The overseas secondary aluminum market continues to exhibit structural divergence. Elevated scrap prices provide strong cost support, but cautious downstream procurement and weak transaction follow-through are dampening demand-side momentum. As a result, prices remain firm while trading activity stays subdued.【SMM Analysis】

[SMM Cast Aluminum Alloy Morning Comment: The Most-Traded Aluminum Alloy Futures Contract Fell in Volatile Overnight Trading, Pre-Holiday Stockpiling Sentiment Remained Weak] On Monday, the SMM ADC12 price remained flat from the previous trading day at 24,100 yuan/mt. On the cost side, aluminum price fluctuations narrowed, providing limited price support.

[Stagflation Expectations Heat Up Combined with China Inventory Buildup, Divergence Between SHFE and LME Aluminum Continues] Overall, geopolitical risks outside China persisted and supply tightened, keeping LME aluminum prices on a relatively strong footing; high inventory levels in China combined with weak demand limited SHFE upside room, with a clear divergence between SHFE and LME price trends.

[SMM Cast Aluminum Alloy Morning Comment: Easing Costs and Sluggish Demand Keep Aluminum Alloy Prices in the Doldrums] Last Friday, the ADC12 market was generally in the doldrums. As aluminum prices weakened, cost support eased, and some enterprises actively lowered their quoted prices.

[SMM Aluminum Alloy Daily Review] The ADC12 aluminum alloy market was in the doldrums overall today. As aluminum prices weakened, cost support loosened somewhat. Meanwhile, downstream demand remained sluggish, pre-holiday stockpiling fell short of expectations, and trading was sluggish, further suppressing upward momentum. Combined with an increase in low-priced supplies in the market and intensified competition among enterprises, the price center shifted slightly downward. In the short term, under the dual impact of weakening cost support and insufficient demand, ADC12 prices are expected to continue a fluctuating trend in the doldrums.

[Inventory Trends Diverge Significantly in and outside China; Aluminum Prices Continue LME-Outperforms-SHFE Pattern] Negotiations in the Middle East experienced repeated twists and turns, and geopolitical risks had not yet fully been cleared. However, the widening supply gap outside China and the steady drawdown of LME inventory jointly supported LME aluminum prices in holding up well. In China, social inventory of aluminum ingots remained at elevated levels, with the strength of demand recovery and the pace of inventory drawdown becoming the core variables influencing SHFE price trends.

[SMM Aluminum Alloy Daily Review] Futures side, the most-traded aluminum alloy 2606 contract opened at 23,735 yuan/mt today, showing an overall pattern of opening higher followed by a unilateral decline. As of the midday session, the price fell 265 yuan from the previous trading day, down 1.12%. The spot ADC12 market remained stable for now. Affected by the narrow sideways movement in aluminum prices, the cost side lacked clear directional guidance, and enterprises generally showed little willingness to adjust prices. Meanwhile, downstream demand remained persistently weak with insufficient order follow-through, exerting some downward pressure on prices. Against the backdrop of weakness in both supply and demand, wait-and-see sentiment in the market intensified, with transactions mainly dr

[Strait Blockade Remains in Stalemate, LME Outperforms SHFE for Aluminum] Overall, the strait blockade continued. The supply gap outside China and the ongoing drawdown of LME inventory supported LME prices to hold up well, while China's aluminum ingot inventory remained at elevated levels. Attention should be paid to whether a turning point in domestic inventory can materialize smoothly.

[SMM Aluminum Alloy Daily Review] Futures side, the most-traded aluminum alloy 2606 contract opened at 23,560 yuan/mt today, dipped to a low of 23,470 yuan/mt during the session, then rebounded in a volatile manner to a high of 23,675 yuan/mt, and closed at 23,635 yuan/mt before noon, up 125 yuan/mt or 0.53% from the previous closing price. The spot ADC12 market remained stable overall, with insufficient demand-side support, mediocre trading activity, and clearly limited upward momentum in prices.

[SMM Aluminum Alloy Brief] Futures side, the aluminum alloy 2606 contract opened today at 23,660 yuan/mt, with the closing price before the midday session at 23,475 yuan/mt, down 185 yuan/mt from the previous settlement, a decline of 0.78%. Spot side, ADC12 market prices continued their downward trend today, with enterprises generally lowering prices. On one hand, weakening aluminum prices loosened cost support; on the other hand, downstream demand remained persistently weak, order release was limited, and increasing low-priced resources in the market further intensified price competition. Under the weak supply-demand dynamics, enterprises mostly resorted to passive price cuts to facilitate shipments, with limited willingness to hold prices firm.