[SMM SHFE Aluminum Spot] In early trading, the trading center of the SHFE aluminum 2608 contract was higher than the same period of the previous trading day. The rise in aluminum prices caused a notable decline in market procurement sentiment. During the day, some suppliers quoted at around parity against the SHFE aluminum 2608 contract, and market price acceptance remained weak. Mainstream transaction prices mainly ranged from a discount of 10 yuan/mt against the SHFE aluminum 2608 contract to parity with it. In east China, the shipment sentiment index today was 3.13, down 0.03 from the previous trading day; the procurement sentiment index was 2.90, down 0.10 from the previous trading day.

[Disturbances from Expectations for US Fed Interest Rate Hikes Combined with Continuous Destocking of China’s Social Inventory; Aluminum Prices to Maintain Consolidation Pattern in the Short Term] Overall, the continuous geopolitical risk premium in the Middle East, combined with continuous destocking of domestic aluminum ingots, jointly underpins aluminum prices. However, the continuous commissioning of long-term aluminum capacity outside China, weak traditional end-use demand in China, together with disturbances from recurrent overseas expectations for US Fed interest rate hikes and uncertainty in the Middle East geopolitical situation, exert significant pressure on the upside room for aluminum prices. In the short term, aluminum prices are expected to maintain a consolidation pattern.

SMM, July 29: In early trading, the operating center of the SHFE aluminum 2608 contract was higher than the same period of the previous trading day. Affected by weak end-use demand, overall market purchasing today was mainly for essential restocking. Due to the rise in aluminum prices, some traders showed increased willingness to sell, but overall purchase willingness was limited. Mainstream transaction prices were mainly at parity to a premium of 10 yuan/mt against the SHFE aluminum August contract. Today, the selling sentiment index in east China was 3.16, up 0.08 from the previous session; the purchasing sentiment index was 3.00, unchanged. The recurring US-Iran conflicts disrupted the rise in SHFE aluminum prices during the night session. Today, traders and downstream processing enterprises in central China mostly stayed on the sidelines, with low purchase willingness and sluggish market transactions. Some large suppliers held prices firm and held back from selling, while small suppliers showed no obvious inclination to prop up prices, leading to a notable divergence in offers and transactions. Eventually, the actual transaction price range in the central China market was around a discount of 100-140 yuan/mt against the SHFE aluminum August contract, with a sustained weakening trend. Today, the selling sentiment index in the central China market was 3.12, up 0.01 from the previous session; the purchasing sentiment index was 2.82, down 0.04 from the previous session. Inventory-wise, aluminum ingot inventory in major consumption regions dropped by 0.5 from the previous period, with destocking mainly occurring in Guangdong and Wuxi.

Amid fluctuations in the US-Iran conflict, the night session saw SHFE aluminum prices rise. Today, traders and downstream processing enterprises in central China mainly adopted a wait-and-see stance, with low purchase willingness, leading to sluggish market transactions. Some large suppliers held prices firm and held back from selling, while smaller suppliers showed weaker resolve to hold prices, resulting in a significant divergence between quotations and transactions. Ultimately, the actual transaction price range in the central China market was around a premium -100-140 yuan/mt against the SHFE aluminum August contract, with a continued weakening trend.

[Geopolitical Premium Materializes in Short Term, Aluminum Price Rise Faces Later Pressure] Overall, in the short term, aluminum prices will consolidate on a strong note and encounter resistance.

SHFE aluminum prices corrected slightly in early trading today. Downstream processing enterprises in the central China market were constrained by weak end-user orders and high finished product inventories, leading to subdued buying sentiment. However, amid the widening discount trend, trading firms engaging in both spot and futures market maintained strong buying sentiment, tending to purchase at deep discounts, while suppliers showed notable willingness to hold prices firm. Ultimately, the actual transaction price range in the central China market was centered around a discount of 120-140 yuan/mt against the SHFE aluminum July contract.

[SMM Analysis: Secondary aluminum operating rate saw a narrower MoM decline but a sharper YoY drop in June]

[SMM Analysis: Secondary Aluminum Operating Rate in June Sees Narrower MoM Decline and Deep YoY Pullback; Attention on Production Flexibility Driven by Price Spreads] According to the SMM survey, in June 2026, the operating rate of the secondary aluminum industry fell 0.9 percentage points MoM from May to 33.3%, and fell 7.6 percentage points YoY.

[Overseas Macro Bullishness Battles Supply Bearishness, China's Destocking Supports SHFE Aluminum Bottom] On the domestic front, bullish factors are prominent. The proportion of liquid aluminum has continued to rise. Over the past week, aluminum ingot warehouse withdrawals hit a four-year high, and the pace of inventory destocking has accelerated significantly, forming support for the bottom of SHFE aluminum. Amid the interplay of bullish and bearish factors, overseas, the bullish impact of the US dollar and the bearish forces from supply and geopolitics offset each other. After its earlier excessive decline, LME aluminum's downward momentum has slowed, and in the short term, it is mainly consolidating at lows for repair; domestically, supported by rapid destocking, the probability of underperforming LME aluminum is low. The SHFE and LME markets may show slight divergence, and a sustained unilateral weak trend is unlikely.

[SMM Aluminum News Flash] Recently, SHFE aluminum prices have accelerated their decline, and casting aluminum alloy futures have also weakened. However, supported by factors such as tight aluminum scrap supply, tax invoice constraints and high costs, casting aluminum alloy prices have shown strong resilience, clearly outperforming primary aluminum in downside resistance. As a result, the price spread between the AL and AD futures has continued to narrow, hitting a new low since the contracts were listed. In the spot market, the positive price spread of ADC12 over A00 aluminum has widened in tandem.