Futures: According to the night session data on October 14, the SHFE aluminium 2511 contract closed at RMB 20,855 per tonne, down 0.36 per cent. It was under pressure in the short term below the 5-day moving average (MA5: 20,934), but remained above the 10-day, 30-day, and 60-day moving averages, indicating a still bullish medium and long-term trend.
The trading volume (31,647 lots) shrank below the average volume, reflecting low market activity. The MACD indicator showed a negative DIF and a positive DEA, with a slightly positive histogram, suggesting weak momentum. Referencing recent price highs and lows (e.g., high near 21,005, low near 19,200), the resistance zone is seen at 20,950-21,000 (near the previous high and MA5), while the support zone is at 20,680-20,800 (near the intraday low and MA60). Overall, the market fluctuated rangebound, and the direction of a breakout from the range needs to be watched.
Primary aluminium market: SHFE aluminium mainly fluctuated downward in the early session, with the price centre falling to around RMB 20,900 per tonne. In East China, although SHFE aluminium trended downward, prices increased compared to earlier periods, leading to more hedging trades. Downstream buying sentiment rebounded, sellers refused to budge on prices, and actual transactions were at parity to a premium of about RMB 10 per tonne against the SMM average price.
The East China market shipment sentiment index was 3.07 on Tuesday this week, up 0.13 w-o-w; the purchase sentiment index was 2.97, up 0.21 w-o-w. SMM A00 aluminium was quoted at RMB 20,900 per tonne on Tuesday this week, up RMB 100 per tonne from the previous trading day, at parity against the 2510 contract and at a discount of RMB 40 per tonne against the 2511 contract, up RMB 10 per tonne from the previous trading day. In central China, purchasing was relatively active before the market opened, with some enterprises adopting a wait-and-see stance. After opening, aluminium prices rose rapidly, downstream purchasing sentiment declined, shipments increased significantly, and daily actual transactions were concentrated at a discount of about RMB 20 per tonne against the SMM central China aluminium price.
The central China market shipment sentiment index was 2.72 on Tuesday this week, flat w-o-w; the purchase sentiment index was 2.57, down 0.04 w-o-w. SMM central China A00 aluminium was recorded at RMB 20,840 per tonne, up RMB 80 per tonne from the previous trading day, at a discount of RMB 60 per tonne against the October contract and a discount of RMB 100 per tonne against the November contract, down RMB 10 per tonne from the previous trading day. The price spread between Henan and Shanghai narrowed by RMB 20 per tonne w-o-w to RMB 60 per tonne.
Recycled aluminium raw materials: Spot aluminium prices increased on Tuesday this week compared to the previous trading day, with SMM A00 spot aluminium closing at RMB 20,900 per tonne. Aluminium scrap prices generally followed the upward trend. With the traditional peak season more than half over, tight supply remains the main theme in the aluminium scrap market, and procurement prices remain high, though the sustainability of these high levels needs to be considered. On Tuesday this week, baled UBC was mainly quoted in the range of RMB 15,850-16,350 per tonne (ex-tax), while shredded aluminium tensile scrap (priced based on aluminium content) was mainly quoted in the range of RMB 17,300-17,800 per tonne (ex-tax). Baled UBC rose RMB 50 per tonne w-o-w, while shredded aluminium tense scrap (priced based on aluminium content), scrap wheel hub, and mechanical casting aluminium scrap remained flat w-o-w. Since former President Trump threatened to impose 100 per cent tariffs on China last Friday, SHFE aluminium broke below key support levels during the night session.
On October 11, suppliers and scrap utilisation enterprises followed the futures decline, lowering aluminium scrap quotes by up to RMB 200 per tonne. After the market opened on Monday, the 13th, some regions such as Hubei, Anhui, and Hunan adjusted prices downward. On Tuesday, the 14th, aluminium prices increased by RMB 100 per tonne, and the cumulative rise in aluminium scrap prices was fully recovered, leading to the decision to keep prices unchanged. Mixed views emerged regarding the subsequent trend of aluminium scrap prices. Some participants in the secondary industry believe that after the National Day holiday, aluminium scrap prices will maintain a strong fluctuating trend, as the tight supply fundamentals are unlikely to ease in the short term, providing solid support for prices.
In October, aluminium scrap prices are expected to be guided higher by primary aluminium prices. However, other feedback suggests that while downstream demand remains stable with a positive outlook, scrap utilisation enterprises still have limited acceptance for high-priced raw materials and maintain a tendency to drive down prices, which may restrain further price increases. According to SMM's comprehensive assessment, the overall aluminium scrap market in October is expected to hold up well, with the mainstream price range for shredded aluminium tensile scrap (priced based on aluminium content) projected to hover around RMB 17,500-18,000 per tonne. The market should closely monitor the sustainability of post-holiday downstream demand and further guidance from primary aluminium price trends.
Secondary aluminium alloy: Futures side, on Tuesday, the most-traded cast aluminium alloy futures contract 2512 fell before rising, opening at RMB 20,475 per tonne, hitting a high of RMB 20,550 per tonne during the session, bottoming at RMB 20,360 per tonne, and finally closing at RMB 20,380 per tonne. It recorded three consecutive bearish candlesticks, down RMB 30 per tonne or 0.15 per cent from the previous trading day. Open interest stood at 13,234 lots, with a trading volume of 4,174 lots, and the session was dominated by bearish position increases. In the spot market, on Tuesday, the SMM A00 aluminium price increased by RMB 100 per tonne from the previous trading day to RMB 20,900 per tonne, while the SMM ADC12 price held steady at RMB 21,000 per tonne.
Aluminium prices reclaimed some losses on Tuesday, and the secondary aluminium market adopted a wait-and-see approach with limited price adjustment sentiment. Currently, raw material availability has not improved significantly, and enterprises continue to face cost pressure. At the same time, stable and improving demand provides support for prices; however, inventory pressure exerts some suppression on prices. It is expected that ADC12 prices will maintain a fluctuating trend in the short term. Going forward, close attention should be paid to raw material supply conditions, changes in social inventory, and the pace of post-holiday demand recovery.
Aluminium market summary: Macro front, Fed Chairman Powell hinted that officials may stop shrinking the balance sheet in the coming months, acknowledging "some signs" of tightening in money markets. Even if a government shutdown severely impairs the Fed's grasp of the economic situation, there is still an expectation for another 25-basis-point interest rate cut later this month. Bullish★ Domestically, Premier Li Qiang chaired a symposium with economic experts and entrepreneurs to discuss the economic situation.
The Premier emphasised the need to strengthen and enhance the effectiveness of counter-cyclical adjustments, persistently boost domestic demand, and strengthen domestic circulation. Multiple measures should be taken to create a first-class industrial ecosystem and comprehensively address disorderly and irrational competition in industries. (Neutral★) Fundamentals: After entering October, some aluminium enterprises in northern China reported that, driven by peak season demand for downstream processed products, the proportion of liquid aluminium directly supplied is expected to increase. This will directly keep aluminium ingot production at low levels, reducing the supply of spot aluminium ingots in the market and providing support to aluminium prices from the supply side. Inventory side, according to SMM data, as of October 13, the domestic social inventory of aluminium ingots was approximately 650,000 tonnes: up 58,000 tonnes m-o-m from September 29, and up 33,000 tonnes from September 25. From a seasonal perspective, there has been no excessive seasonal inventory buildup this year, with inventories remaining at low levels for the same period. Downstream consumption shows resilient peak season performance, with spot discounts limited.
Against the backdrop of seasonal peak demand, even as aluminium prices rose to a high of RMB 21,000 per tonne, spot market discounts did not deepen significantly (the spot-futures price spread did not widen noticeably), further confirming demand's supportive effect on prices. Comprehensive Outlook: Short-term, on the macro front, expectations for US Fed interest rate cuts are positive for metal prices, while domestic policies emphasise counter-cyclical adjustments and domestic demand expansion, stimulating consumption in the domestic market.
Fundamentals provide underlying support: the increased proportion of liquid aluminium direct supply in northern aluminium enterprises keeps ingot production low, leading to tight supply; inventories are at low levels for the period without excessive seasonal buildup, and downstream peak season demand resilience is evident, with limited spot discounts, confirming consumption's cushioning effect on prices. Currently, aluminium prices remain at a relatively high level. High prices will gradually suppress the procurement pace of downstream buyers, and some small and medium-sized processing enterprises may reduce purchases or delay orders due to cost pressure, leading to marginal weakening on the demand side and thus limiting further upside for aluminium prices. The aluminium market is expected to hover at a high.
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.
Responses
