[Geopolitical Risk Premium Continues to Narrow, Aluminum Prices in the Doldrums] Progress has been made in indirect technical talks between the US and Iran, with discussions on fund repatriation and Strait security. Consultations on the nuclear issue are about to begin. The geopolitical risk premium continues to narrow. The dispute over management rights of the Strait of Hormuz persists, and uncertainty remains over the resumption of Strait navigation. The Federal Reserve's hawkish pivot boosted the US dollar index, weighing on nonferrous metal prices. Under macro headwinds, aluminum prices fell in and outside China. In the short term, bearish factors dominate, and aluminum prices are expected to stay in the doldrums.

SMM, July 1: SMM A00 spot aluminum prices closed at 22,260 yuan/mt today, down 240 yuan/mt from the previous trading day, and aluminum scrap market prices generally followed the decline. By product, bare bright aluminum wire and white-grade scrap fell by 200-300 yuan/mt, while aluminum tense scrap generally dropped 100 yuan/mt. The supply side remained tight, supervision of the reverse invoicing policy tightened, and production cuts or shutdowns spread among small and medium-sized scrap utilization enterprises in Anhui, Jiangxi, Hubei and other regions, increasing the scarcity of compliant, invoiced aluminum scrap. On the import side, due to a 1-3 month shipping lag, June-August port arrivals of aluminum scrap are expected to remain low. Additionally, the UAE implemented a temporary ban on aluminum scrap exports for four months starting June 3, further intensifying expectations of tight high-quality scrap supply in Asia. Regarding price spreads, on July 1, the price difference between A00 aluminum and mixed aluminum extrusion scrap free of paint in Foshan was 1,867 yuan/mt, and that between A00 aluminum and shredded aluminum tense scrap was 559 yuan/mt. Against the backdrop of tight invoice availability and the recent rapid decline in aluminum prices, the price spread for aluminum tense scrap narrowed quickly, and some cast aluminum alloy enterprises have started using aluminum ingots instead of aluminum scrap as raw material for production. This week, the aluminum scrap market is expected to continue consolidating at high levels with a weak bias, but downside room is limited. The mainstream range for shredded aluminum tense scrap (priced based on aluminum content) is expected at 19,300-19,900 yuan/mt (excluding tax). Constraints from the reverse invoicing policy and the lagging contraction in aluminum scrap imports continue to provide bottom support, but weak off-season demand and low downstream operating rates are suppressing upside room. Going forward, attention should be paid to the pace of policy compliance, progress in US-Iran peace talks and navigation through the Strait of Hormuz, the pace of ex-China aluminum scrap port arrivals, and changes in downstream operations in China.

[Mideast Situation Adds New Uncertainties, Aluminum Prices Continue in the Doldrums] The dispute over control of the Strait of Hormuz persists, and the resumption of navigation through the strait remains uncertain. The hawkish shift by the US Fed has boosted the US dollar index, weighing on nonferrous metal prices. Under macro headwinds, aluminum prices in and outside China have fallen. In the short term, bearish factors dominate, and aluminum prices are expected to continue in the doldrums.

In 2026, China's aluminum ingot inventory has continuously pulled back from a high of 1.465 million mt in early May, and by end-June cumulative destocking of 300,000 mt brought it down to 1.165 million mt, with the destocking pace steepening markedly. Last week, warehouse withdrawals surged to 170,000 mt, hitting a new single-week high in nearly four years. Driven by three factors—the supply-side proportion of liquid aluminum rising more than expected, supportive export demand, and...

[Strait of Hormuz Control Dispute Continues; Bearish Factors Dominate Short-Term Aluminum Prices] The Strait of Hormuz control dispute continues, and the resumption of navigation in the strait remains uncertain. The US Fed’s hawkish pivot boosted the US dollar index, and non-ferrous metal prices were suppressed. Under macro headwinds, aluminum prices in and outside China fell. In the short term, bearish factors dominate, and aluminum prices are expected to remain in the doldrums.

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I. Japan Market This week, Japan MJP aluminum ingot spot premiums showed a continuous downtrend, with the average price at $384/mt on June 19 pulling back to $380/mt by June 26. Although premiums kept dipping, some traders lowered their offers proactively while others held prices firm. The demand side exhibited restocking for rigid demand, with downstream enterprises purchasing as needed. Short-term restocking activity was moderate, but there was no large-scale concentrated stockpiling, and overall purchasing volume was mild. Currently, the market trading pace is slowing down, spot lacks a trend-driven upward driver in the short term, and premiums follow the futures to stay in the doldrums. II. US Market This week, US Midwest DDP aluminum spot premiums edged up, from an average of $110.2/mt on June 19 to $110.35/mt this Friday. US market fundamentals still provided support: two major demand-side increases were being released, with aluminum semis demand for AI computing data centers surging, coupled with the concentrated commissioning of new production lines at NEV manufacturers such as Tesla, steadily boosting aluminum consumption for automotive lightweighting, keeping the digestion pace of domestic aluminum ingots high. The supply side faced constraints, with Middle East geopolitical disturbances disrupting ocean shipments of aluminum ingots, arrivals growth from outside China consistently lagging downstream demand growth, and domestic inventory continuing to destock, supporting premiums to stay high. However, the pressure logic for the outlook is gradually emerging: LME aluminum prices have already fallen to a staged low, cross-regional arbitrage windows remain open, and arrivals of aluminum ingots flowing into the US market will gradually increase. Coupled with this week’s premiums having stopped rising and weakened slightly, the tight supply-demand situation will marginally ease as external supply replenishes. It is anticipated that US spot premiums will stay high but face pressure going forward, with upside room essentially capped and a pullback adjustment possible. III. Thailand Market This week, Thailand spot premiums rose from $320/mt last Friday to $323/mt this Friday. Affected by the decline in aluminum prices, some traders raised their offers. However, the upside momentum was weak, and the trading atmosphere remained sluggish. Local downstream users only maintained a hand-to-mouth purchase pattern for rigid demand, with low willingness for large-scale stockpiling. Meanwhile, continuous arrivals of aluminum semis exports from China, with large volumes of low-priced fabricated products flowing into the Southeast Asian end-use markets, directly diverted import orders for primary aluminum ingots and significantly squeezed local aluminum demand. [Data source statement: Other than publicly available information, all data are based on public information, market communication, and SMM's internal database models, and are processed by SMM. For reference only, and do not constitute decision-making advice.] Data source: SMM

[SMM Aluminum Weekly Review: Macro Situation Fluctuates, Domestic Aluminum Price Peak Under Pressure amid High Inventory]

[US Fed Hawkish Expectations and Easing Middle East Tensions Pressure Aluminum Prices] The acceleration of strait shipping resumption, combined with hawkish expectations from the US Fed, is causing the geopolitical premium to narrow at an accelerated pace, and LME aluminum will be under pressure in the short term. China side, the destocking pace is maintained, but the absolute inventory remains at high levels. SHFE aluminum, without new macro bullish factors, follows LME aluminum under pressure. It is expected that aluminum prices will remain in the doldrums in the short term.

SMM Jun 24: The morning session saw the SHFE aluminum 2606 contract trade with a center lower than the same period of the previous trading day. As aluminum prices declined, the release of stockpiling demand from earlier price drops, combined with pervasive bearish sentiment, kept overall buying interest weak today. Transaction prices continued to move lower, with mainstream trades at a discount of 30-50 yuan/mt against the SHFE aluminum July contract. The east China shipment sentiment index stood at 2.98 today, down 0.13 DoD; the purchase sentiment index was 2.83, down 0.24 DoD. The morning session today corrected sharply from yesterday, with central China traders raising their offers. Given the low prices, suppliers showed weak selling sentiment and a notable willingness to hold prices firm and hold back from selling. Downstream processing enterprises displayed clear fear of further declines, strong wait-and-see sentiment, and consequently weaker buying interest. Ultimately, actual transaction prices in the central China market centered around a discount of 60-90 yuan/mt against the SHFE aluminum July contract. The central China shipment sentiment index was 2.93 today, down 0.02 DoD; the purchase sentiment index was 2.20, down 0.01 DoD. On the inventory front, aluminum ingot stocks in major consuming regions fell by 1.65 WoW today, with all three regions showing destocking.