November 4 SMM Aluminum Morning Meeting Minutes
Futures:During the night session on November 3, the most-traded SHFE aluminum contract opened lower, then fluctuated higher, stabilizing overall at elevated levels. It opened at 21,555 yuan/mt, hit a high of 21,610 yuan/mt, a low of 21,435 yuan/mt, and closed at 21,570 yuan/mt, up 0.42% from the previous close. Technically, the MA system showed a bullish alignment (MA5: 21,402 > MA10: 21,294.5 > MA20: 21,109.75 > MA60: 20,831.33), and the 4-hour MACD candlestick maintained a golden cross (DIFF: 133.99, DEA: 108.41). Trend-wise, SHFE aluminum remains in an upward channel; although prices pulled back from the intraday high during the night session, they ultimately closed at 21,570 yuan/mt, above most short-term moving averages, indicating the current uptrend remains technically intact.
Macro Front:On November 3, Premier Li Qiang and Russian Prime Minister Mishustin co-chaired the 30th regular meeting between the Chinese and Russian prime ministers in Hangzhou. Li Qiang stated that China is willing to firmly support Russia, maintain close high-level exchanges, enhance strategic alignment, expand cooperation across various fields, continuously advance the China-Russia comprehensive strategic partnership of coordination for the new era, and move forward hand in hand on the path to modernization. (Bullish ★) At a regular press conference on November 3, Foreign Ministry Spokesperson Mao Ning stated that regarding China's rare earth export control policies, the competent Chinese authorities have repeatedly clarified their position. The urgent priority is for China and the US to earnestly implement the important consensus reached by the two heads of state at their Busan meeting, injecting more stability into China-US economic and trade cooperation and the world economy. (Neutral)
Fundamentals:Inventory side, according to SMM statistics, on November 3, combined aluminum billet inventory in two regions totaled 99,500 mt, a slight buildup of 1,000 mt from the previous period, while combined aluminum ingot inventory in three regions stood at 473,000 mt, up 18,000 mt from the previous period. Cost side, SMM data shows that in October, the average tax-inclusive full cost for China's aluminum industry was 15,889 yuan/mt, down 1.8% MoM and 13.3% YoY, mainly due to a decline in the monthly average alumina price during the period, reducing alumina costs for aluminum enterprises, with the average profit in China's aluminum industry around 5,022 yuan/mt.
Primary Aluminum Market:During the first trading session yesterday, the most-traded SHFE aluminum contract's trading center shifted up to around 21,450 yuan/mt; in the second session, it mainly fluctuated around 21,420 yuan/mt. In East China, aluminum prices rose further, with traders increasing shipments, but overall holders still intended to support premiums. Around market open, holders' offers could reach parity to a 10 yuan/mt premium over the SMM average price. However, high absolute prices dampened downstream purchasing enthusiasm, with actual transactions mainly occurring at a discount of 10 yuan/mt to parity against the SMM average price. On Monday, the sales sentiment index in the east China market was 3.02, down 0.06 WoW; the purchasing sentiment index was 3.01, down 0.13 WoW. On Monday, SMM A00 aluminum closed at 21,440 yuan/mt, up 160 yuan/mt from the previous trading day, at parity against the 2511 contract, flat from the previous trading day. In the central China region, trading activity was relatively sluggish on Monday. Before the market opened, most participants adopted a wait-and-see approach regarding offers. High absolute prices led downstream consumers to avoid large-scale stockpiling. Buyers preferred purchasing at large discounts, while holders held prices firm and were reluctant to sell. After 9:30 AM, prices weakened but the market remained quiet with low trading volume. Actual transaction prices ranged from the central China price to a discount of 20 yuan/mt against it. On Monday, the sales sentiment index in the central China market was 2.89, flat WoW; the purchasing sentiment index was 2.81, down 0.03 WoW. SMM central China aluminum closed at 21,300 yuan/mt, up 150 yuan/mt from the previous trading day, at a discount of 140 yuan/mt against the November contract, down 10 yuan/mt from the previous trading day. The price spread between Henan and Shanghai was -140 yuan/mt, down 10 yuan/mt from the previous trading day.
Recycled Aluminum Raw Materials:On Monday, spot primary aluminum prices rose compared to the previous trading day, with SMM A00 aluminum closing at 21,440 yuan/mt. Aluminum scrap market prices followed the upward trend of aluminum prices. As the traditional peak season ended, downstream demand showed significant divergence. Demand for scrap used in cast aluminum alloys remained robust, providing more consumption support, while demand for scrap used in wrought aluminum alloys began to show signs of weakening. However, tight market supply remained the main theme, keeping procurement prices high, though the sustainability of these high levels needs further observation. On Monday, baled UBC was quoted centrally at 16,100-16,750 yuan/mt (ex-tax); shredded aluminum tense scrap (priced based on aluminum content) was quoted centrally at 17,900-18,250 yuan/mt (ex-tax). Baled UBC prices held steady WoW, while shredded aluminum tense scrap (priced based on aluminum content), scrap wheel hubs, and mechanical casting aluminum scrap saw price increases ranging from 50-150 yuan/mt. As spot aluminum prices continued to climb, driving up shredded aluminum tense scrap prices, regions including Jiangxi, Hubei, Foshan, Anhui, and Hunan collectively raised quotes for aluminum tense scrap series, up 100 yuan/mt WoW. In the afternoon, as SHFE aluminum futures continued to rise, some secondary aluminum enterprises in Jiangxi further increased their offers for aluminum tense scrap series, with cumulative increases reaching 200 yuan/mt. Regarding the price difference between primary aluminum and scrap: the price difference between A00 aluminum and mechanical casting aluminum scrap in Shanghai widened by 30 yuan/mt from the previous trading day to 2,462 yuan/mt; the price difference between A00 aluminum and mixed aluminum extrusion scrap free of paint in Foshan was recorded at 2,207 yuan/mt. The aluminum scrap market is expected to hold up well this week, with the mainstream price range for shredded aluminum tense scrap (priced based on aluminum content) potentially shifting upward to 18,000-18,500 yuan/mt. If primary aluminum prices continue to rise, it will further transmit positive effects. Coupled with the restocking demand from secondary aluminum enterprises amid low inventories, the tight supply situation is unlikely to change in the short term. Demand side, the traditional peak season tail-end and environmental protection-driven production restrictions' suppression on wrought aluminum alloy scrap demand may intensify market divergence, requiring close attention to secondary aluminum enterprises' raw material procurement pace as they enter the off-season and the sustainability of end-user orders. If primary aluminum prices retreat after a rapid rise, the aluminum scrap market will face pullback pressure, especially for wrought aluminum alloy scrap varieties which carry higher risks due to environmental protection-driven production restrictions. Overall, the market will continue the tug-of-war between sellers and buyers, and it is recommended to closely track primary aluminum price trends and policy developments.
Secondary Aluminum Alloy:This Monday, the SMM A00 aluminum price surged by 160 yuan/mt compared to the previous day to 21,440 yuan/mt, continuing to hold up well, while the SMM ADC12 price increased by 100 yuan/mt to 21,400 yuan/mt. The tight raw material supply situation persisted, with hoarding behavior emerging in the aluminum scrap market, and procurement costs for secondary aluminum plants continued to climb. Although end-use consumption remained resilient, the rapid price surge has triggered wait-and-see sentiment among downstream enterprises, leading to a slowdown in the transaction pace. Overall, cost and supply-side support currently dominate, and ADC12 prices are expected to hold up well in the short term, requiring attention to raw material prices, inventory changes, and downstream order performance.
Aluminum Market Summary:On the macro front, favorable macro environments domestically and overseas prevailed, with the China-Russia Prime Ministers' meeting focusing on deepening strategic coordination and cooperation across various fields. Supply side, domestic operating aluminum capacity saw limited changes; overseas, overseas aluminum smelters implemented production cuts totaling 210,000 mt with further cuts expected in March 2026, reigniting concerns about tight supply, while medium-term attention should be paid to the ramp-up of Indonesian aluminum projects. Demand side, current aluminum prices fluctuating at highs, combined with severe haze weather in central China leading to the successive issuance of environmental protection-driven production restriction policies, somewhat suppressed demand. Additionally, high LME aluminum prices kept the processing trade window closed, weakening demand for aluminum semis exports. Monitor the destocking cycle for downstream processed product inventories amid high aluminum prices. Overall, with aluminum prices currently high, downstream processing enterprises prioritized destocking finished product inventories, leading to weaker demand for raw materials; however, aluminum ingot inventories remain relatively low, providing limited fundamental drive for aluminum prices in the short term, while macro sentiment both domestically and overseas remains relatively optimistic.
[The information provided is for reference only. This article does not constitute direct investment research or decision-making advice. Clients should make decisions cautiously and not use this to replace independent judgment. Any decisions made by clients are unrelated to SMM.]
