Weak end-use demand caps the rise, and aluminium price consolidation pattern persists

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Futures: In the night session on July 24, the most-traded SHFE aluminium contract opened at RMB 23,195 per tonne, reached a high of RMB 23,220 per tonne and a low of RMB 23,105 per tonne, and finally closed at RMB 23,205 per tonne, down 0.09 per cent from the previous settlement. During this period, after rebounding, prices consolidated at highs and closed with a small bearish candlestick.

Prices moved within the short-term dense moving average range of MA5 (23,232.43), MA10 (23,220.90), MA20 (23,186.42), and MA40 (23,221.95). The moving average system formed bottom support, with only pressure above from the medium and long-term MA60 (23,345.74).

The stage low of 22,875 provided solid support, and consolidation characteristics after the rebound were evident. Trading volume in this period was 50,900 lots, significantly contracted from before, while open interest was 253,000 lots, edging up by 445 lots.

The futures showed slight signs of bearish position building, but fund strength was relatively weak. From a technical perspective, the 4-hour MACD indicator's DIFF (28.68) was above DEA (17.47), persisting the golden cross structure. The red histogram (STICK) value was 22.42, with bullish momentum slightly contracting but the trend not reversed.

On July 24, LME aluminium opened at USD 3,189 per tonne, hit a high of USD 3,189.5 per tonne and a low of USD 3,149.5 per tonne, and closed at USD 3,165 per tonne, down 0.78 per cent from the previous settlement.

During this session, prices rebounded to hit highs, then pulled back under pressure and closed with a small bearish candlestick. Prices fell below the short-term moving averages MA5 (3,173.21) and MA10 (3,168.82). Above, the medium and long-term moving averages MA20 (3,187.07), MA40 (3,262.70), and MA60 (3,305.75) were in a bearish alignment, exerting pressure.

The stage low of 3,040 provided solid support, and the market entered a consolidation and resting phase after the rebound. Trading volume was 13,383 lots, slightly contracted from before, while open interest was 593,000 lots, up by 2,140 lots. The futures showed slight signs of bearish position building, with weak selling pressure. From a technical perspective, the daily MACD indicator's DIFF (-44.58) was running above DEA (-63.23), persisting the golden cross structure.

The red histogram (STICK) value was 37.30, with bullish momentum marginally weakening but not reversed. Short-term, the focus was on high-level consolidation with pullbacks, and the risk of a unilateral decline was limited.

Macro front: Foreign Ministry Spokesperson Lin Jian, at a regular press conference, stated that China's position on China-US economic and trade issues is consistent and clear, opposing all forms of unilateral tariff measures, and that tariff wars and trade wars are in no one's interest.

According to CME's "FedWatch," the US Fed's probabilities for July were no change (62.1 per cent) and a cumulative 25 bps hike (37.9 per cent). For September, the probabilities were no change (15.1 per cent), a 25 bps hike (56.2 per cent), and a 50 bps hike (28.7 per cent).

Fundamentals: The spot aluminium ingot market outside China was broadly under pressure and declined last week, with the average transaction price in major Asian trading regions falling sharply W-o-W. The downstream sector entered the traditional consumption off-season, and purchasing sentiment stayed sluggish.

Coupled with inventory buildup among some traders and rising capital pressure, low-priced sell-offs increased, market price quotes diverged significantly, and the spot price centre continued to loosen. In the short term, there were no signs of improvement in Asia's downstream off-season conditions. Just-in-time procurement by end-users was unlikely to see a volume increase, and traders remained in an inventory clearing cycle.

As a result, spot premiums for aluminium ingot outside China stayed in the doldrums. Future attention should focus on the pace of downstream recovery, new long-term contract signings, and the progress of trader destocking.

If demand remains sluggish, regional spot prices still have room to edge lower. Inventory side, on Monday this week, aluminium ingot inventory in major domestic consumption areas stood at 979,000 tonnes, destocking by 27,000 tonnes from last Thursday and by 43,000 tonnes from last Monday.

Primary aluminium market: In early trading, the SHFE aluminium 2606 contract's price centre ran lower than the same period of the previous trading day. Driven by pre-weekend stockpiling and lower aluminium prices, market purchasing sentiment rose, but due to ample circulating supply, price acceptance only edged up slightly.

Mainstream transaction prices settled at a discount of RMB 10 per tonne to a premium of RMB 10 per tonne against the SHFE aluminium 08 contract. In east China today, the selling sentiment index stood at 3.13, flat M-o-M, while the purchasing sentiment index was 2.94, up 0.03 M-o-M. Today, futures edged down, coinciding with pre-weekend stockpiling and the last long-term contract delivery day of the month.

In the central China market, traders purchased heavily to fulfil long-term contracts, and stockpiling sentiment among downstream processing enterprises recovered slightly. This led suppliers to hold their shipment quotes high, displaying a strong willingness to hold prices firm and hold back from selling conditions.

Ultimately, the actual transaction price range in the central China market centred around a discount of RMB 100-120 per tonne against the SHFE aluminium 08 contract. In central China today, the selling sentiment index was 3.10, up 0.01 M-o-M, and the purchasing sentiment index was 2.96, up 0.08 M-o-M.

Aluminium scrap: Today, SMM's A00 spot aluminium price closed at RMB 23,200 per tonne, edging down RMB 60 per tonne from the previous trading day, while the overall aluminium scrap market remained stable.

Regarding price differences between A00 aluminium and aluminium scrap, on July 24, the price difference between A00 aluminium and mixed aluminium extrusion scrap free of paint in Foshan was around RMB 2,030 per tonne, and the price difference between A00 aluminium and shredded aluminium tense scrap was around RMB 710 per tonne, both continuing to run at historically low levels.

In import news, according to customs data, China's aluminium scrap imports totalled 132,800 tonnes in June 2026, marking the third consecutive month of decline from May's 152,000 tonnes. Looking at cumulative 2026 data, total aluminium scrap imports from January to June reached 981,800 tonnes.

Recently, orders from Southeast Asia to the Guangdong region increased; although the import window improved compared to earlier periods, new transactions were mostly concentrated in low-priced resources, and overall spot market activity remained limited. Affected by the UAE's aluminium scrap export ban and the EU's tariff hike policy, the tightening effect on high-quality imported aluminium scrap supply will become more evident in the future.

The aluminium scrap market is expected to continue the narrow consolidation pattern next week, with demand suppressing and costs providing a floor. As the off-season deepens, end-use orders from downstream are unlikely to see substantial improvement.

Scrap utilisation enterprises continue their procurement strategy of purchasing as needed, and the procurement atmosphere is difficult to see significant improvement. The mainstream trading range for shredded aluminium tense scrap (priced based on aluminium content) is expected to be around RMB 19,800-20,500 per tonne.

Currently, the price difference between A00 aluminium and aluminium scrap has narrowed to a historic low, significantly weakening the economic advantage of aluminium scrap over primary aluminium. If primary aluminium prices continue to decline thereafter, the substitution effect of primary aluminium for aluminium scrap will accelerate and become evident, necessitating close attention to the crowding-out effect of aluminium price movements on aluminium scrap demand.

Secondary aluminium alloy: In the spot market: Today, ADC12 market quotes largely continued to hold steady, with a general lack of willingness to adjust prices across the industry. From the driving factors, although the cost side provided some bottom support for prices, end-use demand was sluggish, downstream procurement pace slowed down, and the wait-and-see sentiment heightened by a slight pullback in aluminium prices collectively capped the upside room.

Under the current mixed pattern of bullish and bearish factors, most producers chose to hold prices steady and wait, resulting in a relatively sluggish market trading atmosphere. In the short term, the ADC12 market is expected to continue operating in a narrow consolidation. Going forward, close attention should be paid to changes in aluminium scrap costs, primary aluminium price trends, and improvement in end-use orders.

Comprehensive outlook: Recently, macro sentiment has seen a slight improvement. The persistent geopolitical risk premium in the Middle East and the continued destocking of aluminium ingots in China are jointly providing a floor for aluminium prices. However, the continued commissioning of overseas aluminium capacity in the long term, weak traditional end-use demand in China, and recurring macro-level uncertainties are exerting significant pressure on the upside room for aluminium prices. In the short term, aluminium prices are expected to maintain a consolidation pattern.

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.