[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 Cast Aluminum Alloy Morning Comment: Rising Aluminum Scrap Costs Support ADC12 Uptrend, End-user Off-season Caps Market Upside] Overnight, the most-traded aluminum alloy 2609 futures contract closed at 23,100 yuan/mt, flat

SMM, July 29 – Today's SMM A00 spot aluminum price closed at 23,400 yuan/mt, up 200 yuan/mt from the previous trading day. Aluminum scrap prices across regions generally followed the increase, rising 100-200 yuan/mt. On price spreads, the price difference between A00 aluminum and mixed aluminum extrusion scrap free of paint in Foshan was about 2,030 yuan/mt on July 29, while the price difference between A00 aluminum and shredded aluminum tense scrap in Foshan was about 710 yuan/mt, both remaining at historically low levels. In terms of imports, according to customs data, China's aluminum scrap imports in June 2026 totaled about 132,800 mt, down for the third consecutive month from 152,000 mt in May. Cumulative data for 2026 showed imports totaling about 981,800 mt from January to June. Recently, Guangdong saw increased orders from Southeast Asia, and although the import window improved compared to earlier, new transactions were mostly concentrated in low-price resources, leaving overall spot market activity limited. Affected by the UAE's aluminum scrap export ban and the EU's tariff hike policies, the contraction in supply of high-quality imported aluminum scrap will become more evident going forward. This week, the aluminum scrap market is expected to remain in a narrow range-bound pattern characterized by demand pressure and cost support. With the deepening off-season, downstream end-user orders are unlikely to improve materially. Scrap utilization enterprises will stick to purchasing as needed, and procurement sentiment is unlikely to recover significantly. The mainstream trading range for shredded aluminum tense scrap (priced based on aluminum content) is expected to hover around 19,800-20,500 yuan/mt. Currently, the price difference between A00 aluminum and aluminum scrap has narrowed to a historical low, significantly weakening the economic advantage of aluminum scrap over primary aluminum. If primary aluminum prices continue to decline, the substitution effect of primary aluminum for aluminum scrap will accelerate. It is necessary to closely monitor the crowding-out effect of aluminum price trends on aluminum scrap demand.

[US-Iran Conflict Renews Disruption to Commodities; Geopolitical Premium Boosts SHFE Aluminum to Surge with Heavy Volume] Overall, the persistent Middle East geopolitical risk premium, combined with continued destocking of domestic aluminum ingots, jointly underpins aluminum prices; however, the continuous launch of overseas aluminum forward capacity, weak traditional end-use demand in China, along with repeated shifts in overseas expectations for US Fed interest rate hikes and uncertainties in the Middle East geopolitical situation, exert notable pressure on the upside room for aluminum prices. In the short term, aluminum prices maintain a consolidation pattern.

[Aluminum Ingot Destocking Continues to Cement Bottom Support; Rate Hike Expectations and Off-Season Demand Constrain Rebound Room] Overall assessment: recently, macro front sentiment has improved slightly. The persistent Middle East geopolitical risk premium and China's continued destocking of aluminum ingots have jointly underpinned the aluminum price movement. However, the ongoing deployment of future aluminum capacity outside China, weak traditional end-use demand in China, and recurring uncertainties from the macro perspective have imposed significant pressure on the upside room for aluminum prices. In the short term, aluminum prices are expected to maintain a consolidation pattern.

SMM, July 27: Today, SMM A00 spot aluminum prices closed at 23,200 yuan/mt, flat from the previous trading day, with the aluminum scrap market remaining largely stable. In terms of the price spread, on July 27, the price difference between A00 aluminum and mixed aluminum extrusion scrap free of paint in Foshan was around 2,030 yuan/mt, while that for shredded aluminum tense scrap was around 710 yuan/mt, continuing to stay at historically low levels. On the import front, according to customs data, China's aluminum scrap imports in June 2026 totaled approximately 132,800 mt, down from 152,000 mt in May, marking the third consecutive monthly decline. From the cumulative data for 2026, total aluminum scrap imports from January to June stood at approximately 981,800 mt. Recently, import orders from Southeast Asia to Guangdong have increased, but although the import window has improved compared with the earlier period, new transactions were mainly concentrated in low-priced resources, and overall spot market activity remains limited. Affected by the UAE's aluminum scrap export ban and the EU's tariff hike policy, the tightening effect on high-quality aluminum scrap imports will become more pronounced in the future. The aluminum scrap market is expected to continue the narrow, sideways consolidation pattern this week, constrained by weak demand and supported by costs. As the off-season deepens, downstream end-user orders are unlikely to see substantial improvement, and scrap utilization enterprises will continue to purchase as needed, so the purchasing sentiment is unlikely to significantly improve. The mainstream operating range for shredded aluminum tense scrap (priced based on aluminum content) is expected to center around 19,800-20,500 yuan/mt. Currently, the price spread between primary aluminum and aluminum scrap has narrowed to historically low levels, sharply weakening the cost advantage of aluminum scrap over primary aluminum. If primary aluminum prices continue to decline, the substitution effect of primary aluminum for aluminum scrap will accelerate, and close attention must be paid to the crowding-out effect of aluminum price trends on aluminum scrap demand.

[End-Use Demand Weakness Limits Rise, Aluminum Price Consolidation Pattern Continues] Our comprehensive outlook indicates that recent macro sentiment has improved slightly, with the persistent Middle East geopolitical risk premium and continued destocking of aluminum ingots in China jointly underpinning aluminum prices. However, long-term capacity additions in aluminum production outside China, weak traditional end-use demand in China, and recurring uncertainty at the macro level are creating significant pressure on the upside room for aluminum prices, which are expected to maintain a fluctuating trend in the short term.

[New 301 Tariffs Strike, Limited Upside Room for Aluminum Prices in the Short Term] Overall forecast: recently macro front sentiment has slightly improved, with sustained geopolitical risk premium in the Middle East and China’s continued destocking of aluminum ingots jointly supporting aluminum prices. However, the continuous addition of long-term aluminum capacity outside China, weak traditional end-use demand in China, coupled with repeated macro perspective uncertainties, put obvious pressure on the upside room for aluminum prices, and in the short term, aluminum prices will maintain a consolidation pattern.

[Secondary Aluminum and Aluminum Scrap Weekly Review: Cost Support and Weak Demand in a Tug-of-War; Short-Term ADC12 Prices Maintain Sideways Movement] This week, ADC12 prices continued to move sideways. As of today, the SMM ADC12 quotation was adjusted down by 100 yuan/mt from last Thursday to 24,000 yuan/mt. During the week, cost support from aluminum scrap remained, and enterprises showed little willingness to voluntarily cut prices. However, constrained by weak off-season demand, prices lacked upward momentum. The overall market exhibited a tug-of-war pattern characterized by "selling at stable prices and transacting based on orders.

The Material Recycling Association of India (MRAI) has urged the government to abolish the 2.5% Basic Customs Duty on aluminum scrap, arguing that the move would reduce raw material costs, improve the competitiveness of recyclers and downstream manufacturers, and strengthen the circular economy. The association noted that India imports 80-85% of its aluminum scrap demand and that secondary aluminum now accounts for around 35% of the country's total aluminum consumption.