared to the previous trading day, but overall performance during the morning trading session showed a retreat after a rapid rise, with some suppliers lowering prices. Spot transaction sentiment was not positive, and overall spot premiums/discounts transactions remained unchanged from the previous trading day.

The SHFE aluminium 09 contract had a discount of RMB 10 per tonne to a premium of RMB 10 per tonne. Today, SHFE aluminium futures consolidated, and the trading sentiment in the central China market remained sluggish, with absolute prices and premiums/discounts both at high levels. Downstream purchase willingness was poor, and suppliers sold in large quantities collectively, with weak willingness to hold prices firm, and market transaction prices showed a downward trend. Ultimately, the actual transaction price range in the central China market was around a discount of RMB 50-70 per tonne against the SHFE aluminium 09 contract.

Today, aluminium prices edged down, and the spot market gradually recovered. Inventory was basically stable, with no inventory buildup pressure emerging, supporting suppliers' future expectations. In the morning, some slightly lowered shipments, while most firmly held prices and held back from selling.

Quotes ranged from -10 to +10, with the centre gradually lifting, and spot circulation was notably tightened. Downstream maintained a tone of replenishing on demand at lower prices, and demand release was relatively stable. Traders' willingness to absorb non-premium cargoes gradually increased, and effective demand takeover compensated for the lack of the former, with overall transactions improving and sentiment somewhat recovering.

Secondary aluminium raw materials: Today, the SMM A00 spot aluminium price closed at RMB 23,740 per tonne, down RMB 60 per tonne compared to the previous trading day. Domestic aluminium scrap market prices were basically stable with a wait-and-see stance. Against the backdrop of sustained rising primary aluminium prices, aluminium scrap fluctuations were relatively limited, and the price transmission mechanism was blocked.

However, with the recent pullback in primary aluminium, aluminium scrap's resilience to price falls provided an opportunity for narrowing the price difference between A00 aluminium and aluminium scrap. Regarding the price difference between A00 aluminium and aluminium scrap, on August 25, the price difference between A00 aluminium and mixed aluminium extrusion scrap free of paint in Foshan was RMB 2,255 per tonne, and the price difference between A00 aluminium and shredded aluminium tense scrap was RMB 1,034 per tonne.

On the import/export front, according to SMM customs data, in July 2026, China's aluminium scrap imports totalled approximately 119,600 tonnes, down M-o-M from 133,000 tonnes in June, mainly due to the earlier price inversion between Chinese and overseas markets and delayed shipping schedules, with overseas high-quality scrap replenishment remaining low.

Affected by the UAE's aluminium scrap export ban and the EU's tariff hike policy, the supply contraction effect in Europe and the Middle East continues to be evident, further consolidating Southeast Asia's position as the major supplementary source. The aluminium scrap market this week is expected to continue its pattern of narrow consolidation, with demand suppressed and costs providing a floor.

Currently in the tail end of the traditional off-season, downstream end-user orders are unlikely to see a substantial surge. Scrap utilisation enterprises continue their purchasing-as-needed strategy, with a cautious purchasing atmosphere, and the pre-peak-season effect is not yet significant; enterprises still need to wait and see for subsequent order intake. Shredded aluminium tense scrap (priced based on aluminium content) is expected to trade mainly in the range of RMB 19,900-20,700 per tonne.

Secondary aluminium alloy:Spot side: Today, ADC12 market offers were generally stable, with SMM ADC12 prices remaining flat from the previous trading day at RMB 23,900 per tonne. The demand side has not shown significant improvement, and price hikes still lack sufficient transaction support. Meanwhile, the cost side still provides some support, leaving limited room for further price declines.

The market overall presents a state where it is difficult to move up or down, with strong wait-and-see sentiment. However, as the traditional peak season gradually approaches, some enterprises have reported marginal improvements in recent orders, and market expectations for future demand recovery have warmed. In the short term, ADC12 prices are expected to maintain a narrow consolidation trend, with a subsequent focus on changes in the cost side and improvements in end-user demand.

Comprehensive outlook: Macro sentiment fluctuates. New progress has emerged in US-Iran talks, with Iran and Oman planning to establish a safe maritime channel through the Strait of Hormuz, easing market sentiments on geopolitical tensions. On the fundamentals side, China's aluminium ingot inventory destocking trend continues, providing bottom support for aluminium prices. However, driven by newly commissioned and resumed capacity outside China, daily average aluminium production is expected to continue rebounding.

The SHFE/LME price ratio has recovered. As orders on hand are fulfilled, export demand is pulling back M-o-M but short-term resilience remains. On the domestic demand side, the transition period between the off-season and peak season is not yet clear, and the market has some concerns about peak season demand. In the short term, aluminium prices are expected to maintain a consolidation pattern on a subdued note.

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.