[Central Bank Sends Easing Signals; Supply-Demand and Geopolitical Games Limit Aluminum Price Upside Room] Our comprehensive assessment shows that the macro front has improved recently, with the marginal constraints of interest rate hike expectations on the nonferrous metals sector continuing to ease. The proportion of liquid aluminum in China has kept rising. China’s central bank will implement accommodative monetary policies, step up counter-cyclical adjustments, and redouble efforts to expand domestic demand to steer the economy toward sustained, more favorable, and broader-based development. The persistent geopolitical risk premium in the Middle East has jointly underpinned aluminum prices, significantly boosting short-term market confidence. However, the ongoing commissioning of long-term aluminum capacity outside China, the recent softness in traditional end-use demand in China, combined with the repeated shifts in expectations for US Fed interest rate hikes and the uncertainties triggered by geopolitical turmoil in the Middle East, continue to exert certain pressure on the upside room for aluminum prices.

Futures: Last Friday, LME lead opened at $1,895/mt, drifting lower then stabilizing in the Asian session; entering the European session, it briefly touched a high of $1,899/mt before weakening, dipping to a low of $1,875.5/mt in late trading, and finally closed at $1,880.5/mt, down 0.69%. Last Friday night, the most-traded SHFE lead 2609 contract opened at 15,550 yuan/mt, lightly touched a high of 15,565 yuan/mt at the start before drifting lower, dipped to 15,360 yuan/mt in late trading, and finally settled at the low of 15,360 yuan/mt, down 1.22%. On the macro front: South Korea's KOSPI index rallied nearly 18% last Friday, posting its largest single-day gain on record, with a monthly decline of 22% ranking as the third-largest in history. Foreign investors net purchased 7.2 trillion won worth of KOSPI shares last Friday, hitting an all-time high. On the first day of tighter regulations on leveraged ETFs in South Korea, trading volume plummeted 75%. South Korea's July exports surged to the second-highest level on record, and semiconductor exports soared nearly 180% YoY. The US Fed: ① Fed Chairman Walsh considered reducing the frequency of annual meetings. ② Several Fed officials voiced support for interest rate hikes, intensifying hawkish pressure internally. China's manufacturing PMI for July was 49.2%, with manufacturing production showing good resilience. The People's Bank of China held a work conference for H2 2026, continuing to implement moderately accommodative monetary policy. July sales performance from new energy vehicle startups was released, with BYD sales exceeding 410,000 units to reach a new high, and Leap Motor surpassing the 100,000-unit mark. Spot fundamentals: In the Shanghai market, Chihong lead was quoted at 15,600-15,630 yuan/mt, at premiums of 50-80 yuan/mt against the SHFE 2609 contract. The center of SHFE lead shifted lower again, with suppliers reducing shipments and limited quotes from the Jiangsu, Zhejiang, and Shanghai markets. Meanwhile, EXW cargo quotes from primary lead smelters showed north-south divergence, with suppliers in the northern market actively quoting and selling, while those in the southern market held back from selling at low prices, offering few quotes, and mainstream production areas quoted at premiums of 0-25 yuan/mt against the SMM #1 lead average price. In secondary lead, smelters had many shutdowns, with some secondary lead smelters holding prices firm to sell, and secondary refined lead quotes were at premiums of 20-50 yuan/mt against the SMM #1 lead average price, with individual quotes at a premium of 125 yuan/mt. Downstream enterprises remained mainly engaged in just-in-time procurement, with wait-and-see sentiment rising, and spot market trading was thin. Inventory side: On July 31, LME lead inventory decreased by 4,575 mt to 441,275 mt; as of July 30, total SMM lead ingot social inventory across five regions reached 68,500 mt, up 6,100 mt from July 23, and up less than 100 mt from July 27. Lead price forecast today: In August, lead consumption is expected to show no improvement, with downstream enterprises cautious in procurement and lead ingot inventory accumulating, dragging lead prices to consolidate on a subdued note. Meanwhile, increased maintenance and production cuts at primary and secondary lead smelters, along with expectations of supply tightening, drove the narrowing of spot discounts for lead, providing strong support for lead prices.

[SMM Daily Review: Weaker Dollar and Cooling PCE Resonate, Silver Price Continues to Consolidate at Lows] SMM July 31 News: The dollar plunged below 100, PCE cooled, but conditions for a trend shift in rate hikes were not met, and silver prices consolidated. Spot cargo supply and demand were both weak at month-end, transactions were sluggish. Attention is on next month's maintenance and demand recovery.

[Marginal Easing in Expectations for US Fed Rate Hikes, Continued Aluminum Destocking Underpins Market] Based on a comprehensive assessment, the macro front has improved recently; marginal constraints from rate hike expectations on the nonferrous metals sector continue to ease; the proportion of liquid aluminum in China keeps rising; the Middle East geopolitical risk premium continues to accumulate, while aluminum ingot destocking continues in China, collectively underpinning aluminum prices; and market confidence has strengthened markedly in the short term. However, the continuous rollout of long-term aluminum capacity outside China, weak traditional end-use demand in China, coupled with recurring expectations for US Fed rate hikes overseas and disturbances from uncertainties in the Middle East geopolitical situation, still exert some pressure on the upside room for aluminum prices. In the short term, aluminum prices consolidate on a strong note.

SMM July 30: PV Aluminum Extrusion: This week, according to feedback from PV frame enterprises in the survey sample, industry operating rates remained stable overall. According to SMM, China’s module scheduled production was ~38.5 GW in July, and is expected to edge up MoM to 39.3 GW in August. Underpinned by stable-to-rising demand from downstream module production schedules, PV frame enterprises’ operating rates are expected to hold steady in the near term, with leading PV frame enterprises with long-term contract advantages maintaining high operating rates. Raw Material Prices: During the period (July 27–30, 2026), the SMM A00 weekly average price was 23,357.5 yuan/mt, up 0.8% from the previous week’s average. Overall, the continuous rise in the proportion of liquid aluminum in China, the persistent geopolitical risk premium in the Middle East, combined with sustained destocking of domestic aluminum ingots, jointly supported aluminum prices, visibly enhancing near-term market confidence. However, the continuous additions of forward aluminum capacity outside China, weak traditional end-use demand in China, together with ongoing fluctuations in expectations for US Fed interest rate hikes and uncertainty in the Middle East geopolitical situation, still pose certain pressure on aluminum price upside. In the near term, aluminum prices maintained a consolidation pattern on a strong note. Next week, the most-traded SHFE aluminum contract is expected to move in a range of 23,000–24,150 yuan/mt, and LME aluminum in a range of $3,100–3,250/mt.

[SMM Aluminum Price Weekly Review: Two Major Factors Boosted Market Confidence, Short-Term Aluminum Price Maintained Consolidation on a Strong Note]

This week, platinum and palladium first declined, then rebounded, and then pulled back, closing lower after wild swings. At the start of the week, a brief US-Iran ceasefire caused safe-haven risk premiums to recede, and coupled with rising interest rate hike expectations, this dragged prices lower. After hitting bottom, oversold buying and safe-haven demand amid trade frictions fueled a rebound. Late in the week, the hawkish US Fed decision (a 9-3 split, with three votes calling for a rate hike) again put prices under pressure. On the GFEX, platinum settled at 391.65 yuan per gram and palladium at 297.05 yuan per gram. Spot premiums remained generally stable, while demand was subdued. In the near term, geopolitical volatility and trade frictions may provide intermittent support, but the hawkish US Fed stance reinforcing rate hike expectations, the rebound in oil prices pushing up inflation, and weak downstream demand continue to constrain any rise. Focus on the evolution of the US-Iran situation and the September policy path.

[SMM Silver Weekly Review: Silver N-shaped consolidation ended flat this week amid repeated tug-of-war between geopolitical and interest rate hike expectations] Silver prices showed an N-shaped trend this week. At the start of the week, ceasefire expectations pushed prices up. Subsequently, the hawkish US Fed held rates steady, combined with repeated Middle East tensions, and silver prices consolidated to close at 14,286 yuan/kg. Spot silver supply and demand were both weak, and transactions remained at parity. On the inventory front, total social inventory accumulated to 3,658 mt, while ETF open interest edged down. Short-term, it is expected to move sideways with a downward bias.

SMM, July 30: Today, the most-traded SHFE aluminum 2609 contract closed at 23,625 yuan/mt, up 240 yuan, or 1.03%. Trading volume was 209,579 lots, and open interest was 250,601 lots, with a daily decrease of 3,175 lots. Capital clearly exited, with both bulls and bears reducing positions to lock in profits. The price held above the 5-day, 10-day, and 30-day moving averages but remained below the 60-day line. Short-term bearish pressure has significantly eased as the price continues to repair from lows following a steep decline earlier. Today the price shot up to close sharply higher, with bulls showing improving buying support at lower levels. The 5-day and 10-day moving averages have turned upward, while the 30-day and 60-day moving averages remain in a downtrend, indicating that the medium-term downward trend is intact. The 60-day line above forms strong medium- and long-term resistance, capping upside room for the rebound, while the short-term moving averages below offer solid support from the lower end. The DIF and DEA lines are below the zero axis, but the gap continues to narrow, signaling greatly diminished bearish momentum and strengthening rebound momentum from lows—overall downward pressure has markedly eased. SMM Commentary: Persistent Middle East geopolitical risk premiums, coupled with continued destocking of domestic aluminum ingots, have jointly underpinned aluminum prices. However, headwinds remain—overseas forward aluminum capacity continues to be added, domestic end-use demand is weak, expectations for US Fed interest rate hikes keep resurfacing, and uncertainties surrounding the Middle East geopolitical situation add volatility. As a result, upside room for aluminum prices faces clear pressure, and prices are expected to maintain a fluctuating trend in the near term. Today, the most-traded alumina 2609 contract settled at 2,648 yuan/mt, down 36 yuan, or 1.34%. Trading volume reached 381,349 lots, and open interest was 248,892 lots, with a MoM decrease of 6,152 lots, reflecting funds reducing positions and exiting. The price settled below the 5-day, 10-day, 30-day, and 60-day moving averages, with the shorter-period averages forming bearish pressure from top to bottom. Short-term bears continued to press, sending the price sharply lower to test new lows, while bullish buying support at lows remained weak. Medium- and long-term moving averages have all shifted from support to resistance levels, and the medium-term drifting lower trend has not changed. Any rebound repair phase will face layered resistance from these moving averages. SMM Commentary: Supply side, weekly production was basically flat with the previous week, and operations were stable. But the supply surplus pattern remains unchanged and continues to weigh on prices. On the inventory front, total national alumina inventory increased by 24,000 mt WoW to 7.028 million mt, extending the inventory buildup trend. In markets outside China, earlier geopolitical conflicts brought a large influx of low-priced cargoes into China, draining overseas circulating inventory. Recently, overseas spot conditions have tightened due to concentrated restocking demand from new capacity preparations in Indonesia and production resumption and restocking in the Middle East, pushing alumina prices outside China significantly higher. Looking ahead, China lacks macro bullish catalysts, and the oversupply situation continues to pressure prices. Short-term prices are expected to remain in the doldrums. Moreover, with expectations for production ramp-up in Guangxi, inventories are likely to build further next week. [The information provided is for reference only. This article does not constitute a direct recommendation for investment research decisions. Clients should make decisions prudently and not use this as a substitute for independent judgment. Any decisions made by the client are unrelated to Shanghai Metals Market.]

[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.