According to SMM statistics, on July 2, aluminum billet inventory in China's mainstream consumption areas dropped to 130,000 mt, down 4,000 mt from last Monday and 10,000 mt from last Thursday, with the destocking pace accelerating markedly. Compared with the same period, it was 23,500 mt lower than in 2025 and 9,700 mt lower than in 2024, pushing total inventory to the lowest level for the same period in the past three years. In terms of warehouse withdrawals,

SMM, July 3: In the morning session, the SHFE aluminum 2606 contract traded at a higher center than the same period of the previous trading day. Buying sentiment picked up somewhat, boosted by Friday stockpiling, but remained at a weak level. Market liquidity was relatively ample, with mainstream transactions at parity to a premium of 10 yuan/mt against the SHFE aluminum July contract. In east China today, the shipment sentiment index stood at 2.91, flat MoM, while the procurement sentiment index came in at 2.79, up 0.06 MoM. Following the sharp drop on the futures market, aluminum prices rebounded for two consecutive days, yet bearish sentiment in the central China market remained strong. With the weekend stockpiling cycle approaching, downstream processing enterprises still mainly made just-in-time procurement, with only small-scale raw material stockpiling, leaving the overall market trading atmosphere largely sluggish. Suppliers also showed limited willingness to hold prices firm. Ultimately, actual transaction prices in the central China market were centered around a discount of 50-70 yuan/mt against the SHFE aluminum July contract. In the central China market today, the shipment sentiment index was 2.89, up 0.01 MoM, while the procurement sentiment index stood at 2.12, up 0.01 MoM. On the inventory front, aluminum ingot inventories in major consumption areas fell by 1.95 MoM today, with all three regions showing destocking.

Today ADC12 market quotes continued to rise overall, with the SMM ADC12 price up by 200 yuan/mt from the previous day to 24,000 yuan/mt. As spot aluminum prices and aluminum alloy futures rebounded consecutively, cost support strengthened further. Enterprises' enthusiasm for raising prices in tandem increased noticeably, and market sentiment recovered somewhat from the earlier period. On the demand side, downstream orders had yet to show significant improvement, and the overall operation remained stable. Some enterprises reported that order intake since July had changed little, with the market still dominated by just-in-time procurement.

[ADC12 Price Daily Review: Futures and Spot Prices Strengthen in Tandem, but Demand Concerns Linger; Weakening Prices Outside China Drive Continued Recovery of the Domestic-Overseas Spread] Today, quoted prices in the ADC12 market generally extended their upward trend. The SMM ADC12 price rose 200 yuan/mt from the previous day to 24,000 yuan/mt.

[Weekly Review of Aluminum Scrap and Secondary Aluminum]Primary-Scrap Spread Narrows Sharply as ADC12-A00 Premium Hits a Record High: Has the Window Opened for Primary Aluminum to Replace Scrap?

SMM July 3: The daytime session continued to surge today, and spot southern China showed resilience. The consecutive rise in absolute prices spurred some speculative cargo to accelerate outflows for monetization, causing downward disruptions, but with high futures and a stagnant spot-futures price spread, hedging parties largely held prices firm, unwilling to join the rush to sell. Mainstream quotations were at a premium of -10 to +10 yuan/mt, with a certain gap, and overall circulation pressure remained controllable. Demand side, aluminum prices remaining relatively low supported stable just-in-time procurement by downstream players, and traders gradually entered the market to purchase at non-premium levels, with moderate absorption capacity, but both showed little willingness to chase the rally or add positions, lacking elasticity. The supply-demand pattern was lukewarm, and overall transactions were stable and predictable. Spot transactions concentrated at a premium of -20 yuan/mt to 20 yuan/mt against the SHFE aluminum 2607 contract.

[Expectations for US Fed Interest Rate Hikes Delayed, Short-Term Weakness in Aluminum Prices Hard to Break] In China, the proportion of liquid aluminum continued to rise, and warehouse withdrawals of aluminum ingots hit a four-year high in the past week. The further acceleration of the destocking pace has been the biggest highlight recently, but the absolute inventory level remains in a high range. Recently, with the continued narrowing of the geopolitical risk premium coupled with expectations for new project startups outside China, macro headwinds still dominate. LME aluminum is under significant pressure in the short term, and domestic aluminum prices are expected to follow LME aluminum and remain in the doldrums.

This week, the aluminum processing industry was broadly under pressure from three factors: a deepening off-season, continuously weakening aluminum prices that fueled widespread price-drop sentiment, and shrinking exports. Only a few subsectors such as energy storage provided marginal support. The operating rate is expected to continue its downward trend in the short term.

SMM, July 2: PV aluminum extrusion: This week, leading PV frame enterprises maintained a full production schedule. In July, downstream module manufacturers face delivery targets, and module production schedules are expected to edge up MoM from June, boosting supporting demand for PV frames and driving a higher industry production schedule. Currently, some frame enterprises in east and north China have reported that they will maintain full-capacity operations in the near term. On the raw material front, aluminum prices continued to drift lower this week, but PV frame enterprises did not adjust their restocking pace in response; they continued to purchase as needed against orders, without any concentrated restocking actions. Overall, the operating rate of China's PV frame enterprises is likely to hold up well in the short term. Raw material prices: During the period (Jun 29-Jul 2, 2026), the SMM A00 weekly average price was 22,560 yuan/mt, down 4.0% from the previous week. Overall, progress was made in indirect technical talks between the US and Iran, with discussions on fund repatriation and Strait of Hormuz security underway. Nuclear negotiations are about to commence, geopolitical risk premiums continue to converge, the dispute over Strait of Hormuz governance persists, and full resumption of transit through the Strait remains uncertain. A hawkish pivot by the US Fed boosted the US dollar index, tilting the global macro front toward a bearish stance and exerting downward pressure on aluminum prices. Domestically, the proportion of liquid aluminum continued to rise, and weekly aluminum ingot warehouse withdrawals hit a four-year high. The destocking pace accelerated once again, marking the biggest highlight recently, though absolute inventory levels remained in an elevated range. As geopolitical risk premiums continue to converge, compounded by expectations of new overseas project launches, macro headwinds dominated. LME aluminum faced considerable pressure in the short term, and SHFE aluminum followed suit under pressure in the absence of fresh positive macro catalysts. Aluminum prices are expected to remain in the doldrums. Next week, the most-traded SHFE aluminum contract is expected to trade within the 21,800-23,000 yuan/mt range, with LME aluminum trading in the $2,950-$3,150/mt range. Further attention is needed on: the actual pace of production resumptions at Middle Eastern aluminum enterprises after full Strait of Hormuz transit resumes; the US dollar's movement and its transmission to commodities after the hawkish Fed signals materialize; and whether domestic inventory destocking continues to accelerate.

[Weekly Review of Aluminum Scrap and Secondary Aluminum]The price difference between A00 aluminum and aluminum scrap narrowed sharply, and with cost support, the spread between ADC12 and primary aluminum continued to widen.