SMM July 6: The SHFE aluminum 2608 contract opened at 22,685 yuan/mt, rose to a high of 22,970 yuan/mt, dipped to a low of 22,685 yuan/mt, and settled at 22,885 yuan/mt, up 225 yuan/mt or 0.99% from the previous trading day. Trading volume was 168,800 lots, open interest stood at 253,200 lots, with a daily open interest change of -9,839 lots. The price reclaimed the MA5 (22,612) but remained below the MA10 (22,895), MA20 (23,463), MA40 (23,967.75) and MA60 (24,254.42). The moving average system remains in a bearish arrangement, and the short-term rebound has not yet reversed the weak pattern. In the MACD indicator, DIFF (-449.81) is below DEA (-383.17), and the histogram recorded -133.27, showing bearish momentum still exists but is narrowing marginally. Trading volume of 168,800 lots declined by 65,400 lots from the previous trading day, and the daily open interest change of -9,839 lots points to continued capital outflow. Today’s rise largely reflects a technical repair driven by bears covering positions. SMM Commentary: US-Iran indirect technical talks have made progress, with discussions around fund returns and strait security, and nuclear consultations are about to start. The geopolitical risk premium continues to converge, while the Strait of Hormuz management dispute persists and the resumption of navigation through the strait remains uncertain. The US Fed’s hawkish pivot boosted the US dollar index, pressuring nonferrous metals prices. 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. The alumina 2609 contract opened at 2,716 yuan/mt, rose to a high of 2,730 yuan/mt, dipped to a low of 2,705 yuan/mt, and settled at 2,720 yuan/mt, down 2 yuan/mt or 0.07%. Trading volume was 193,200 lots, open interest stood at 334,200 lots, with a daily open interest change of 11,220 lots. Prices are still below the MA5 (2,748.20), MA10 (2,790.80), MA20 (2,839.30), MA40 (2,815.55) and MA60 (2,799.83). The moving average system maintains a bearish divergence, and the downward trend has not yet been repaired. In the MACD indicator, DIFF (-23.67) is below DEA (-3.94), and the histogram widened to -39.47, with bearish momentum continuing to be released. Trading volume of 193,200 lots decreased by 68,000 lots from the previous trading day, but the daily open interest change of 11,220 lots indicates capital still entered the futures market at low levels, and short-term bearish initiative remains strong. SMM Commentary: According to SMM statistics, as of last Thursday, China’s total alumina inventory edged down WoW. Looking at the inventory structure, raw material inventory at aluminum smelters continued to destock slightly, but due to large recent price fluctuations and divergent market views on the outlook, restocking willingness was weak and end-users mainly adopted a wait-and-see stance. In-factory inventory at alumina refineries decreased, mainly affected by some enterprises in the north undergoing periodic maintenance; under production constraints, they prioritized consuming in-factory inventory. After the maintenance ends next week, this impact is expected to gradually fade. Port inventories continued to accumulate, with port arrivals from outside China staying high, as imported resources supplemented spot supply and added market pressure. Overall, the oversupply pattern remains unchanged. Before Guinea’s bauxite quota policy is implemented, the market lacks clear bullish drivers. Next week, inventory is expected to shift from weak destocking to a slight inventory buildup, supply-demand conditions will stay loose, and alumina prices will remain in the doldrums. [The information provided is for reference only. This article does not constitute direct investment research and decision-making advice. Clients should make prudent decisions and should not use this as a substitute for independent judgment. Any decisions made by clients are unrelated to SMM.]

[Destocking Accelerates to Provide Support, Export Concerns Limit Rebound Room] The US Fed's hawkish pivot boosted the US dollar index, weighing on nonferrous metal prices. The Middle East geopolitical situation has been somewhat volatile but shows no signs of deterioration. 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.

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

[SMM Zinc Morning Comment: LME Boosted SHFE Trends, SHFE Zinc Rose in Night Session] Last Friday, the most-traded SHFE zinc 2608 contract opened at 24,500 yuan/mt. After the opening, SHFE zinc hovered at highs. At the beginning of the session, it dipped to a low of 24,490 yuan/mt, then touched a high of 24,690 yuan/mt during the session, and finally closed up at 24,670 yuan/mt, up 275 yuan/mt..

[Strong Macro Front but Weak Fundamentals, Silicon Metal Market Stagnant with Fluctuations]: This week, spot silicon metal prices continued to hold steady with consolidation, while futures prices fluctuated near 8,600-8,800 yuan/mt. As of January 15, SMM oxygen-blown #553 silicon in east China was at 9,200-9,300 yuan/mt, #441 silicon at 9,300-9,500 yuan/mt, and #421 silicon at 9,500-9,800 yuan/mt, flat WoW. In the futures market, the most-traded contract closed at 8,730 yuan/mt on Thursday, down 25 yuan/mt from Monday. Silicon metal fundamentals remained weak, with both supply and demand declining. Supply side, new production cuts were added at some silicon furnaces in Sichuan and Inner Mongolia this week, with a major plant in Sichuan completing cutbacks, driving the local operating rate down to 0%; the overall operating rate trended weaker. Demand side, reduction expectations were mainly in the polysilicon sector. Affected by poor downstream demand expectations, coupled with continued inventory accumulation at silicon enterprises, market sentiment was neutral or slightly negative, and downstream procurement activity was moderate.

Next week, key macro data include China's August CPI annual rate, the US August non-seasonally adjusted CPI annual rate, and the preliminary US one-year inflation expectation for September. This week, US August ADP employment growth slowed sharply to 54,000, reinforcing expectations for US Fed interest rate cuts, while Fed officials expressed divergent views on rate cuts. The Fed's third-ranking official stated a gradual rate cut would be appropriate, while a 2025 voting member reiterated opposition to a September rate cut. Next week marks the final week before the Fed's policy meeting, with markets continuing to trade on expectations for US dollar interest rates and tariff changes. For LME lead, rising expectations for US Fed rate cuts and a weaker US dollar index lifted the center of nonferrous metals prices. Meanwhile, LME lead inventories fell by over 10,000 mt weekly, while the LME 0-3 premiums and discounts diverged, with discounts widening to -$44.77/mt, hitting a new low since October 2024 month-end. Additionally, Chinese lead smelters began winter stockpiling of lead concentrates earlier, exacerbating ore supply tensions and driving TCs to historic lows, potentially supporting lead prices from a cost perspective. LME lead is expected to trade between $1,975-2,010/mt next week. Domestically, increased production cuts by secondary lead smelters tightened supply gradually, while logistics vehicle restrictions in North and Central China were lifted, boosting spot cargo availability. However, the traditional peak season for lead-acid battery demand remained weak, with downstream enterprises maintaining just-in-time procurement, weighing on lead prices. Barring new factors, short-term lead prices may consolidate, with the most-traded SHFE lead contract likely trading between 16,700-16,950 yuan/mt next week. Spot price forecast: 16,600-16,850 yuan/mt. Lead consumption showed no significant improvement in September, with downstream enterprises likely sustaining just-in-time procurement. For primary lead, some smelters advanced maintenance, but inventories remained at smelters, prompting suppliers to sell at discounts. Spot discounts are expected to persist next week. For secondary lead, increased maintenance at smelters in Anhui and other regions created significant regional disparities in the spot market, with large discounts for secondary refined lead transactions and price inversions between secondary and primary lead.