Tightening liquidity expectations strengthen, aluminium prices under pressure with short-term volatility

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Futures: SHFE aluminium closed at RMB 24,510 per tonne yesterday, up 0.35 per cent. The price stood above MA5 (24,423) but remained suppressed by MA10 (24,520), MA30 (24,603.83), and MA60 (24,619.33), with the short-term moving average bearish alignment not yet reversed. MACD indicator DIF = -71.63, DEA = -45.84, the death cross continued, with the negative histogram narrowing to -51.58, indicating slightly weakening bearish momentum. Trading volume shrank to 41,600 lots, with strong wait-and-see sentiment in the market. The suggested core trading range for SHFE aluminium is 24,200-24,700. LME aluminium closed at USD 3,629 per tonne, with the price running above all moving averages (MA5 = 3,594.9, MA10 = 3,594.2, MA30 = 3,566.68, MA60 = 3,449.77), showing a bullish alignment. MACD indicator DIF = 35.33, DEA = 35.15, a golden cross emerged, with the histogram turning positive (0.3452), indicating exhaustion of downward momentum and short-term signs of strengthening. The suggested core trading range for LME aluminium is 3,600-3,660.

Macro front: Trump informed Israeli Prime Minister Netanyahu that mediators are drafting a letter of intent, which both the US and Iran will jointly sign to formally end hostilities and initiate a 30-day negotiation covering topics including Iran's nuclear program and navigation through the Strait of Hormuz. The US Fed meeting minutes showed that many policymakers advocated removing the easing bias, most participants believed policy tightening would be needed if inflation persists above 2 per cent, and only a few officials supported future interest rate cuts — the hawkish tone far exceeded market expectations.

Fundamentals side: Ex-China, amid Middle East conflicts, aluminium outside China showed a rigid supply gap, driving continued destocking of LME inventory. As of last Wednesday, LME inventory decreased approximately 11,700 tonnes Y-o-Y to 346,500 tonnes. The LME aluminium Cash-3M premium structure continued to deepen. Domestically, as of this Monday, SMM aluminium social inventory was approximately 1.435 million tonnes, an inventory buildup of approximately 7,000 tonnes compared to last Thursday, with inventory still at high levels, continuing to pressure aluminium prices.

Primary aluminium market: Yesterday during the morning session, SHFE aluminium 2606 contract traded in a range, with the overall price centre moving higher compared to the previous trading day. Some downstream enterprises began stockpiling, and overall market buying sentiment rose significantly compared to the previous day. Sellers' sentiment to hold prices firm was prevalent, with some sellers holding back from selling, and mainstream transaction prices continued to rise. The mainstream spot quotation was SMMA00 average price to RMB +20 per tonne. East China market shipment sentiment index was 2.95, down 0.02 W-o-W; purchasing sentiment index was 3.03, up 0.25 W-o-W. In central China, insufficient invoice quotas restricted suppliers' shipments, with a notable willingness to hold prices firm and hold back from selling, and market transaction prices were relatively high. Moreover, with aluminium prices edging up slightly while sustainability of subsequent orders from downstream processing enterprises remained uncertain, the market trading atmosphere remained sluggish. Ultimately, the actual transaction price range in central China was between central China price at parity and central China price plus 30 yuan premium. Central China market shipment sentiment index was 2.82, down 0.01 W-o-W; purchasing sentiment index was 2.3, down 0.02 W-o-W.

Aluminium scrap: Yesterday, primary aluminium prices edged up RMB 60 per tonne compared to the previous trading day, while aluminium scrap market prices remained generally stable. According to the latest customs data, China's aluminium scrap imports in April 2026 were approximately 171,000 tonnes, down approximately 10 per cent Y-o-Y. Cumulative imports from January to April 2026 totalled 700,000 tonnes. In terms of import source countries, the main sources of China's aluminium scrap imports in April were Thailand, the UK, Japan, the US, Australia, and other countries and regions, with Thailand accounting for 20.7 per cent of China's total imports.

Secondary aluminium alloy: Yesterday, the ADC12 market was dominated by stable prices and wait-and-see sentiment. SMM ADC12 price remained flat from the previous day at RMB 23,600 per tonne. Demand side, narrow-range aluminium price fluctuations and lacklustre downstream purchasing limited upside room for price adjustments. Cost side, tight compliant aluminium scrap supply, persistent invoice shortage issues, and elevated import costs provided clear cost support. Additionally, some producers showed signs of production cuts, and market expectations for subsequent supply tightening warmed up. Combined with cost support, enterprises had a willingness to increase prices in the short term. Overall, ADC12 prices are expected to move sideways in the short term.

Aluminium market summary: Macro front, the US and Iran plan to sign a letter of intent to formally end hostilities and initiate 30-day negotiations, with geopolitical risk trajectory still to be observed; the US Fed meeting minutes were far more hawkish than expected, with most policymakers supporting policy tightening, and expectations of liquidity tightening are overall bearish for metal prices. Fundamentals side, the ex-China supply gap and low inventory still provide bottom support, but high domestic inventory remains the core factor suppressing significant price rallies. Additionally, weak spot market trading performance further limits upside room for aluminium prices. In the short term, aluminium prices are expected to continue the pattern of LME outperforming SHFE, fluctuating at highs.

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.