December 17 SMM Morning Meeting Minutes
Futures: During the night session on December 16, the most-traded SHFE aluminum contract 2602 opened at 21,845 yuan/mt, reached a high of 21,885 yuan/mt, and fell to a low of 21,810 yuan/mt, eventually closing at 21,825 yuan/mt, down 20 yuan/mt or 0.09% from the previous close. Technical analysis showed the MA moving averages forming a bullish alignment followed by a pullback (MA5: 21,846.00 < MA10: 21,949.50 < MA20: 22,040.50 > MA40: 21,823.25), with the MACD 4-hour candlestick continuing to show a green histogram (DIFF: 15.06, DEA: 60.54). Open interest during the night session was approximately 288,000 lots, a decrease of 736 lots from the daytime session. LME aluminum opened at $2,872.5/mt, hit a high of $2,886/mt, and a low of $2,850/mt, finally settling at $2,882.5/mt, up 0.26% from the previous day. Trading volume was 22,100 lots, an increase of 3,211 lots, while open interest stood at 682,000 lots, down 12,948 lots.
Macro Front: A relevant official from the Central Financial and Economic Affairs Commission stated that expanding domestic demand is the top priority for the next year, emphasizing the need to grasp structural changes in consumption and boost consumption from both supply and demand sides. Regarding comprehensive rectification of "involution-style" competition, at the enterprise level, efforts should be intensified to curb such competition. The mechanism for regulating capacity in key industries should be accelerated, with enhanced dynamic monitoring and early warning, ensuring both the orderly exit of outdated capacity and the smooth transition of new, high-quality capacity. (Bullish★) On Tuesday Eastern Time, data released by the U.S. Bureau of Labor Statistics showed that U.S. seasonally adjusted nonfarm payrolls for November came in at 64,000, higher than the market consensus of 45,000. October figures were revised down to a decrease of 105,000, compared to an expected decline of 25,000. The U.S. unemployment rate for November rose to 4.6%, above the market forecast of 4.4%, marking the highest level since September 2021. (Bearish★)
Fundamentals: The domestic aluminum ingot long-term contract market in 2026 is characterized by stable yet adjusted prices, declining order signing willingness, and a tight supply-demand pattern. Long-term contract pricing across regions shows differentiated premium and discount adjustments against the SMM A00 aluminum price. Influenced by factors such as aluminum prices fluctuating at highs, diverging downstream demand, and global supply deficits, the overall volume of long-term contracts signed is expected to decrease compared to 2025, with market uncertainty significantly increasing.
Primary Aluminum Market: The SHFE aluminum 2601 contract fluctuated downward during the early session. Suppliers concentrated on selling, while downstream purchasing sentiment was cautious with a noticeable decline in procurement interest. However, with the absolute price drop, some suppliers held prices firm, showing low willingness to sell at large discounts. Offers were mainly around a discount of 10 yuan/mt to parity, with some traders expanding discounts to sell, quoting discounts of 30 to 20 yuan/mt against the SMM average price. Actual transactions were primarily at discounts of 20 yuan/mt to parity against the SMM average price, with concentrated trading around the average price by large players. On Tuesday, the market sentiment index for selling in east China was 2.83, down 0.03 WoW; the purchasing sentiment index was 2.58, down 0.17 WoW. On December 16, the SMM A00 aluminum price was 21,630 yuan/mt, down 80 yuan/mt from the previous trading day, at a discount of 100 yuan/mt against the 2601 contract, flat from the previous trading day. On Tuesday, trading in the central China market was relatively sluggish, with high premiums and discounts, weak purchase willingness among downstream enterprises, leading to subdued purchasing by traders, while suppliers offloaded large volumes, causing prices to continue declining. The actual transaction prices ranged from a premium of 20 yuan/mt to a discount of 20 yuan/mt against the central China price. On Tuesday, the selling sentiment index in the central China market was 2.72, up 0.02 WoW; the purchasing sentiment index was 2.71, down 0.08 WoW. The SMM central China price closed at 21,560 yuan/mt, down 90 yuan/mt from the previous trading day, at a discount of 170 yuan/mt against the 2601 contract, down 10 yuan/mt from the previous trading day. The price spread between Henan and Shanghai was -70 yuan/mt, down 10 yuan/mt from the previous trading day.
Recycled Aluminum Raw Materials:On Tuesday, spot primary aluminum prices continued to decline from the previous trading day, with the SMM A00 spot price closing at 21,630 yuan/mt, while the aluminum scrap market followed with a slight decrease. Some scrap utilization enterprises reported high inventories of wrought aluminum alloy scrap collected during the peak season, lacking sufficient orders on hand to hedge against raw material inventories, thus temporarily slowing the procurement pace for related scrap. Additionally, environmental protection-driven production restrictions in Chongqing affected the operating rates of alloy enterprises, leading to a slight weakening in downstream demand for aluminum scrap. The imported aluminum scrap market faced tight supply, with traders maintaining low inventory levels. However, a narrow rebound in aluminum prices mid-week led to a decline in aluminum scrap prices. Some aluminum scrap suppliers held prices firm and were reluctant to sell, while downstream alloy enterprises also faced tight supply of recycled aluminum raw materials. On Tuesday, baled UBC was quoted in a range of 16,200–16,700 yuan/mt (tax excluded), and shredded aluminum tense scrap (priced based on aluminum content) was quoted in a range of 17,900–18,450 yuan/mt (tax excluded). Prices for baled UBC, clean tapping aluminum wire, mixed aluminum extrusion scrap free of paint, mechanical casting aluminum scrap, scrap motorcycle wheel, and mixed aluminum tense scrap decreased by 50–100 yuan/mt WoW. In terms of the price difference between A00 aluminum and aluminum scrap, the price difference between A00 aluminum and shredded aluminum tense scrap closed at 1,901 yuan/mt on December 16, while the price difference between A00 aluminum and bare bright aluminum wire in Jiangsu was 882.5 yuan/mt. The aluminum scrap market is expected to hover at highs this week, with the mainstream range for shredded aluminum tense scrap (priced based on aluminum content) at 18,100–18,800 yuan/mt (tax excluded). The tight supply situation is difficult to reverse, with constraints on imports and recycling still in place, providing a floor for prices. Demand side, the year-end push for annual targets in secondary aluminum and the inhibitory effect of high prices are intertwined, leading to cautious purchasing by extrusion and rolling scrap utilization enterprises due to price aversion. The price trend of primary aluminum serves as the core guidance, coupled with the impact of environmental protection-driven production restrictions and transportation constraints in central China, market sentiment remains cautious. Overall, the tug-of-war between sellers and buyers continues, requiring close monitoring of primary aluminum fluctuations, environmental protection policies, and downstream procurement pace, while remaining vigilant against the risk of a high-price correction.
Secondary Aluminum Alloy: Futures side, the most-traded contract for cast aluminum alloy opened at 20,955 yuan/mt on Tuesday, initially falling then rising during the day, probing lower before noon to a low of 20,805 yuan/mt, rebounding in the afternoon to a high of 20,975 yuan/mt, finally settling at 20,950 yuan/mt, up 5 yuan/mt from the previous trading day, a gain of 0.02%. The market saw bears reducing positions. Spot side, SMM A00 aluminum spot prices continued to drop 80 yuan/mt to 21,630 yuan/mt on Tuesday, while ADC12 prices held steady at 21,600 yuan/mt. Aluminum prices extended their decline on Tuesday, with secondary aluminum market prices showing slight divergence; some companies adjusted quotes down by 100 yuan/mt following the market, while others chose to maintain firm offers, adopting a wait-and-see stance. Currently, raw material supply is generally tight, traders' reluctance to sell intensified amid falling prices, and high costs supported secondary aluminum prices, making them relatively resilient. Sharp aluminum price fluctuations heightened downstream wait-and-see sentiment, coupled with signs of marginal demand weakness, leading to overall sluggish trading. Overall, cost support forms a price floor, while weakening demand and fluctuating aluminum prices suppress purchase willingness; ADC12 prices are expected to hover at highs in the short term.
Aluminum Market Summary: From a macro perspective, market sentiment gradually cooled. Supply side, domestic operating aluminum capacity currently stands at 44.39 million mt, high industry profits stimulated a slight increase in operating capacity, but the overall scale change was relatively small, with no significant supply increment. Demand side, although December is the traditional consumption off-season, consumption in sectors like automotive, power, and electronics showed strong resilience, without seasonal weakness, and the proportion of liquid aluminum direct supply remained high; however, with improved shipment efficiency of Xinjiang aluminum ingots, previously accumulated social inventory accelerated inflows, and overall off-season demand still lagged supply growth, aluminum ingot social inventory is expected to continue its buildup trend. To date, domestic aluminum ingot inventory has accumulated to around 600,000 mt, near a three-year high for the same period and showing signs of further increase. Cost side, alumina prices continued to decline, auxiliary material prices were generally stable, and the marginal cost of aluminum production kept decreasing, significantly weakening cost support for aluminum prices. Overall, the aluminum market faces a slight supply increase, resilient but still soft demand, and significantly weakened cost support, with fundamentals leaning bearish; coupled with profit-taking triggered by realized interest rate cut expectations, SMM expects aluminum prices to drop back slightly in the short term, mainly hovering at highs.
[The information provided is for reference only. This article does not constitute direct investment research advice; clients should make decisions cautiously and not use it as a substitute for independent judgment. Any decisions made by clients are unrelated to SMM.]
